Archive for the ‘strategy’ Category

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Sprinkling some Web 2.0 pixie dust on boring stuff

Monday, September 29th, 2008

Cisco’s acquisition lineup tells a story.

  • Webex for $3.2 Bil
  • Postpath for $215 Mil
  • Jabber (undisclosed sum)

Hmm .. what do these three have in common? Looks like Cisco is after the $34 Bil collaboration market, by beefing up its portfolio with unified communications, telepresence, and all sorts of Web 2.0-for Enterprise technologies so that people can cut down on physical travel.

Makes sense, given the weak economy and soaring gas prices – it’s costly to travel. Much like how dinosaurs went extinct and the smaller animals went on to dominate the earth because they were smaller, nimbler and able to adapt to the changing environment, Cisco is evolving.

Companies that rely on easy credit and on business models that require moving physical goods will probably find a tough time surviving. Cisco can help in the latter by cutting down on employee travel (ok-still no substitute for actually delivering parcels of stuff like Amazon), but for multi-national companies even small savings make a significant dent when multiplied.

Web 2.0 innovation is increasingly bottoms-up; that is, it’s first tested “in the wild” by consumers, then buffed up for corporations. That’s right, Web 2.0 is growing up and is punching holes through the corporate firewall.

Why am I writing about this? Oh, because I think it’s cool to watch the behemoth Cisco turn its big ship. We’ll see if they succeed in evolving fast enough.

A similar trajectory this reminds me of is British Telecom (BT).

Cisco = big company that makes the low level nuts and bolts for networking = boring.

BT = big telco which without, your cell phone might as well be a brick = equally boring.

Cisco with Web 2.0 = ooOOooh!

BT with Web 2.0 = aaAAaah!

Ok, on a more serious note, just as Cisco has a real strategy-so does BT. Just as Cisco is thinking how it can provide more value on top of its TCP/IP stack, BT is working to deliver more value through its pipeline – by being a channel for SaaS providers to reach BT’s SMB clients.

What BT has done so far:

  • Acquired Ribbit – $105 Mil
  • Partnered with Genius.com, branded as BT Smart Marketing
  • Announced a deal to sell NetSuite and SugarCRM

At the very least, Cisco and BT’s strategies to deliver value added services on top of their commoditizing products in an increasingly saturated market (Africa aside) makes for an interesting juxtaposition and business case study.

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Posted in business, cloud computing, saas, strategy, web 2.0 | No Comments »

iPhone 3G MS Exchange sync pricing strategy

Sunday, July 13th, 2008

Unless someone knocked you out in a hockey fight last Friday and your consciousness has just returned, chances are that you have heard of this thing called the iPhone 3G launch. I’ve been going back and forth on my decision on whether to get it or not. There are 2 things that are holding me back from getting an iPhone 3G:

  1. MS Exchange synchronization pricing
  2. No tethering option

It’s a classic pricing strategy–their (AT&T’s) attempt to extract more value from the wireless consumer segment that well .. has more money to dispose. Not only have they hiked the price of the unlimited data plan by $10/month from $20 to $30, but they charge you an additional $15/mo if you want to synchronize with an Exchange Server.

I’m a price-sensitive customer *and* I’m a techie at heart, thus I simply balk at having to guarantee AT&T’s revenue for 2 whopping years merely to transfer a sequence of low and high electrical signals to some proprietary email server, as opposed to any other email server, or as opposed to just casually serving the web.

The techie in me knows that they’re simply charging more by discriminating against MS Exchange data from casual web surfing, or any non-Exchange email data.

From Wikipedia’s entry on Net Neutrality: Neutrality proponents also claim that telecom companies seek to impose the tiered service model more for the purpose of profiting from their control of the pipeline rather than for any demand for their content or services.

The entrepreneur in me knows that they are just playing it by the pricing strategy books. To that end, I say, all the more power to them. Maybe I won’t buy the phone, but seeing that they are so savvy and nickel and diming the segment I am in (the “tough” crowd), I’m considering buying their stock instead.

