Your first customer

Enough with the top-down total addressable market (TAM). Enough with the press releases, the ads, the unsolicited e-mails, the planning, the strategizing and the writing of comprehensive business plans. Your first customer is the hardest one you’ll get, and by far the most important. And the best way to get it is to pitch your idea to people that might want to buy your product.

That first customer will provide market validation – i.e. someone actually needs your product. It will provide feedback – i.e. the little hints, tips, tricks and tweaks that focus your product offering to best service the customer. And finally it provides you with a reference, meaning someone that can actually communicate that the product had value to your second, third, your forth and so on, customer.

So pick up that phone and start pitching!

What do you sell? A new view on brand based products

What do you sell? I guess there’s already many ways of classifying this, nevertheless I would like to add one more. Do you sell a product or a commodity? Our economy grew out of what were largely commodities; agricultural products were traded in markets, often at market prices. Cotton is cotton, the only differences between vendors are price, quality and quantity.

As our society closed in on the industrial revolution we made a leap forward, we started making products. Pants are not equal to each other, even if they are made from the same material. The reason is that when we add some sort of processing to our commodities, we make them into products, but a side effect is that products vary more in terms of (perceived) quality than commodities do. Sure there’s good cotton and bad cotton, but nothing that justifies the kind of price differences we see in for example clothing.

This insight is something that is often overlooked, especially in economic theory. After all, consumer’s perceptions are hard to measure in numbers and models, and are thus often let out of the equation altogether – just represented by the demand function. The solution for this is usually to assume perfect markets, which, if they exist at all, mainly describe commodity markets. This is the source of our propensity to think that price is the only thing that matters. If the market leader in an industry is about to launch a product that competes with mine, the instinct is to lower price or increase quantity. This is often the wrong thing to do.

Economic theory has however also created useful tools. One of the best ideas, in my opinion, is the concept of utility. In all simplicity utility is a measure of the relative satisfaction from, or desirability of the consumption of various goods and services, and can as such contain whatever criteria consumers (or businesses) use to decide on which product to buy. In this view utility is the only reason people buy products, and the explanation why people buy something is simply that it yielded the best utility for the price.

Though many would disagree with me, utility is in my mind what sets commodities apart from products. By this I’m not saying that commodities don’t have utility, of course they do, or people wouldn’t buy them. What I’m saying is that it’s the very nature of the utility that sets them apart. For commodities the utility is given, there’s no added value, just “real” value. For products utility is made up, it’s socially constructed; it’s whatever you think it is. This is where you can charge more for your products than they cost to produce.

So what do you sell? Do you sell a product or a commodity? If you sell a commodity you would want to switch to a product at once. Cotton can be de-commoditized by adding socially constructed value, “It’s organic!”  The same applies to other commodities. If, on the other hand, you sell a product then you should understand what “utility” constitutes in your marketplace. The utility of clothing is certainly not only that they cover up parts of our bodies we don’t want others to see, or keeping us warm – if that was true, clothes would be commodities and priced close to production price.

So ask yourself - and don’t settle for the first answer – "What do I sell, and what should I do about it?" It may be the first step to really understanding branding at it’s core.

Killer apps and USP’s – find them, use them!

New products need to provide value. We all know that. But further than that it needs to be clear what the product does and why people should care. This will let your product escape the trap Google Buzz, New Coke (or even better Crystal Pepsi), Cosmopolitan Yogurt, Palm, other PDA’s, and countless other products that no one in the world could understand what were good for went right into. Products need to have a clear intrinsic purpose, and they need a company around them that clearly explains externally what the product is, what it does, and why we should care.

New products should have a killer application. For example Twitter’s killer app was status messages that fit into a text message. Now it’s important to note that a killer app isn’t necessarily what you will end up doing. The killer app is what you start out doing! Today I don’t care if Twitter updates fit into a text, now I use it because I already am. Killer apps allow you to find a niche that’s big enough for you to start growing your business. For example I think that in [insert random number here] years there will be a big company that deals in robots, kind of like a Microsoft of robots. If I wanted to start that company today, I wouldn’t care what robots would be in 20 years, I would find a small niche in which to start making robots today that could provide me a basis for new niches and eventually a world leadership in robots. Maybe I would start with toy robots? Certainly I could make a lot of fun stuff without requiring too much AI at the offset? Nevertheless a killer application is something more specific. It’s something that makes my robots intrinsically better than other robots. Maybe my toy robots could play board games? Certainly the technology to allow robots to play the games already exist, the only technological challenge left would be to get the robot to recognize the game, the location of the pieces and give it the ability to move the pieces autonomously.

