TV pilots, especially the successful ones, are a great analogy for how to conduct product concept demos. At least, that is the insight I gained as I was watching the pilot episode of House M.D. You see, I am working with an early stage startup who’s getting ready for their demo to secure more funding. So, my goal is to get some creative juices flowing and get connected with my muses for more creative powers… So, lets take a look at how to build a successful product demo by dissecting a pilot episode.

First, you gotta start with a compelling concept. This does not mean you spend the next 20 minutes lecturing someone in the coolness of your technology. But, it is about focusing on the problem that you are solving, and succinctly explaining how your product solves it and why people will buy it. The key is to highlight your unique differentiation, your original angle, so it captures interest and makes people curious.

Once you got the interest, next is your story line. As you are putting your story together, keep the focus on what makes you and your product unique, as well as what its key selling points are. Remember, it is not about showing every single feature of your product, but more about incorporating your purpose and your compelling concept into your demo. If you say everything, you end up saying noting at all… So, build a story line around what matters, such as your users, and make it fantastic.

You also need to build in drama and diversity. Remember, to make it stick, you gotta make it simple, concrete, credible, emotional and bring unexpectedness with each story (Made to Stick: Why Some Ideas Survive and Others Die.) What will make the show catchy so people will tune in week after week, season after season? So, talk about the state of the industry, where things are heading, who are your competitors, why they can’t copy you and how you plan to sustain your competitive advantage. Make it exciting as you talk about the commercialization potentials of your product, what you will leverage and how. Most importantly, make it stick!

What about the special effects? Certainly who you are, the brand and the image of your company and product, needs to come through loud and clear during the presentation. However, have you ever seen a pilot episode having a better special effects than even the first season release? Make the quality of your presentation (images, graphs, …) as great as possible, but don’t forget about what really matters the most.

Lets not forget your cast and crew. After all, chemistry and ability to work together on and off the set is just as important as the artistic credibility of the individuals. So, highlight your team and their background. Especially if you have exceptional skills and experiences in the team. Remember, you gotta be credible! Not to forget truthful and passionate about what your are doing. You can’t tell it; you have to show it and mean it!

Lastly, don’t forget to study your audience before the presentation. Think about it, pitching The Man Show to Lifetime Movie Network makes as much sense as Chewbacca living on the planet Endor. So, research the backgrounds of the individuals you are meeting with and tailor your presentation to deliver to their requirements. Be confident and comfortable with your audience.

This covers the key elements of building your demo. Now, your script also needs to deal with your business model. The amount of time you need to spend on it during your demo will mainly depend on two factors: 1) how far along you are in your business; and 2) your audience. For early stage startups, many investors look at the business model as a moving target. So, with that, your story, the problem you are solving, how you are solving it and what you have prototyped is far more important than any 5-year projections.

However, that doesn’t let you off the hook. You need to have a clear understanding of your business and be able to sell them on your elevator pitch. So be ready with an executive summary of your business plan that not only they can walk away with, but also compels them to take action. In a way, this is the rolled up summary of your presentation that is clear, to the point and exciting. And, not to forget realistic.

With that… Lights, camera, action!

Technorati Tags: business pitch, product demo, chewbacca

“We cannot direct the wind,
but we can adjust the sails”
— Contemporary Western Proverb

Your firm is a living organism, a complex system. As with all living systems, it self-maintains, self-renews and evolves. The firms that recognize themselves as a living organism, a learning organization are aware of their environment, their place in the ecosystem and the shifts that are occurring. This awareness and sensitivity to internal and external changes gives them the flexibility to adjust and adapt.

“Adapt or die” is a common phrase that highlights the importance of survival for firms. As firms adapt and evolve, the organization determines and selects the traits necessary for the survival and through its culture continuously reinforces it. This continuous process of adaptation and evolution further ensures the success and survival of the successive generation.

