Product Design Does Not End With Designing a Good Product

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Fun Run Jet Ski

Designing a good product is a tough undertaking. It generally involves a lot of trial and error and above all, patience. It is also expensive.

So why do so many products fall short of meeting their potential? Microsoft launched its new Windows phone via Nokia, and it failed to resonate with customers. The movie The Interview was launched by Sony pictures, and in spite of a ringing public endorsement from the North Korean Government, it failed to hit its targets. GM failed to resonate with consumers this year and found itself trailing most car manufacturers in each major category. Sometimes it is about having a good product. Other times, it is in the packaging around the product.

If you look closely at many of the products that fail, you will notice something very important. The products that fail started on the path to failure by not fostering a community for their users.

Throughout my career, I have tried to act under the assumption that good product design does not end with building a good product, but includes many other factors that can be influenced around the product – community being an important one.

Here are a couple of examples to frame what a successful community looks like.

Recently, I purchased a new BMW. Part of the process of purchasing a BMW includes registering on their website. Once you have done that, you are given a series of updates on how your car is progressing. Essentially, they are building your expectations regarding the delivery of the car. At some point, you are notified that your car is ready and available at the dealership. When you go in to pick it up, you are given a lengthy orientation of the vehicle. This is followed by a call and an invitation to joint a BMW expert at a future date to help you further orient yourself with the car. This is followed up by invitations to BMW events, parties, speakers and driving classes. All of these events and communications are aimed at two very important objectives. First, they want you to be a happy owner of a BMW. Second, they want you to join their community. They know that as a member of the community, you are likely to feel that you are giving up more than a car if you choose to purchase a Mercedes on your next go around. They are creating stickiness.

A great product has a great communications plan that works in harmony with it.

When I design products, I design a communications plan that addresses what happens when customers purchase, use and leave my product. The goal is to create stickiness and leave your customer feeling like they will lose more than just a product if they leave. They will lose the community they live in.

Other companies have similar views, although they might manifest themselves in different ways.

DirtyBit, a gaming company in Bergen, Norway is a producer of excellent multiplayer games. Their most successful game, Fun Run has over 45 million users. Dirtybit uses not only the game to communicate to their user base, but also social media and self- hosted public events. Their relationship with their users extends outside of the traditional boundaries of their product and into the social experiences of their audience. The result is that people are painting their vehicles with Fun Run scenes to show their solidarity with the game.

How many of you can say; “My customers repainted their jet ski to look like my product?”

Starting Something New in Scandinavia

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New BeginningsThis week concludes my last days at Innovation Norway. Officially, I am part of the dearly departed this Thursday. I will still be contributing to several companies in that region of the world but not as an Innovation Norway employee.

A little over a month ago, I sent out an email to the colleagues and companies that I worked with over the past two and a half years, and among the many responses that I received, one question resonated with me:

What advice would you give to Norwegian (and Scandinavian) entrepreneurs who are trying to start a business?

It’s a great question. So many of the entrepreneurs that I know in Norway struggle with how to approach their market. It is a complex question with a lot of possible answers that I will try to boil down to something digestible.

Accept that your market (Norway and the rest of Scandinavia) will mislead you.

On some basic level, most of the people in Norway should realize that they live in a bit of an economic bubble that distorts their view of the rest of the world. This distortion originates from the fact that Scandinavian companies and consumers are biased toward local products. If given a choice between an inferior, more expensive local product and a superior cheaper product, most will choose the local product. Part of this stems from the fact that Norwegian is not a common language globally, and few international companies focus on Scandinavia as an early target market. This leaves most consumers finding local products before they find global products and the result is that it’s easier to pursue local goods and services. But there is more to it than that. There is a great deal of pride in Norway about what is built in Norway. People from that region want to support local products.

So you might ask…what is wrong with that? The answer is nothing, if you understand that what you are seeing is not representative of global demand for products.

I visited MESH (an incubator in Oslo) about a half year back, and a young entrepreneur approached me with an application that he felt should drive a great deal of investment. He said to me, “I have 4,000 users, and that demands a high valuation and proves that it has the potential to go global!” The sad truth is that it means very little on an international scale. 4,000 users move the needle in Norway, with a population of 5.1 million people, but it is not representative of the sensibilities and demand of a global market.

Go where the money is.