USP’s are something else, they’re extrinsic, but they are very much related to killer apps. A USP is a Unique Selling Proposition, to understand it fully you should go to your local supermarket, locate the aisle that has toothpaste and read the tag lines. Every brand will have toothpaste for whiter teeth, cleaner teeth, anti-bacterial, anti-bad breath and a few that attempt to do it all. Think about it, do you really think there’s a lot of difference? Most of the toothpaste is just filler anyway, the parts that differentiate the products are measured in parts per million, so it likely wouldn’t be all that difficult to put all the good stuff in a single ultimate toothpaste. Continuing the robot example above, we could for example use “A friend for life”, or “Playmates forever” as a USP. This is how people understand your product. Notice that the USP don’t only separate the product from other robots, but other toys as well.

The difference between the two is that the killer application is the use of your product; the USP is what separates your product from all those others in the mind of the consumer. For start-ups however you often find yourself being so original that your product will be mentally sorted in a new category. In these cases, it pays to use the killer app to create a USP because you fortify your position as the one that provides that application. Combining a clear view of killer apps, niche markets, product positioning and business strategy will align different interests in your company so that product designers, business strategists, marketers, finance people, sales people and so on all understand what the company is setting out to do, and can agree on it.

If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.

What Facebook is missing out on...

It strikes me as somewhat absurd that Facebook don’t see the opportunity they are presented with in face of the recent criticism. The criticism, as you are probably well aware off, is in my view best summed up in Leif Harmsen’s words “It is not ‘your’ Facebook profile. It is Facebook’s profile about you”, he considers it a repressive regime akin to North Korea, and he’s not alone. Yet this isn’t anything new. It’s more a case of the “commoners” starting to question what the more tech savvy ones of us have questioned for quite some time, and thus the topic has gained some momentum in the mainstream press as well.

The problem is obvious, as problems often are, but the solutions keep escaping the minds of clever people. Or does it really? A related debate I have followed since I first heard a discussion about social networking 3.0 at Stanford in 2007, is about how we can transfer ownership, and more importantly control over user information to the users. The simplest solution is of course just to pressure sites like Facebook to change their terms of use, but a more lasting solution would include the possibility for users to bring their friends, pictures and other information with them between social networking sites. Undoubtedly there are many design issues for such a system, for example I certainly have multiple online identities; my Facebook content isn’t really suitable for my LinkedIn page and so on. And where would my information be hosted? Would I have to buy server space in case someone wanted to view my profile while I was online? Would the standard allow new networking sites to add slots for specific information that were only suitable for that site (like favorite recipes for a cooking site, or where I’ve been for a scuba diving site), and how would I controll what and how much  information is sent to each site I visit?

This however isn’t the biggest problem; the reason why such systems haven’t been implemented is that no one with the leverage to create this system has done it yet. This system has to be made by the right people, people that can reach critical mass. At present, only geeks and idealists would bother to learn how to use a totally new system, especially because something like that sounds very complicated. The average user doesn’t want complicated stuff, they want simplicity, and they just want to use the product. So to reach critical mass for such a system you would have to have some way of gaining a lot of users for it fast. Like a big already existing user base, like Facebook has, but wait - why should Facebook make this system? Facebook like it the way it is, they own your content (or their content about you to be accurate), and can use it for pretty much whatever they want. In addition to this Facebook enjoys users that have extremely high switching costs, something which might be their biggest competitive advantage. It seems that Facebook is in a perfect place.

So why should Facebook do it?
The first reason why Facebook should create a system for sharing information is that it would buy them credit. It would buy them credit with the tech community for being open and with the media for listening to them. It would buy them credit with normal users because they would feel safer and because they have the option to leave. Remember why some people escaped the Matrix? It turned out that given an unconscious choice nearly 99 % of test subjects would accept the program anyway. I see no reason why this shouldn’t hold true for Facebook as well, as the primary reason people leave is because they are malcontent by Facebook’s closed systems and strict privacy policy (at least if we believe random Internet chatter - which we do).

Secondly, and maybe more importantly, I believe that if Facebook don’t do this, others will. Services such as Google Accounts and Open ID don’t have a long way to go to allow users to store information that at their request can used by third party sites. Right now Facebook can deny Open ID and other such services to provide login to their site, but can they still do that in 3 years? Right now they can delay the inevitable move to such services, but as I wrote in a blog post some time ago, change happens when change is due. Change isn’t always created willingly, it’s just there and those that catch the wave gain momentum, furthermore no surfer ever caught the back of a wave. If people gets used to logging in to their favorite sites through a third party provider, I’m not sure Facebook can withhold the pressure.

