Social networking technologies are changing the way customers and consumers interact with companies, their products and services. As an example, Amazon.com customer reviews and the ’search inside this book’ technologies influence my book buying habits; and this is not limited to just searching for opinions on books.

Social networking sites and technologies can be a gold mine for companies; in some aspects they are the online version of a focus group. Customer discussions and comments enable firms to get real-time feedback on their products, identify trends and test ideas with a diverse user community. However, building these online communities are not without challenges and effort, as summarized by Michael Bloch in the article Forums as marketing tools - tips and pitfalls.

For Dell, this challenge is a good opportunity to reconnect with their customers. As I mentioned on my previous post: Strategy 101: Revisiting Low-Cost Leadership with Dell:

At the business level, reiteration of the customer commitment and firm understanding of why the customer chose, and is going to choose, your company’s products is the next important step in starting your differentiation process.

So, in February 16, Dell announced Dell IdeaStorm and StudioDell. These new social sites complement their already existing Direct2Dell: one-2-one communications with Dell blog site, which has been in operation since at least July of 2006.

No doubt that the value of these sites is linked to the utilization of the ideas presented. However, it is certainly a great strategy for working closely with customers on the web. I am quite curious to see how it will evolve and change Dell’s brand, products and services. However, I do hope Dell will look beyond the customer input for new ideas and innovations. Managing customer feedback can be a challenge, as in some cases “customers may not know what they want, but certainly want what they know.” (Bob Phelps — Smart Business Metrics: Measure What Really Counts & Manage What Makes The Difference) As always, there needs to be a balanced approach, as highlighted in Ballmer’s interview with Fast Company.

“We can believe that we know where the world should go. But unless we’re in touch with our customers, our model of the world can diverge from reality. There’s no substitute for innovation, of course, but innovation is no substitute for being in touch, either.” Steve Ballmer

Social webs are a great resource for the firms; just don’t let them be the only source for your innovations.

About Dell IdeaStorm
Dell IdeaStorm is a social website designed for customers to share, discuss and vote for ideas as a Dell user community. The site provides a vehicle for the customers to post new ideas and wishes, and enables the community to promote/vote on these Digg-style. As Dell points out on the Ideas in Action site, they have every intention to utilize these learnings, as well as providing their responses for the most popular requests, such as the case for Linux distribution options.

Dell employees are monitoring IdeaStorm to gauge which ideas are most important and most relevant to you. And we’ll share those ideas throughout our organization to trigger new thoughts about how we evolve as a company.

As your ideas continue to pour in, we will use this page to provide updates on ideas that Dell is considering. We’ll also show you how your ideas are being put into action at Dell over time. Please check back to see your ideas in action.

About StudioDell
Dell also launched “Your Stories” section on StudioDell, similar to YouTube, for customers to submit their own videos showing how they use Dell products and services in their business and personal lives.

Technorati Tags: Social networking technologies, Social networking, Dell, IdeaStorm

The concept of technology goes back to ancient Greeks: online etymology dictionary states technologia as its origins:

• techné: meaning belonging to the arts, crafts or skill;
• logia: meaning sayings or speaking;

In the ancient times, technology was more than “gadgets”; it was mostly about the craftsmen passing their know-how, the art of doing things from generation to generation, and improving and innovating along the way. As the terminology evolved, it also acquired a scientific context: etymology of technology indicates that in 1859 the meaning “science of the mechanical and industrial arts” was first recorded, followed by the terms high technology in 1964 and high-tech in 1972.

Today, technology is more vital than ever to firms’ global competitiveness. Yet, technology is inherently difficult to manage with its constantly changing and unpredictable nature. As a result, the field of Management of Technology has emerged to help aid the technology managers through this complex maze by giving them the tools, processes, and the know-how they need to bring high-tech products to the marketplace. The U.S. National Research Council in Washington, D.C., defined management of technology (MOT) as:

linking engineering, science, and management disciplines to plan, develop, and implement technological capabilities to shape and accomplish the strategic and operational objectives of an organization (National Research Council, 1987).

In summary, technology management focuses on the intersection of technology and business, encompassing not only technology creation but also its application, dissemination, and impact. As technology managers, our job is to align the technology strategy with the firm’s goals and objectives, and to apply our know-how to manage the process and the results. As such, at a minimum a general understanding of technology and innovation, management, leadership, strategy, operations, new product development, project management, product marketing, organizational behavior, and product quality is needed to be successful in the role.