 

One of the most interesting and disturbing aspects of working in Innovation Norway is the fact that the vast majority of the companies who walk in and ask for money are in for a tough education. Innovation Norway is not set up to financially support all of the fledgling businesses in Norway, let alone the ones that it has already funded. Many of the businesses that I have seen live from one grant to the next, and find themselves perpetually starved for capital. Once you have started your business, the best advice anyone can give you is to figure out where in the world funding is available for your product or service, and go there to raise money. Many markets may not be funded in your region, outside of initial seed capital from the government.

Furthermore, the venture funds are most likely too small for most companies. Many of the larger investment funds receive a significant portion of their capital from the government. This is the government’s way of injecting capital into the system to enable and fund innovation. The problem is that it is like putting a Band-Aid on a much bigger problem. The investment community cannot raise sufficient capital on its own from local (government) sources without such intervention. This means that the pool of institutional investors is far too small for many industries.

You should also understand that competition is good when you are raising money. If you only have one potential source of capital, that source can make all sorts of demands on you, and there is little you can do about it. Find the market that is funding what you are doing, and drum up as much interest as possible. Many of you will find this a difficult suggestion, as most investors want you to live where they fund companies. This has to do with the fact that most of them do not want to travel for board meetings. Regardless….this is a price for raising money that many of you will have to pay.

Find help from people who operate in your market…rather than simply live in your neighborhood.

Many companies bring on advisors and board members from a local pool of people. This can work if you live in an area where there is a large pool of highly qualified experts in your chosen field. It does not work when your pool is more limited. If I were looking for experts in fishing, shipping or energy, Norway is one of the first places that I would look. However, that would not be the case if I needed an expert in telecommunications, because the pool of people simply is not big enough.

Look at the regions of the world that have the best talent pool for what you are doing, and draw from that pool. To the extent you can, bring “known” people into your company. Almost all of my start-ups have been drawn from the same talented groups of people. However, I do reach outside of that when I need experience that my immediate team does not offer. Working with people who are simply on-hand often leads to hardship. When I look back on my own failed endeavors, I can usually trace back the problems to the people who were involved (user experience designers who did not have the drive or talent to design a product, or marketing people who did not know how to drive a users attention). And yes…on occasion, I was not the right fit for what I was trying to do. Surround yourself with the right people, and you are more likely to have a successful outcome.

Learn from failure rather than hide from it.

 

This is the hardest piece of advice for people to follow in Norway. One of the advantages of living in the Silicon Valley is that it has a culture that accepts failure. The general idea is that if you are going to fail, fail fast. And if you fail, learn what you can from the experience. Anyone who tells to you that success is not driven from the lessons of past failures is not being honest with you. Embrace failure for what it is…a learning experience.

With that said, it is particularly hard to follow this advice in Norway because the culture is not particularly accepting of failure.

I am of the opinion that when you live in a relatively small society, where everyone knows what is happening with…well…everyone; there is a natural desire to avoid embarrassment or condemnation. I once asked a friend in Tromso what he thinks drives this desire to hide failures, and he responded by telling me, “Norwegian’s are not empathetic about failure…they are critical of it”. I do not know if this is simply one person’s opinion, but I do know that tolerance of mistakes does come from empathy.

So my advice is simple. Help people to learn from their mistakes, as you would have them do with you. Embrace failure by saying…this was an expensive lesson that I know how to avoid in the future.

As many of you are on vacation or are returning from vacation, I hope that you will find my words comforting, and that they will help you grow with the opportunities you are pursuing. J

 

I wish you all every success.

 

 

Defeating Darth Vader in Your Office

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Darth Vader

Over the holidays, a close friend shared a very difficult situation with me.  One of the members of his company found a way to hold his company’s IP hostage in return for additional compensation.  It started with this nefarious individual asking for administrative access of the company servers  for some changes that needed to be made.  An innocent enough request in a small startup. Things went very wrong when he logged into all of the access accounts and changed the passwords.  He then phoned my friend and threatened to leave (with the company IP) if he was not granted additional stock.  This was a few months after he committed to staying after he received a large allocation of stock options.

This is where my friend found himself with a very difficult decision.  He was forced to ask himself two very difficult questions…

Do I give him more stock? or  Do I fight him and deplete the company’s scarce capital?

My friend decided to give in and provide the options.  The consensus at the time was that the risk was too great for the company and the employee could be managed (even after his transgression).

My friend was wrong.  Two months after receiving the new options (and burdening everyone with a great deal of drama), he left anyway and tried again to hold the company hostage.