The life-cycle refers to our knowledge and generalization of living systems, the principles and laws that govern life from birth till death. As businesses, we also go through our life-cycle stages. As always, these are guidelines and not definite steps. As with my son that skipped the crawling stage and went to straight to walking, firms can also skip stages. Here are the common stages of a business life-cycle:

• Seed: Similar to a plant life-cycle, the seed stage represents the germination of a compelling concept and the push for finding the first set of customers to validate the idea. The firm’s main challenge is market acceptance, and managing resources and time effectively.
• Startup: This stage is characterized as customer acceptance, where the focus shifts to obtaining new customers and delivering on the product’s promise. Usually at this stage, the firm has enough customers, are able to keep them satisfied and the focus is shifting from survival to managing revenues and expenses. The firms’ main challenge is to have checks and balances to ensure they are on track, and managing the burn rate. This is where you don’t want to run out of money…
• Growth: Congratulations, you have proven the idea, showed the market validity and are now acquiring many more new customers. The growth stage is a milestone that marks the validation of the idea, which also means increased competition. If the firm is focused on growth, it will strive for operational excellence, proper scaling of the product and the business, and will look at ways to expand into new businesses, markets and customers.
• Decline: This stage is usually marked by the reduced revenue and profitability. At this stage, there may be a crisis that calls for action and renewal. Or, the organization might be the frog in a pot of cold water, slowly being boiled, not realizing the situation they are in. All focus is now on managing negative cash flow and costs.
• Exit: The exit stage is all about closing the doors whether due to bankruptcy, selling the business, acquisition by someone, … This process mainly includes proper valuation of the company. There maybe psychological and financial impact that should be managed.

Just like a child growing up, each stage is a change, requiring different nurturing and focus areas for its survival. Yet, basics are needed for survival at every stage: basic management skills, basic financial knowhow, basic marketing competencies. In addition, there are also other factors to consider:

• Clarity on what you are and what you are not. This is important for your internal decision making, for your customers and your brand image. This continuous adjustment, explicit commitment and mutual adjustment from everyone is needed to achieve results.
• Know how you compete. Many new firms excel because they stress customer service and flexibility over what established firms can offer. This coupled with focus on high-quality products, flexibility in responding to customer needs and product customization gives them a boost in the market over competition.
• Innovate while managing your core business. It is too easy to put all your eggs in one basket or over commit yourself. Innovation and technology strategies correlated with growth, but need to be managed.
• Understand other life-cycles in motion, such as those of your customers. Where they are in their adoption curve drives their purchasing behavior and risk profile.

Technorati Tags: business life-cycle, business survival skills

Strategic planning is all about the future: where you are going over the next 3+ years, how you plan to get there and how you know when you arrive to your destination. However, your success at your strategic planning all depends on how well you know yourself, and your starting point.

Here are few key areas where you should build a good foundation and understanding in order to achieve success at your strategic plans. It is a good starting point, but not all inclusive. Please add to this list with your experience and insights.

Know yourself
This is all about self-examination and being introspective. It is about recognizing your strengths and weaknesses, understanding your distinctive competencies and realizing your competitive advantage. This process requires you to be true to yourself about who you are, so you can chart a course for who you want to become.

Know your customer
You want to understand your customer better than your customer understands herself. What keeps them up at night; what they don’t foresee today, but will need tomorrow; what motivates them to buy and turns them off; what makes them successful; why their customers prefer them to others; how are they profitable … This is where you are wishing for a mind-meld approach to getting to know your customer. In the end, you want to become a specialist in your customer’s businesses. It will help you understand their articulated needs, but also help you innovate for the unarticulated opportunities.

Know your competitor
You need to understand your competitors and your industry in order to play the game. What are the strengths and weaknesses of your competitors? Why are your customers choosing your competitors’ products? What is the layout of the industry structure; how is the ecosystem playing out; what are the trends; … These will help you to identify new opportunities and potential threats.

Know your data
What do you need to insure a sound decision making process? What key performance indicators do you need to benchmark and watch for? Always remember the saying: garbage in - garbage out.