Technology management is a demanding and a rewarding job, as it requires the right balance of generalization and specialization, business and technology, big picture thinking and minding the details, as well as hard and soft skills. Here are some of my observations on where the technology managers often struggle. I would love to hear your experiences as well.

• Focusing mainly on a single aspect of the technology management process — Sure, we all have our strengths. However, technology management requires a multidisciplinary approach. Managing only one aspect of the project, such as technology, without much regard for other facets crucial to its commercialization success, is an early sign of failure. You can see this in products with poor maintenance and upgradeability, issues with overall usability, and failing when it comes to addressing customer needs, or costly manufacturing processes, packaging, etc.
• Executing the flavor of the month strategy — It is the job of the technology manager to ensure technology direction is aligned with the organization’s strategy. However, as Heraclitus stated, change is the only constant. If a change in strategy is not communicated effectively, and change management is not handled accordingly, the team will be left feeling as if they are executing the flavor of the month strategy.
• Failing at the know-how and not utilizing processes effectively — As I discussed in my other posts (Success is a Journey: How do you define it for your innovations?, Quantifying Innovation, or Your Golden Goose: Guidelines for Establishing a Patent Strategy) the process of managing technology will be different based on the type of innovation and where it is in its technology and product life cycle. Inappropriate application of processes will certainly hinder its success.
• Ignoring the softer side things — A big portion of the job requires emotional intelligence, and being able to manage change effectively and efficiently. Available tools and processes are not sufficient, and skills are required to maneuver the political landscape, and ability to manage bottom up as well as top down and sideways.
• Forgetting to wear the appropriate hat: leader, manager, strategist and technologist — A technology manager needs to be able flexible, and wear the appropriate hat as the context requires. We are the leader that communicates the technology vision and strategy, and many times the ones that rally the teams. We also need to strategize for the big picture, define the technology directions and also demonstrate proof of concept as required. Not to forget the fact that we also need to manage the day to day details with a multidisciplinary approach.
• Being oblivious to the influences of internal and external forces — It is too easy to stay focused on the day to day management of the details. However, as technology managers, we need to be mindful, and effectively and efficiently manage the opportunities as well as the threats. I have discussed this topic in detail in my previous posts: Single Minded Focus On Your Innovations? and How To Identify Forces Impacting Your Innovation.

Technorati Tags: etymology of technology, Management of Technology, technology management, technology manager

Every once in a while, we all need to be reminded of challenges of managing the innovation process and forces at play that influence an innovation’s commercial success. Over the weekend, I watched the documentary, Who Killed the Electric Car? For anyone that is knee deep in driving innovation in her organization, this is a good documentary to watch. It reminded me of all the various internal and external factors that could support or hinder an innovation’s potential success.

This post, without going into politics, will look at the available tools and methodologies for performing impact analysis. Once you have the results, what you do with them (strategic planning, risk management, etc.) would be part of your innovation and technology management process. It is also important to note that this analysis provides a snapshot view point in time. As such, depending on how turbulent your business environment is, you should consider a continuous scanning process.

Porter’s 5 forces framework (Competitive Strategy: Techniques for Analyzing Industries and Competitors) is a good starting point for analyzing the attractiveness of your market. The inter-relationship between the four external actors (potential new entrants, potential substitutes, buyers and suppliers) and the rivalry between the firms within the industry forms the five competitive forces. In summary, the greater the strength of the competitive forces, the greater the intensity of competition in the industry, and the less profit potential. These forces are summarized as follows.