I was very glad he shared this with me and empathized with his situation.  I think that most people who work in hi-tech can identify with someone who had to deal with an aspiring Darth Vader.

This is what I have learned from my own experience.

First, you should never put yourself or your company in a position where it can be held hostage.  If you are in that position, you have already lost more than you are likely to understand.  One of the most common mistakes people make is not putting into place some simple safeguards to protect the company.

Second, if someone attempts to hold your company hostage, you should remove that person regardless of the costs.  In the heat of the situation, it is hard to understand that companies can be reincarnated with some creativity and very little financial costs.

Third, once you negotiate with a terrorist, you will always be negotiating with terrorists.  People are conditioned by their experiences.  Once you give in to someone’s poor behavior, you are letting them know on some fundamental level that what they did is OK.  The behavior will likely continue or even get worse.  In the case I mentioned above, it got progressively worse and ultimately drove some good people out of the company.

Fourth, get your board and your personal advisors involved at an early stage. Many people look at this sort of problem as something they should be able to handle on their own and try to keep from others. This is almost always a mistake.  As it turned out, many of the people whom were advising my friend had dealt with similar situations and could have provided him with insight as to what his options were and how to best handle this sort of situation at an earlier stage than he did.

Here is how you can identify the problem before it starts…

Corporate “Darth Vader”(s) do not always look the part.  Often, they are capable people who feel that they have not been fairly compensated.  Regardless of their motivation however, here are a couple of ways that you can identify them.

1)   They often compare their value to others in the company and highlight that they are the only people who can make the company successful.  Everyone else in their view is expendable.

2)   They often insist on absolute control of their area.  If they are an engineering lead, they will insist that all communications go through them and nobody else.

3)   They will try to assassinate people who threaten their authority by delivering ultimatums to remove these people or by shutting off help to the people they do not like so that their perceived competition will fail.

4)   They blame others for their failures.  If they are late on their deliverables or are going to miss their deadlines, it is someone else’s fault.

5)   They hold back critical information about their work to gain additional leverage or control.

6)   They do not “train” their team members for leadership roles.  Why should they? It is not necessary if they intend to make all of the decisions.

This is how you prevent the problem from ever starting.

The most concise answer I have is hire good people, and treat them with respect, but put reasonable safeguards in place that are difficult to circumvent.  For those Reaganites out there, the operative phrase is “Trust but verify”.

Here are five easy steps I always follow.

First, every employee (or contractor) of the company should sign an IP Agreement.  This agreement stipulates that whatever IP that is developed for the company stays with the company and cannot be removed without the express permission of senior management or the board.  This protects one of the two key assets of the company.

Second, all employees (or contractors) should sign an agreement saying that they are not allowed to poach employees of the company.  Often when people leave a company under less than ideal circumstances, they will try to “help” other employees to leave.  This protects the other key assets of the company.

Third, administrative control should be maintained by at least 2 key people at all times.  This means that if the administrative interface is accessed, the ability to modify access should be based on an authentication that the CEO holds but his key people can utilize.

Fourth, all IP should be automatically backed up to a system that only the CEO and the board can access.  As with the first measure, this protects your intellectual property.

Finally, the greatest asset of any organization is its people.  You must always maintain the viability of an operational team for the company.  This means cultivating back-up options for critical roles in the company to reduce risk.  It also means that you have to protect your people when you have a less-than-honorable person in your midst.

Where people are concerned, there are always complications.  Looking back on my experience (and that of my friend), there were plenty of warning signs and opportunities to prevent this type of situation from occurring.  What hinders you here is faith that people will always do what is right.  That is simply not the case.  Most will, but some simply do not live by a moral compass or will justify their extreme behavior with their view of what they deserve.

An ominous first article for the year but an important topic nonetheless. Don’t give in to the Dark Side. 🙂

Failure Is Your Best Teacher And A Roadmap For Success

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Reading a Map

As the New Year approaches, I find myself embracing the cliché and reflecting on 2013.  Over the year, I have seen some striking successes such as companies receiving funding, products launching, and new teams coming together.  I have also witnessed the failure that is inevitable with those who attempt to do what is new.

In most cases, I watched those who failed over the past year be consumed with their troubles…they let their failure own them.  They entered that dark world where they think they cannot come back from their situation.  The solution is not to focus on what went wrong, but rather what they need to understand from their failure.

This message is addressed to those people who need to understand the value of failure.