My second gripe is the inability to tether the iPhone 3G to a laptop (without hacking it). This point is important to me because when I travel with my laptop, and if I’m in a spot where I don’t have wifi access, I just need that option to tether my laptop to my mobile phone.

Maybe AT&T is worried about people starting to use the iPhone as a modem and thus cannibalizing revenues from their existing wifi hotspot sales. To that end, I feel like if I’m already putting up with the hike in price for monthly unlimited data, putting up with the extra monthly charge for their discriminating against MS Exchange data, it’s just simply un-polite to ding me again by forcing me to cough up even more for a separate wifi hotspot plan. Come on.

And I quote Bruce Scheier:

Anyone with wireless capability who can see my network can use it to access the internet. To me, it’s basic politeness. Providing internet access to guests is kind of like providing heat and electricity, or a hot cup of tea.

I can see how they might have justified this impoliteness though. Corporate users probably have their companies paying for the bills anyway, and corporations have much deeper pockets and can easily justify such a cost as a business expensive. However, this pricing model obviously neglects the average work-for-a-corporation-joe-but-this-is-an-out-of-pocket-expense.

All said, here’s a message from a randomly-selected passionate early-adopting techie from the price-sensitive “tough crowd” segment, to whoever green-lighted this pricing strategy. You guys suck, and I hope you enjoy this video.


How to Get Broke by Buying an iPhone

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Posted in business, entrepreneurship, marketing, mobile, product management, strategy | No Comments »

Hidden flaws in strategy (part un)

Thursday, July 3rd, 2008

The McKinsey Quarterly has an interesting piece titled “Hidden Flaws in Strategy”, authored by Charles Roxburgh. What I like about this article is that it forces one to think about your blind spot, and provide solutions on how to overcome your own bias. A blind spot is well, very self-explanatory, which is why I think that’s just all the more reason why people, especially those who do any kind of strategy, should read this well put together article.

I’ll sum up some of the key takeaways to me, but reading the original piece of McKinsey is highly recommended.

Here are the common strategy flaws.

Flaw 1: Overconfidence

Our brains are naturally wired to make us overconfidence. This can be a good thing, because otherwise no one in their right mind would want to launch a new startup. However, we hurt ourselves when we try to make accurate estimates. Given a test question like “How heavy is a fully laden 747?” where participants are asked to give an answer where they were 90% confident, most people would rather be precisely wrong than be vaguely right.

Lesson learned: Be skeptical of strategies premised on certainty, and (duh) give yourself some wiggle room.

Flaw 2: Mental Accounting

Richard Thaler, a theorist in behavioural finance named the concept of mental accounting, defined as “the inclination to categorize and treat money differently depending on where it comes from, where it is kept, and how it is spent.” Some examples of mental accounting in the boardroom:

  • imposing caps on core business while throwing money at a startup
  • writing off money spent with conveniently created categories such as “revenue-investment spend” or “strategic investment”

Lesson learned: Don’t be so quick to throw away “so what if we throw it away” money. Eval potential investment through the standard scrutiny process, regardless of how the money fell into your lap.

Flaw 3: Status quo bias

An experiment conducted by Samuelson and Zeckhauser discovered that when students were asked how they would invest a hypothetical inheritance of millions of dollars, they adopted a “let’s leave things where they are” approach. That is, if the inheritance was already in high-risk high-yield stocks, it would be left as is. If the inheritence was already in low-risk low-return bonds, it would also be left as is. They opted not to rebalance the allocation in this hypothetical portfolio, even if it wasn’t in accordance to their risk preference.

The explanation is that people are more concerned about the fear of loss more than they are excited by the prospect of getting more. That’s the status quo. That’s what makes entrepreneurs special–they are not the status quo.