The third reason Facebook should use their user base to create an open, user owned system that can transfer information easily from site to site is that whatever disadvantage Facebook sees in having users logging in to their site via a third party provider will be Facebook’s advantage against new social sites. If users are used to using their Facebook login when they log into pages on the net, they will expect new sites to follow this convention, thus granting Facebook some limited power to monitor and control new services.

The fourth reason Facebook should do this is because there’s bound to be a business model in it. What this model is, I’m not sure, but it could for example be that commercial sites would have to pay a small fee to use the service, or that when you log in you get redirected through Facebook’s ad page.

The fifth and final reason is that this would be a good first step towards extending into new forms of web services. When users already have a login, it should be easier to gain momentum for new and exciting products. Google has already realized this when they launched both Wave and Buzz (though this seems to be bad examples, as both services are virtual ghost towns). Having a customer base like Facebook’s is an incredible asset, in the case of Facebook an asset that remains close to unexploited. Surely marketing new web services through Facebook would ensure enough users to create critical mass for many services?

Maybe Facebook as we know it today is just a stepping stone? I certainly think that they should consider expanding their services, and specifically they should start making a product that they could easily gain market leadership with almost immediately, namely an open profile service that provides an API for other services to let users log in with their Facebook profiles. With the share number of users Facebook has it shouldn’t be a problem becoming the market leader in this "sort of related" market.

If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.

How to deal with uncertainty - the maximize options approach

In a recent blog post I wrote that it is becoming increasingly difficult to forecast the future. As I imply, the problem is choice: Lower distances between people increases the ripple effect of individual choices, and technology together with consumerism increase the sets of choices, and options available to each choice to create an exponentially growing possible futures.

"Difficult to see. Always in motion is the future.” (Yoda)

Simply put I would claim that the uncertainty of the future is a function of the number of people that make choices, times the number of choices available, times the number of options available in each choice, times a coefficient for the impact of each choice. As all the factors that go in to the function have higher values now than they did earlier the uncertainty increases. What I don’t mention is how to cope with the increasing uncertainty; this is what I will address here.

Economists love choices, because they apply math to find the “right” choice. Consider that you’re in a TV game show, you get presented with two choices, a) 100% chance of $ 10 000 or b) 50 % chance of either $0 or $50 000. Any economist will tell you that the options are worth respectively $10 000 and $25 000, so you should choose b) (this is because given enough similar choices the average outcome would be those numbers). Now, if however, you chose b) and you lost and had to go home with $ 0, did you make the wrong choice? Many will say yes, because you lost all the money. These people think that a good choice is a choice that you would not change after you see the outcome; this seems to me like it is a bad definition. I think that you always have to judge a choice based on the information that was available at the time, thus it was still the right choice! If you are presented with a choice of this type, you should follow this procedure.

The problem, as the clever reader has already deduced, is that you rarely know the numbers. And this is exactly what forecasting has been occupied with since the beginning of the industrial era; how can we put numbers on stuff that we know very little about? There are tons of books on this subject, so I won’t go in to it, but rather utter my proposition on how to deal with uncertainty in choices in these days, and especially in the years to come. First, let me repeat myself, in instances where numbers are available or could be attained, follow the above procedure. This is for all those other instances.

I already professed my love for platform technologies, but I haven't explained why, so here goes. The more malleable a technology is, the more uses it can have, thus the more ways it can be successful should it fail in its intentional use. The more adaptable a technology is (Cēterīs paribus), the higher is the probability that its owners will find an application that is profitable. Consider a hypothetical example, two companies are specializing in medical technology, both companies have a development cycle of 15 years, and neither has any information about what its competitors are doing. One company is certain that it can make a cure for let’s say AIDS, and the other is certain that it can make a platform that will cure every bacterial infection known to man, but would only be able to market it for one use at a time. Assume that the technical challenge is equal, and that the main risk is that competitors beat them to market. Which company would you invest in? Since neither has any information about what their competitors are doing (the premise of uncertainty), I would invest in the bacterial platform company. The AIDS company has one chance to succeed, if someone else beats them to market they are dead, finito. If someone else makes the bacterial technology, the company can just change its marketing to target another disease, because the drug can target all diseases, but just market towards one at a time.