There are three things that we should all try to remember about failure:

Failure should be embraced.  Its necessary to grow.  I believe that most fail before they succeed in business.  The more adept people learn from those failures and call them lessons…occasionally, they might refer to their failures as an expensive education.

After failing over and over again to perfect the light bulb, Thomas A. Edison stated “I have not failed.  I’ve just found 10,000 ways that won’t work.”  Failure is about discovery and understanding would you would not do again.

Failure is about strategy.  I have failed over the course of my career many times but I have learned that the key is to leave yourself with options to recover.  In other words, it is important to have contingency plans.

I learned this lesson the hard way

While working at Kadoink, we found ourselves running out of cash.  During the 2008 downturn, there was a pullback from one of our financial backers and we were forced into a massive downsize and ultimately the sale of the company.  The lesson learned from this is that we should have cultivated more alternatives for financing and been more sensitive to the economic environment.  The other lesson I learned from Kadoink is that revenue is the best Venture Capitalist.

Try to look at each decision point and ask, “What will I do if it does not work out?”

Failure is a good roadmap.  If you look out to the universe of companies you are competing with, you will generally see a landscape dotted with failure.  Facebook stuck with a one size fits all solution, opening the market up for vertical solutions like Pintrest to come in and win market share.  Similarly, Apple’s recent announcement to launch a low cost consumer phone (5c) is now diluting its premium brand while lowering the overall cost of its products and leaving the company vulnerable to low-end competition.  Microsoft is focusing its advertising campaign for tablets on Apple rather than Samsung, leaving the majority of the market un-countered.

Looking at the companies around you, you will see failure everywhere…and you will see opportunity.  Use the failures of the other companies in the market to avoid the same pitfalls.  Let their disasters be your education, your roadmap and ultimately your success.

I wish you all a happy holiday and hope that you will learn from failure and find success and the market of your choosing.

Judge at UCLA’s Global Access Program

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On December 7th, 2013, I have the honor of participating as a judge at UCLA’s Global Access Program (GAP) finale.  Several companies will be presenting their business models and plans for review in this event.  The event will be closed to the general public but anyone who is in the area is welcome to reach out to me to grab a cup of coffee.

Never Under Estimate the Last Mile

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Last Mile

Having grown up in La Jolla, California, I have fond memories of bike riding with my friends down to the beach during summer break.  I remember that during the summer of my 12th year that an ice cream truck broke down about a quarter of a mile from the beach and the ice cream man was selling all the ice cream for 75% off to anyone who would buy it.  The problem was that the refrigerator on the truck was also broken and everything was going to melt.  The only thing he could do was to sell to people who happened to walk by his truck.

Looking back at that day, I realized that my neighborhood ice cream man did not have a back up plan.  He did not have an answer for two essential questions:

1)   What can I do if I cannot get to the beach with my ice cream?

2)   What can I do (in an age prior to cell phones) if my truck breaks down?

He did not have a good plan for the “Last Mile” of his delivery.

Every business should have a plan that addresses how a product is delivered to its target audience.  That plan should also account for what can go wrong as well and what the response will be.

It is a difficult thing to react to a problem when your feet are to the fire and you have to find a way to deliver. However, prior to that moment, when you are not under the intense pressure of a delivery, it is easier to put together a comprehensive plan.

Here is what everyone should consider regardless of the product you are trying to deliver.

Understand what it means to miss a deadline.  Have a back-up plan should your delivery fail and be prepared to follow it.  If your engineering team is late to deliver a product.  Know what adjustments you will make to sales and marketing and how you will deliver the news to your existing or potential customers.  All too often, a company will slip a delivery date and not communicate the issue with their customers which ultimately leads to a crisis of confidence.

If you look at Apple Computer’s announcement of the iPad Mini in 2013, it was clear that they were having a delivery issue.  To address it, they announced the product in anticipation of the holidays and provided a new, accurate release date.  Detaching the shipments of iPad Minis from the shipments of the iPad Air likely caused some logistical challenges but those costs were far outweighed by their maintaining consumer confidence.

Postpone the launches that can kill you.  If the product is not what it should be and will likely undermine consumer confidence in the company, postpone the launch until the problem can be corrected.  If you look carefully at the majority of the mishaps in the marketplace with respect to product launches, most of them could have been avoided if the companies had not held fast to their delivery dates.