• The threat of new entrants into the industry — potential entrants reflect the firms that are not yet in your market, but potentially could be lured in for various reasons, usually related to the similar factors as outlined in the ‘intensity of rivalry’ (below). However, these potential new entrants have to deal with several entry barriers:
• economies of scale that maybe available to large incumbents;
• experience curve effects already benefitting the existing competitors;
• access to channels & complementary assets;
• The threat of substitutes for the industry’s products or services — these are alternative but equivalent solutions. Threat of substitution is influenced by all factors effecting the potential entrants as well as the competition among the firms. Additional attributes to consider are:
• buyer’s switching costs to the substitute;
• relative price/performance, and how fast it is improving in the substitute’s industry;
• The bargaining power of buyers of the industry’s products or services — this represents the relative relationship between the firm and its customers. The factors effecting the buyer’s bargaining power is similar to the factors influencing the suppliers.
• buyer concentration;
• buyer’s switching costs;
• threat of backward integration: buyer set up subsidiaries that produce some of the inputs used in the production of its products;
• The bargaining power of suppliers of products or services to the industry — this measures how much a supplier can raise prices without the firm retaliating or switching suppliers. Suppliers include material and component suppliers, as well as skilled labor, technology, software and other inputs to the final product/service. The factors influence the supplier’s bargaining power are:
• importance of the factor to the user: the more important the given component/factor to the user, the more likely the firm has to accept unfavorable terms;
• supplier concentration: the fewer the suppliers, the more bargaining power the supplier has;
• firm’s switching costs: the higher the switching costs, the less likely the firm will switch suppliers;
• threat of forward integration: if the supplier can enter the buyer’s industry with its own competitive product, it has additional bargaining power;
• The intensity of rivalry among firms in the industry;
• growth rate of the market: slow-growth markets may increase intensity of competition among existing competitors;
• number of competitors: the more contenders, the more intense the competition;
• buyer’s switching costs: low switching costs make it easier for competitors to steal each other’s customers;
• firm’s exist costs: the higher exit costs, the more likely the firms will stay in;
• brand loyalty: less brand loyalty, more likely buyer’s will switch vendors;
• buyer’s price sensitivity: the more price sensitive the customers are, the more likely lowering price would entice customers’ to switch vendors;
• ability to differentiate: less opportunities for differentiation indicates less likely to keep existing customers’ loyalty;

Complimentary and Supporting Industries has been added as the Sixth Force to Porter’s model. A product’s complements enable its users to experience the full benefits of the product, such as the iPod and its infinite number of accessories. An industry with easy access to related and supporting industries may benefit from cross-compilation of ideas, common pool of technical talent, opportunities for joint innovation, and opportunities to share infrastructure and/or distribution channels. These opportunities can enable creative and innovative linkages with the complementer to further differentiate your product. However, at the same time, the threat comes if the complementer becomes a new entrant by integrating the offer into their product, thereby becoming a competitor.

We can further Porter’s forces by looking at the external forces that impact the business environment utilizing STEEP forces analysis (Social, Technological, Economic, Environmental, Political).

• Social —what are the current trends in the communities and relationships, and how the industry and technology influences those trends, such as: demographic factors (population distribution, age distribution, education and income levels), attitudes towards capitalism, individualism, environmentalism, church and religion, health and nutrition;
• Technological — what are the technological changes and their potential impacts, what is the efficiency of the infrastructure (transportation, education, health care, communication, etc.), cost and accessibility to power, new technologies, manufacturing processes and overall industrial productivity;
• Economic — how are the economics changing in the industry, such as:  economic growth, unemployment and inflation rates, consumer  and investor confidence, currency exchange;
• Environmental — what are the environmental trends and influences: impacts to firm’s production processes, affects on customers’ buying habits, perception of the company or product;
• Political — what is the political climate, its stability and risk, what are the various government policies and mandates, export restrictions, taxes and tax breaks, copyright and patent laws, environmental protection laws, union laws;

You can assess the impact of these forces using a range of –/++ to indicate how favorable (++) or unfavorable (- -) a given force is. You can also do further sensitivity analysis on your findings and by exploring what ifs: what if a given force changes by X value, or what would it take to make a given factor favorable? You can also funnel these learnings to your strategic plans and risk management activities. Again, the speed that your business environment is changing should dictate the frequency of this activity. For emerging and highly turbulent markets, you should consider putting in place a continuous environmental scanning process.

On a different note, ecosystem modeling allows you to visually diagram the interrelated roles, interactions and influences for your product. This will be a future blog topic.

The next step in your analysis should include the examination of internal organizational dynamics for additional insight. As Christiansen points out in The Innovator’s Solution: Creating and Sustaining Successful Growth:

A surprising number of innovations fail not because of some fatal technological flaw or because the market isn’t ready. They fail because responsibility to build these businesses is given to managers or organizations whose capabilities aren’t up to the task. Corporate executives make this mistake because most often the very skills that propel an organization to succeed in sustaining circumstances systematically bungle the best ideas for disruptive growth. An organization’s capabilities become its disabilities when disruption is afoot.