By the same principle, even if I don’t believe in global warming I believe in environmentalism, because an earth with rainforests have more options that an earth without them. A country with a highly educated workforce has more options than one without it. A company with several paths to market has more options than one with only one path to market. A technology with many uses has more options than one with limited use. A user friendly computer has more options than one that’s not. A diverse education gives more opportunities than one that’s specific. This principle is universal.

But, you may ask, how does this relate to forecasting the future? Well, the concept I’m trying to explain has two implications for you. Firstly, it means that if there are high uncertainty go with the option that leaves more options open. Secondly, when creating something, try to leave as many options open for as long as possible. If you don’t know how things are going to turn out right now, maybe you will have a better understanding in the future, thus closing doors prematurely is extremely dangerous and will become even more so in the future.

To wrap it up, here are some simple predictions made following this principle:

• Mobile phones that allows anyone to create uses will have more uses than a mobile phone that don’t, thus cell phone producers that have open platforms will outlive those that don’t.
• Countries that have an adaptable workforce will be less affected by upheaval, because they can shift the workforce over in other industries temporarily or permanently should disaster strike in a specific industry.
• Renewable energy producers that use existing infrastructure, such as oil from algae, will be more successful than those that gamble on technologies like hydrogen that requires major rebuilds of gas stations etc, because they have more potential customers, quicker.
• On demand television will outcompete fixed programming, because people will have more options on when and where to watch. On demand television also have more options on how to make money - the business model.
• The deck of cards will survive Monopoly, because you can play many more games with a deck of cards. Also you can do magic, tell someone’s fortune or even use them for a raffle.

The point is that the more adaptable you are, the more likely are you to survive turbulence or achieve your goals in an uncertain world. Forecasting is great, but when that fails, you should try to keep your options open. Even when traditional forecasting is a possibility you should consider looking at what has more options that are favorable to your goal. It’s always better to have two ways to success than just one, especially when the probabilities of each way actually leading to success is unkown.

If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.

Thoughts About Way Too Needy Products or The Microwave that Went ”Me! Me! Me! Me!”

We have so many manufactured items around us that we often forget they are manufactured goods that at some time got bought, paradoxically we rarely think about many of these products. While we live in a mutually dependent relationship with these items, some product developers don’t understand that new products have to fit into the already existing eco-systems that are our lives.

In our everyday lives we interact with hundreds and maybe thousands of products, in fact mostly anything that we use are products of some sort, (look around you now, how many things that’s not some sort of a product can you find?) We once created all these items, but they also influence us back. I like to think about manufactured goods, services and anything that for some reason can be called a product as living in a symbiotic relationship with mankind, we depend on them, they depend on us. The reason we keep them around is because they (help) perform small tasks that makes our lives easier, for example a door can be opened or closed – a very practical notion that allows us to separate rooms and give them different functionality, different rooms are equipped with different products that perform tasks that naturally occur in that room, for example toilet paper, one of my favorite products, belongs in the bathroom and makes the tasks performed in there easier to handle.

The paradox is that we rarely think about how many products we are surrounded by in our lives, if you ask people how many products or items that was once manufactured they own, most people would grossly underestimate the number. This is because we only think about our iPhones and laptops and televisions or whatnot, we don’t think about door handles and the paint on our walls, we don’t think about that stack of newspapers or that jar of jam in the fridge. The fact of the matter is that we have so many things around us that are products that we can barely wrap our minds around it, which is a good thing. If we constantly went around being reminded of all our products we wouldn’t find time to do anything, and that’s why most products are made to blend in to our lives. So why does some product developers feel that their products are so important that they can disrupt the natural flow in the eco-system of man and his creations?

Let me give a couple of examples: Fire alarms beep too often and too loudly when the batteries go out, I get it! It’s important, but seriously, it can wait until morning. Some microwaves do the exact same thing, every 10 second it will let out a beep until you have opened the door. Why? Maybe the stuff I was heating said to let it rest for a few minutes, can’t I watch TV until then? Yet another example, to quote David l. French: “My Pantec phone...is so needy that in addition to sucking down juice like a college kid on St. Patty's day it makes you press 3 buttons before it even allows you to make a call.” Facebook e-mails you each time something barely happens, and it’s too damn hard to turn off (I just set my spam filter to catch *@facebook.com), I had to delete iTunes, because it kept downloading updates the size of entire musical albums every month, and frankly I don’t use it that much. And what’s with trying to force me to install Safari? I don’t want it!