Apply differentiation
There is a subtle yet important difference between being different and differentiating yourself. You don’t just want to be different. In everything you do, you want to offer significant value over your competitors. You want that value to shine through your brand image where your customers, current and future, can clearly recognize it.

Create your safe haven
We are living in a global world where competition is everywhere and customer loyalty is in demand more than ever. Recognize the challenge, and figure out how to create high entry barriers to protect yourself using your strengths. Aside from patents, look to build exceptional customer relationships, alliances and partnerships.

Know your resources
There are always more things we want to do than would fit into the time and resources available. But, that is no excuse to spread your resources too thin. Multi-tasking, frequent context switching will kill the productivity of your team. Instead, prioritize and stay flexible.

Be agile and adapt
In a way, everything is in a constant flux and all things change. So, be alert, stay in control and watch for shifts in the marketplace and in your customers. Recognize the changes, be agile and adapt accordingly.

Minimize your dependence
No doubt we can’t do it all ourselves and we need help. At the same time, recognize your dependencies and work to minimize them. This could be anything from your one customer, a product, partnerships or alliances.

Technorati Tags: strategic planning process, strategic plans, know yourself

You might have read various customer reactions to Apple’s iPhone price and product line adjustments. Overall, I would bucketize the comments into 5 general categories:

• It is only a fad and you get what you deserve;
• I am extremely angry at Apple for doing this to me;
• They didn’t deliver any of the updated functionality they promised;
• You are an early adopter, you can’t complain about the price;
• Anything & everything else;

So, what does that mean about iPhone customers? Everett Rogers, early researcher on the topic of diffusion of innovations, highlighted the fact that not everyone adopts innovations at the same time or the same rate. In his book, Diffusion of Innovations, 5th Edition, he described the adoption process as a sociological activity where everyone proceeds at her own pace based on her perception of cost/benefit analysis and emotions. Rogers identified 5 categories of adopters, and he observed that if you look at the cumulative number of adopters over time they follow an S-shaped curve.

• Visionaries/innovators have a high level of risk tolerance and the ability to deal with uncertainty. They love new ideas, new technologies, and are willing to deal with setbacks, even if it will cost time and money. In this fashion, they are crucial to the innovation process as they bring new ideas and innovations into society and seed the diffusion process. The first 2.5% of the adopters.
• Early adopters (the next group) are looked upon by society as opinion leaders as they take more time to determine whether to invest or not. Their acceptance of new technologies and innovations increases others’ confidence, and as change agents they speed the diffusion process. Studies have shown that early adoption entails the ability to comprehend and handle complex and ill-defined technologies, and that these individuals tend to be well-educated and well-financed. They represent 13.5% of the category.
• Early majority follows the lead of the early adopters. They are cautions towards change and new ideas. However, once the early adopters’ experiences indicate success, they follow. They represent 34% of adopters.
• Late majority exhibits skepticism and caution, especially if there are unanswered questions about the innovation. However, they respond well to peer pressure and eventually adopt the new technology. They represent 34% of adopters.
• Laggards, as the word indicates, lag behind everyone in the adoption curve. So much so that by the time they adopt a technology, something newer has already been introduced. They represent the final 16% of adopters.

(In case you are wondering… I am an “early adopter” who is offset by a “laggard” hubby (self-proclaimed Luddite). In the end, it is a nice balance for our relationship.)

Apple is expected to have 10% of smartphone sales by the end of 2007, and just after a few months of release they reached their first million handset sales. Considering this, and reading through customer comments, I can’t help but wonder if I am looking at three generations of adopters mixed into one: inventors, early adapters and early majority.

It is evident that we live in a world where the development cycles are continuously shrinking and firms are looking to introduce new products at faster rates. Steve Jobs is pushing it further by readjusting iPhone’s price to be more competitive with the market. However, as our ancestors said, there is time and place for everything and nothing is without consequences.