Radical innovations especially challenge the established firms as the conflicts can occur within existing resources, established processes and organizational values. Fear of cannabilizing their existing products, and concern for disrupting their well-oiled cash machine can quickly kill new and different ideas. Even when the products make to the market, sales force, unsure of the product and/or compensation models can easily drive potential customers away. This is why the role of senior executives is important, as they can create the needed interference between the new business and mainstream business, and also sense and redirect the business as the circumstances changes and new challenges emerge.

Christiansen also points out that the issue with disruptive innovations are rarely with the technology, but how the market is managed. Sustaining technologies continuously provide improved product performance, at least in theory. (I just had a flash back to the Microsoft Word 6.0 release…) Disruptive technologies on the other hand provide the market a different value proposition. They also tend to lack in product performance, at least in the near term.  However, they certainly provide benefits that niche customers demand. As such, identifying this segment of the market, captivating the visionaries and ideal spokes-persons, and selling the value proposition and benefits of the product (selling sushi vs. selling cold dead fish) becomes a key management issue.

These main internal and external factors can also be captured as part of your SWOT analysis (Strengths, Weaknesses, Opportunities and Threats), which deserves a separate post of its own. These tools can collectively provide the needed extra insight for your innovation’s success, as you will have a better understanding of what are the forces, i.e. opportunities and threats — internal and external, surrounding your innovation. Now, grab a pen ‘n paper, and brainstorm forces impacting your innovation while watching the documentary. As always, a bulleted list of items by themselves are not useful on their own, so make sure to funnel them to your innovation and technology management process.

Technorati Tags: innovation process, impact analysis, strategic planning, technology management, Porter’s 5 forces, STEEP forces

Cathy Park , a social entrepreneur in South Africa, had an interview with Ode Magazine on her experiences teaching business skills and life skills to juvenile offenders. Her experience has shown that there are striking character traits that the successful criminal and entrepreneur share.

• You need to take risks and have no fear;
• You need persistence and staying power;
• You don’t want to work for a boss;
• You need the right connections and need to know your market in order to supply that market with what it wants;
• You have to be prepared for the unexpected;
• You have to be self-motivated and self-determined;

So, what differentiates us? It comes down to the choices we make everyday: realization between instant gratification vs. hard work and time that it will take to reach our dreams, and taking accountability for our actions.

Peter Drucker would concur as he stated in The Effective Executive: The Definitive Guide to Getting the Right Things Done (Harperbusiness Essentials)

A decision is a judgment. It is a choice between alternatives. It is rarely a choice between right and wrong. It is at best a choice between “almost right” and “probably wrong”.

Here is to making good choices.

Technorati Tags: Cathy Park, entrepreneur

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“No. He’ll be an engineer…”

This Dilbert clip has been posted to YouTube. This clip had a whole new meaning for me after listening my son give his grandmother technical support over the phone… Yup, he’ll be an engineer!

The complete series for the show is available at Amazon.

We hit the tipping point tonight with my 8.89 year old son as we watched him provide phone support to his grandmother for using iMovie. I felt amazement and awe. I listened to the discussion intently as he took his time to understand the problem, explained the solution and walked his grandmother through the needed steps to get her going. At one point he even asked if it is OK for him to go to his Mac to assist more accurately. At the end he acknowledged that “After-all, I am the iMovie expert in this house!” My favorite quote of the night is:

“Are you good to go without me?”

It is mind-boggling to think how technology and people-friendly innovations are changing the landscape as we speak. Boundaries between the generations are blurring as technologies are becoming ever more pervasive and ubiquitous.

Don’t get me wrong, he is not just interested in all the new cool gadgets or games. Right now, his favorite activity is to play his dad’s old school games, starting with the original Zork. Remember DOS? The last commercial version of DOS was released in 1995 by IBM. Microsoft Windows Millennium Edition is the last version of a DOS-based Windows OS which was released in 2000 and was officially discontinued in 2006. In mere 5-years, if that, technology is completely made irrelevant. Think about it, product lifecycles are continuously shrinking… Without a managed innovation pipeline, what new ideas, products, services and businesses will you be bringing to the market continuously?