Needy products are becoming an epidemic, and it needs to be stopped. If you are a product manager, try to think less about how important your specific product will be and more about how your products can fit into the lives of your customers. Products exist to make our lives easier or better, and people making products need to realize this and start focusing on the users’ interaction with products within the context of their lives. Products should not act as high-maintenance girlfriends or drama queens. Get serious guys; start making products that I want to keep around me.

If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.

Why the iPhone succeeded, a case of recognizing complex unmet needs, not technology revolution!

It’s hard not to notice that the players that were dominant in the cell phone market a few years ago have been marginalized by players such as Apple and Blackberry. It’s easy to attribute this to technology saying that the iPhone was so technologically superior to the phones of the time that it was inevitable, or that iPhone redefined the cell phone industry. However, it is important to note, I think, that the iPhone wasn’t mainly a technological innovation, in fact the technology to do most of what the iPhone does had been available for years, what happened was non-technology based disruption that largely was due to the incumbent industries inability to meet a very complex user need. Let’s look at the case of the iPhone to see what really happened.

Consumers were screaming for increased use of their cell phones, yet there was no solution in sight, but let’s for the purpose of limiting this post look at music as an example, keep in mind though that music is just one example and that you can replace “music” with “content” or “applications” in most places where I use the word. So, the consumers were screaming to use their cell phones for music, yet there was no good solution in sight. There were three parts of the infrastructure that needed to come into place, the content, the device and the network capacity, these were controlled by three types of actors with differing interests that would have to come together to put music on phones in a user friendly way: cell phone manufacturers, record labels (content providers) and phone carriers.

The manufacturers was happy with the way things were, incremental innovation, mostly in design, lowered the product life cycle so that new phones was bought all the time, they didn’t have to spend much on marketing, because consumers often bought what they were recommended in the (carrier owned) stores, so the best marketing was to have good relations with carriers, making sure both players made good money on selling that particular phone. The market mechanisms seemed to have stabilized, leaving no reason to think there was any change around the next corner. The manufacturers were largely dependent on the carriers. Since the stores where cell phones were bought generally belonged to the carriers, people chose their phone on the basis of what carriers offered them, the best thing a manufacturer could do was to be present in as many stores as possible, and just make sure they didn’t fall behind the other brands in innovation. Indeed a comfortable place to be for a large firm.

The record labels viewed cell phones as a treat, this seems to be their strategy with most new technology, so consumers were pirating music and putting it on their phones, with little revenue finding its way to labels. The labels would have preferred a pipeline of music that went through carriers, for example you would by a song for a few dollars through SMS or WAP. For consumers this took too long and was too expensive, for them it was easier to just use their pirated/ripped media library on their computer and use a cable or whatnot to transfer the songs to their cell phones. The phones didn’t have any storage capacity anyway to support buying a media library that would just work on your phone. In an effort to limit pirating, the music industry didn’t even make an effort to expand their market by finding a viable business model in cell phones or mp3-players.

The carriers on their part had a wholly different agenda, music didn’t really interest them. When a carrier imagined a future where wireless high speed internet access, together with technologies such as Skype was dominant, they got sick to their stomach, because that was a world where they were redundant. The carriers have been selling subscriptions that has a monthly fee and fixed prices on for example calls and texts, by adding free or cheap cell phones to the mix they could confuse buyers into buying subscriptions with crazy margins. If phones become internet based (with for example Skype as the carrier), they will at most be able to maintain the monthly fees, a prospect that will allow consumers to better understand what they are paying in relation to other carriers, this will lead to a lowering of the carriers margins, and force them to compete on price.

Needless to say, the phone carriers wanted to postpone the introduction of high-speed internet to phones and thus didn’t want music consumption to go through the high-speed connectivity that the consumers needed to effectively use their phones for music, because this connectivity could also facilitate other uses. For them the “pirate music on your computer then transfer to phone” model was sufficient, and no one bought a lot of music from the crappy stores they had anyway, why go into a market that clearly can’t be solved in their best interest? This stifled the innovation among the manufacturers, because, as noted above, they didn’t want to upset the carriers that they were so dependent on. And besides, they didn’t own any content that could be sold anyway, how would they make more money from adding functionality which someone else would get the revenue from (if anyone would get any revenue at all), and that their most important partners didn’t even want or push for? They settled for having the capacity to play music, in their crappy homemade players, and consumers would have to take it or leave it.