Not to pick on Apple, but they have one of the more infamous examples of this problem.  Apple Maps was launched with significant quality control issues.  It curtailed the growth of the platform and ended up costing the jobs of several of the key individuals involved.  In addition, hundreds of news articles were released condemning the release.  Certainly a problem to be avoided.

I have been in the position several times of having to make the difficult decision to sacrifice the launch date for product quality.  As a general rule, I tend to favor quality above most other areas of the delivery.

Prepare for what will likely and unlikely go wrong.  Plans often go as far as delivering a product to the customer but what happens next is often a surprise.

Case in point, Nikon produced the D600 Full Frame SLR Camera in 2012.  The product is extremely competitive and by all accounts, one of the best performing cameras on the market.  But, it was not perfect.  Soon after shipping, it was found that the camera sensor was showing oil spots and an excessive amount of dust.  Consumers started to complain but the company did not have an adequate plan to address the problem. The problem got worse and was exacerbated by the fact that the company chose not to publically acknowledge the flaw.  The result was the loss of consumer confidence and a large number of customers changing allegiances to Nikon’s rival Canon.

Formulate a plan for how to make the customer experience a palatable one.  Work out what you will do if the unthinkable does happen, and understand that the last mile of delivery is critical to the success of any product. Good product people understand this problem and make sure that the outcome of a product launch is as predictable as possible.

October 25th, 2013 – Innovation Management in a Global Perspective

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Norwegian Business Council

I will be lecturing entrepreneurs at the Marriott at Union Square (Sutter Street) on Silicon Valley Trends at 8:30am.  This will be an exciting lecture and discussion based upon a wide series of interviews and discussions we have conducted with scores of companies, venture capitalists and associations.

Following the presentation, I will be participating on a review panel for investment ideas.

This event is sponsored by the Norwegian Business Council.

How Politics is Losing Sight of Good Business

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Gerrymander

I have always viewed people who discuss politics in a business environment as being a bit annoying.  I truly do not care if someone is a Republican or a Democrat.  What I do care about is if they do their job and how they get along with other people in the company.

However, today, with a government shutdown looming and for a brief moment, I will join the ranks of those who discuss politics and make a “political statement”.

I believe that the single most destructive group of laws passed by politicians on both sides of the aisle relate to Gerrymandering.  For those of you not familiar with the concept of Gerrymandering…it is the process of setting electoral districts.  This is where you look at the social and political demographics of a region and you redraw who is voting in each region according to “like preferences”.

On paper it sounds good…I get to vote for people who share my interests.  It assures that I am represented by someone who also believes in my interests.  It might mean that people from a predominantly Catholic region might have a Catholic representative…or maybe an area that dislikes gun control can vote for a representative who also dislikes gun control.

But there is a problem.  One of the powers of a good democracy is that our elected officials have to strike a balance to meet the needs of all of a nations constituents rather than just their own.  The problem with having all of the same social/political demographics in a voting district is that diversity is lost.  It means that if one region has extreme political or economic views, the elected representative has to adhere to those views or risk their next election.

The result is what we have today.

  • Representatives who have to make constituents with very particular interests happy rather than being forced to find the compromise in any situation.
  • Pandering to the lowest common denominator rather than following the greater good.
  • Focusing on winner take all rather than we can all win together.
  • Ideology above diversity.

So why does this discussion belong on a website that covers business issues?

The United States (arguably the greatest country in the world) is moving towards another moment in history where we will fail to shine.  Where a group of elected officials will move us ever closer to economic ruin over ideology and religion rather than recognize that politics is really about compromise and making tough choices that keep the economy going.  A good economy gives enables us with freedom to buy things like cars, guns, food and common necessities.  It also provides fuel for education, arts, business and yes…even religion.  A poor economy undermines all of it.

In other words, our Congress is on their way to making choices that are bad for business.

Let us all hope that our elected officials listen to fewer of THEIR constituents and pay attention to the needs of ALL constituents.

Technical Incubator (TINC) Kickoff – Fall 2013

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I will be kicking off the Technical Incubator (affectionately known as TINC) for Innovation Norway from August 22-24th in Oslo (Innovation Norway Boardroom).  The program will continue in Silicon Valley at Innovation House where I will be an Executive Advisor to the companies we are working with.

This will be an exciting event because not only will we be bringing over several new Hi-Tech firms but we will also launch our first Medical TINC program (MED-TINC).  This program will highlight four companies that Innovation Norway has invested in and believe have great international potential.

-Mark Robinson “Productdude”