Maybe it is the engineer gene in him that is bringing back all the old cool stuff. In a way, we are reliving the pioneering days of computers through our son’s eyes. Ok, that is little exaggerated …

Dell has been generating quite a bit of news lately with Michael Dell’s return as CEO, and Kevin Rollin’s quick exit. There is a fair amount of discussion in regards to if Dell will succeed in turning around the company: with his vision, strategy and style. However, for me, as a curious observer of business turnarounds, Dell’s current dilemma is a great opportunity to visit business strategy 101 and reinforce the need for innovation for growth.

Dell was able to establish itself as the low-cost leader in the PC market, mainly due to its direct sales business model as well as the incredible efficiencies it achieved via its supply-chain strategies. Today, Dell lost its market position to HP and hopefully realizing that efficiencies are not the means to an end; competition is global and fierce; customers are constantly evolving and business can’t stay still.

Although economics 101 dictates that the demand increases with decrease in price, the real world doesn’t always follow this philosophy. In fact, commodization is a kiss-of-death for many firms: the price becomes the only way to differentiate; profit margins decline as increased volume isn’t sufficient; growth comes to a halt. This further impacts the company negatively as customers struggle to find a unique value and benefit in the firm, leading itself to perceptions of poor quality, poor brand and poor service. Unfortunately Dell is impacted with this perception/reality, as it is not viewed as an innovative company and is currently suffering problems with its customer service.

In the times of stress, it is human nature to resort to old habits and lead from our strengths or what we know best. For businesses, this tends to translate to cutting back on innovation investments and focusing on bottom line for margins or having a single-minded focus on its innovations. Along these lines, Dell is also planning to further improve its efficiencies in its supply-chain. I believe Dell has one of the best-in-class supply-chain efficiencies in the industry, yet it is quickly loosing footing. As such my logic dictates that although this strategy might help with its margins as the low-cost provider, its not going to drive the needed growth.

Change is constant, so is customer taste and buying patterns. Although today’s customers are price sensitive, they do prefer quality, innovation and customer service, and are willing to pay for it. Research shows that it can cost five times more to gain a new customer than retain an existing one. Unfortunately, Dell’s recent customer service problems seem to further alienate their existing customers. At the business level, reiteration of the customer commitment and firm understanding of why the customer chose, and is going to choose, your company’s products is the next important step in starting your differentiation process.

For growth, the firm needs to focus on its top line by retaining its existing customers and attracting new ones. New product and service innovations, as well as incremental value improvements to existing offerings would fuel the growth Dell needs. Sanjay Dalal of the blog Creativity And Innovation Driving Business shares his thoughts on the new products and services Dell can target for the new customer segments, such as: educational computers for students, cool computers for teenagers, appealing computers for women, the home bundle, and best business computers.

Although innovations are good, defensible innovations are what the firm needs. As I discussed in my post Innovation and the Degree of Innovativeness, innovation is multidimensional, and the more dimensions you are innovating (technology, process, product, service, business model, value-delivery, brand, design, quality, market, customer/segment, …), the more difficult for your competitors to copy you.

For Dell, innovating or updating their direct sale model to further support the new customer segments and products as Sanjal Dalal suggested, perhaps through strategic partnerships, would improve their competitive standing. Strategic partnerships, leveraging the strengths of individual businesses to form an alliance that is beneficial to both parties, is another method by which new growth opportunities can be created for a specific goal – promotion, product bundles, technology integration, services, channels… For Dell, strategic channel partners could also come in handy as Dell grows its non-US markets where the direct sale model is not central to consumer buying habits.

Ideas for innovation are everywhere: security and secure infrastructure is a concern for all enterprises, demand for mobility and connectedness is rising, green-ness is not hype and always there is a growing need for energy efficient systems, and customers need systems that just work as computing infrastructure grows in complexity. As the competition intensifies with globalization and new technologies, brand becomes even more important for firms as they compete for differentiation. Interestingly enough, I was never aware of the green-efforts that were pursued by Dell; perhaps another opportunity for improving their image.

Starting with your customer and your brand is good first step towards determining your overall strategy for growth. However, don’t stop there: look for dimensions you can innovate and continuously add value. These strategies will help in your quest for growth.

Technorati Tags: Dell, strategy 101, innovation, low-cost provider