Previously I looked at the innovation lifecycle and how one can define success goals for each phase in the model . Do you think acceleration of the adoption curve interferes with innovation’s natural progression, as the firm needs to manage the conflicting interests early in the technology’s lifecycle?

Technorati Tags: iPhone, diffusion of innovations, implications of increased adoption rate

There are many things to consider during your innovation journey: insights into your customer and markets, good understanding of your ecosystem and its complex interactions, being comfortable with uncertainty, your culture and its dynamics, focusing on concrete milestones while managing to a long-term vision, and even a bit of luck.

Peter Drucker has boiled down the essence of the innovation process into the following three necessary conditions: innovation is work, innovation is built on strengths and innovation is an effect in economy and society.

Innovation is work

“There is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new system.”
- Niccolo Machiavelli, The Prince

Drucker indicates that innovation is work; it is hard, focused, and purposeful and makes great demands on diligence, on persistence, on commitment and requires resilience. Winston Churchill made the statement “To improve is to change; to be perfect is to change often.”

It is important to remember that innovation is not a linear process, but an iterative one. You learn by doing, where you discover market and technology unknowns and make course corrections on the fly. No wonder the traditional business planning falls flat in the face of the innovation process. Instead you need to utilize planning tools that are more appropriate, such as the assumption based planning processes.

Innovators must build on their strengths

Drucker also points out that innovators must build on their strengths, that innovators look at opportunities over a wide range, but evaluate these opportunities on the merits of their fit with the innovator herself, and with the organization.

Hamel and Prahalad define core competency as something that a firm can do well, such as technical know-how, specific processes, design skills, innovative culture, or relationships with customers and suppliers. However, more specifically, a core competency needs to meet the following conditions:

• Has a direct customer benefit, such as lower cost, key feature/functionality, …;
• Is difficult for competitors to imitate, thereby providing key differentiation;
• Has the ability to leverage and utilize the competency in other parts of the firm, including products, technologies and/or markets;

Jeffrey Phillips of Innovate on Purpose shares a key observation: “consider your core competencies when you generate and consider ideas, but don’t define them too narrowly or you’ll likely miss a great opportunity - one that exists at the intersection of your capabilities and anothers.”

My experience and past interviews in large organizations have shown that opportunities that are adjacent to the organization’s existing competencies help increase the innovation’s success rate. Along the same lines, there is a higher degree of failure on projects that did not have synergistic fit with the organizations’ strategy or existing workforce competencies.

Building new competencies in an area is a valid reason for pursuing a new innovation. M&As are often used to close a competency gap, and to acquire new ones. However, about two-third of M&As fails. At the same time, the innovation process requires constant vamping of your core competencies and exploiting them in unique and creative ways. So, not only do you need to build on your strengths, but also you do need to have the competency to further grow your strengths.

Innovation is an effect in economy and society

Finally, Drucker indicates that the innovation is an effect in economy and society; it is a change in behavior of customers, in how they work and produce something. As such, he points out that the innovation always has to be close to the market, focused on the market, and be market-driven.

Yet, market adoption and acceptance is a complex process where one rarely has the power to control. No wonder resilience is highlighted as an essential strength for the innovators. Innovators use their experiences and skills for solving problems, where their background and interest define their innovation’s target focus. However, the real work starts with the answers and insights they gather through this experimentation.

With that, we came full circle – innovation is work, it is built on strengths where strengths continuously need to evolve, and it is an effect in economy and society, where its adoption requires even more work and new competencies for it to be successful.

Technorati Tags: innovation process, core competency

The desire for growth is built into our DNA. Today, growth is not just expected but demanded from every company. Somewhere along the way, the definition of business growth skewed and became synonymous with an increase in size, number, value or strength. We have seen too many examples of bad growth driven by short-term focus on the wrong measures of performance. Classic examples are the dot-com bubble burst, Enron, implications of population growth on our natural resources, and even the growing pains felt by firms, including Google.