The other explanation is the endowment bias. Thaler discovered in an experiment with Cornell students that they wouldn’t pay more than $2.75 for mug with a Cornell imprint, but if they were given one, they wouldn’t sell the same mug away for less than $5.25–did the free market suddenly decide that the same mug has more value when it was already in someone’s possession when the same mug (a brand new one available for purchase) would be worth less? I think not.

While conservatism can be a strategic asset, it is important to distinguish between a status-quo option that is genuinely the right thing to do vs. one that just “feels safe” because of our innate bias.
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Posted in business, entrepreneurship, product management, self improvement, strategy, things to remind myself, winds of change | No Comments »

SDSIC Integrated Product Management and Development – A Case Study

Thursday, April 24th, 2008

Recently, I’ve been really fortunate to have met so many amazing people, that I can just learn from through osmosis, merely by just hanging around them (the converse is also true, which is why I am careful to stay way from people I don’t want to model myself after). Two days ago, I attended a San Diego Software Industry Council (SDSIC) event on Product Management where a real world case study was presented by Alan Kiraly, CEO of Enterprise Informatics.

When I last took Rod Whitson‘s class on product management at UCSD, I particularly liked the real world case studies that we went over. It was definitely a plus that Rod actually had real world experience to draw from. Likewise with Alan, who is also an industry veteran. The other thing I like about an actual face-to-face event is the people interaction, the stuff that you learn that nobody will actually write in a book.

Here’s a couple of things I picked up from Alan’s presentation.

A solidified and well defined business processes can be quite the competitive advantage. Alan talked about how Enterprise Informatics use their own product for their SOWs “lifecycle” management (eating your own dogfood == awesome!). What I particularly liked about this really manages decision making. Once an SOW is defined, if the time is not right, it can be thrown out in the “parking lot”. At a later time, if the opportunity arrises, the SOW can be picked up, dusted off a little, tweaked and be reused by putting it on the development cycle train.

The obvious value here is in saving time and resource in planning. Planning and strategizing stuff takes time and .. well, brain power! Too many times have I figured a whole plan for something, shelved it, and then later when I want to revisit it, I have to redefine the entire plan from scratch again.

Transparency is good. Ok, so nothing really ground shattering here, but it’s nice to hear about real world problems when transparency is not advocated. In a global and diverse organization, with people working across various continents and different timezones, synchronizing work and expectations can be a challenge. I can surely relate to that–my team at work, consist of folks in California, Australia, Israel, China, France, and the UK.
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Posted in business, entrepreneurship, marketing, people i like, product management, project management, san diego, startup, strategy | No Comments »

Lessons from the Warrior of the Light

Tuesday, April 8th, 2008

I’m definitely a fan of Paulo Coelho, the renowned Brazillian author. He has a unique way of teaching the lessons in life that he has learned through storytelling.

A few lessons from the Warrior of the Light.

Using one’s own madness

A warrior of the light studies very carefully the position he wishes to conquer.

However difficult his objective may be, there is always a way to overcome the obstacles. He verifies the alternative routes, sharpens his sword, and seeks to fill his heart with the perseverance necessary to face the challenge.

But, as he advances, the warrior realizes there are difficulties he had not foreseen at the outset.

If he waits for the ideal moment, he will never move from his position; he sees that a little madness is needed for the next step.

The warrior uses a little madness. Because – in war and in love – one cannot foresee everything.

Life is such that if you wait to gather 100% of every single detail before you can make a decision, others would have surpassed you. If you waited for the fog to clear, then what you see is what everyone else will also see. Given the perfect picture, anyone sane would make the same correct, best choice. This is exactly how *not* to beat the market.

CEOs often make decisions with incomplete data–and that takes a little madness. It’s about making decisions with the best information possible available at that time. Standing still through inaction is waiting to fail–and I’ll fail from action than inaction.

So when do you put yourself out there and wear your heart on your sleeve?
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Posted in changing the world, entrepreneurship, execution, failure, fear, goal setting, passion, perseverance, quotes, regular reads, self improvement, startup, strategy, things to ponder about, things to remind myself, values | No Comments »

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