I found Robert M. Tomasko’s definition of growth refreshing: moving beyond your self-imposed boundaries and constraints to achieve your full potential and deliver unique value (Bigger Isn’t Always Better: The New Mindset for Real Business Growth). As he outlines, the growth process, as with purposeful change management, involves:

1. putting aside old ways of perceiving the situation;
2. leading change, first within yourself and then within the organization, towards this new perspective;
3. building capabilities to support this new perspective;
4. reorienting and readjusting your value delivery chain and ecosystem to align with this new perspective;

I previously wrote about creativity, invention and knowledge and how they are the foundation for innovation. Here, innovation, implementation of a new idea for the purpose of creating value, is the fuel for growth. And, innovation management is your control system. Combined, they will help achieve sustainable growth for your firm. So, here are the necessary conditions for sustainable growth.

• Offer clear value and benefit to the company, customers, suppliers, industry and the market through this change or new perspective. It is ultimately about people: it is a change of behavior, processes, how people work and produce work. If there is no clear and compelling benefit, it won’t stick. So build close linkages with your workforce, lead users, customers and suppliers. Strive to go beyond relationship building to achieve an emotional connection with them. As Guy Kawasaki stated, make evangelists, not sales (Rules For Revolutionaries: The Capitalist Manifesto for Creating and Marketing New Products and Services).
• Recognize that growth is not a destination, but a path and on-going process. It requires developing the needed capabilities and competencies in awareness, adaptability, and building a learning organization. It requires much mindfulness, being aware of the present moment to exploit opportunities so as to keep the bigger picture and vision in mind. At the same time, it requires effective risk management: understanding/recognizing possible uncertainties and unexpectedness’, adjusting and adapting as needed. It is about impermanence, understanding that everything changes and is in flux, and learning to let go and adapt.
• Be resilient. You’ll have plenty of failures, nay-sayers and set backs. So, build your capacity for change and dealing with change, even under negative and unexpected circumstances. I once heard that forgiveness is hoping for a better past. So, don’t dwell in your past failures. Failure is inevitable and it is part of your learning process. The key to success is to fail early, learn from it and move on with greater understanding. Just remember Guy’s coin phrase: churn, baby churn.
• Utilize both sides of your brain: don’t just be creative but also be analytical to successfully exploit the opportunity. Think out of the box, look for connections even seemingly unrelated, be open to and seek new experiences and ideas, be observative and keenly inquisitive. Know that the future is unwritten and full of opportunities. Be positive, hopeful and optimistic, regardless of the current situation. But, while dreaming big, start small, simple and with focus. Iteratively build on your previous successes, and create your future one step at a time.
• Build a culture of trust, commitment, accountability and focus on results. Commitment is key, and it should not be confused with consensus, as it is about having the courage and wisdom to move forward even when not everyone agrees. Accountability is about the personal ownership for delivering the agreed upon performance to the company and to the team. Focus on results is recognizing what really matters and what ultimately delivers value.
• Achieve the right balance between:
  • long-term and short-term;
  • leading and managing;
  • idea-generating and doing;
  • being supportive and driving the needed change, however uncomfortable;
  • providing resources/funding and placing constraints, even if they are artificial;

So, instead of pursuing the popular definition of growth, contemplate your unique value and how to further it. Whether it maybe building the next great product/service, or how you go about developing and delivering it. Whatever it is, keep the focus on achieving sustainable growth.

Technorati Tags: Robert M. Tomasko, Bigger Isn’t Always Better: The New Mindset for Real Business Growth, innovation, sustainable growth, conditions for sustainable growth

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

Brad Feld and Jason Mendelson have just started AsktheVC blog. From the looks of it, it will be a great resource for enterpreneurs and all. Their goal is to build a strong knowledge base of VC and enterpreneurship information reference resource on the Web. So, questions are welcomed and encouraged. Check it out, and ask away…

Technorati Tags: blog, VC, enterpreneurship