Enter Apple. Apple had three resources that allowed them to enter, they already had a deal with the record labels; the labels acting on their fear of becoming obsolete had agreed to sell music through iTunes for use in mp3-players, given that all effort would be made to limit the ability to copy the music, which suited Apple well. Apple also had the expertise to create ways for consumers to interact with the technology, this is really the only expertise Apple had that separated them, the technology, which is the third resource, was widely available, and Apple had a large engineering division that could make the phone. What happens is that Apple enters as a cell phone manufacturer and has a deal with the record labels. The high speed connectivity that carriers didn’t want and that the other manufacturers didn’t see any point in providing was pivotal to Apples plan, they wanted to make money not only on their phones, but on the extras as well, like iTunes. Apple also had a plan to sell other content, but let’s keep with the music for this post.

Apple had an advantage over the other manufacturers; they had a congregation that would buy their product no matter what. The iPhone was also perceived as an iPod with phone capability; to consumers this was just as good as phone with mp3 capability would have been. In addition consumers already knew how to consume music on mp3-players, they didn’t to the same degree know how to do this on their phones. Thus the iPhone was perceived as a better music player than the other phones, but not as inferior when it came to the phone capability. The incumbents in their infinite wisdom had their core competency in making phones, however this wasn’t perceived as important, because any technology company can make the phone part of a phone. These reasons add up to the fact that consumers wanted the iPhone, whether their carrier recommended them or not, this represented a shift in power, from the carrier’s power over the manufacturers, to Apples power over carriers. Even if the smart phone, here exemplified as the iPhone, likely will be the death of the carriers current business model (as noted above) in the not so distant future, the carriers needed to scramble to make sure they would be the one that had a monopoly on marketing the iPhone, because now the consumers would buy the carrier that had the iPhone, not the phone that carrier recommended.

Though I limited this post to apply to music it could just as easily apply to other content, such as movies or games. The point is that Apple sees an opening where the increasing needs of consumers are not reflected in the market offerings, and where the players that are necessary to fulfill this market need are looking the other way. If the three types of actors above had put their heads together, they likely would have seen this path to profit, and would have acted on it, but they were busy following different agendas. The genius of Apple lies in realizing that more sophisticated phones wasn’t the need at all, the actual need was made up of at least two different needs, the need for better phones and the need for some way to use the better phones. Apple set about to provide both at the same time, and it was this that gave them the ability to enter the market for cell phones with such a success.


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Stepping out of the box (part 2): Techniques for stepping out of the box

This post continues from this post, and explains some steps that can be taken to step out of the afore-mentioned box.

Start anywhere but at the start
If you were to write a book, a criminal novel, where would you start? Most people I guess, would figure out a plot, and then start fiddling with the details. What if you just started to write? Don’t have a plot; don’t know how it ends or who the killer is. Just write something crazy, introduce us to the situation where the protagonist comes across the murder. Put in as many weird details as you can, then start working them out. The result will be very different than if you start by deciding how the murder took place, how the murderer covered it up and then write the book. In inventing it’s the same, most people start either with a technology or an unmet need. Don’t do that, find somewhere else to start. Find a crazy theory of where to start.

How about this? Most people start companies that they either know something about or that interest them. Find out what you know the least about and start with that. Find something that interests no one and start there. Think about roads, extremely boring, and I know nothing about making them. Maybe that’s a good place to start, exactly because I don’t know anything I can’t have any preconceived notions, I don’t know that I have to make the roads using asphalt and stone, maybe because I don’t know that I had to go to a university to ask someone, maybe I went in to the wrong building and met the wrong guy, but maybe it turned out that he had just invented a cheap material that would be perfect for roads, only that he hadn’t realized what the material was for? Maybe he had invented something completely different and you could go with that instead?

Find a starting place that is outside the normal, then you force yourself to think in a new way.

Challenge yourself beyond your capability
The previous example also advocates this point. A friend of mine considers himself a pickup artist, which means he goes out twice a week to pick up girls, and are fairly successful. However, he never uses the same approach twice, so each time he picks up a girl the difficulty goes up, and so does his success rate. My theory is that the more approaches he use, the further he comes from what is normal to do when picking up girls, and the less he is categorized as “the guy who just want to get laid”. It also shows that he is having fun, he’s a cool guy, that loves what he is doing. He says random things, and because of that he get’s random results. My point is that for us that accompany him we always think “that is never going to work”, but sometimes it does, and we are as surprised each time. The thing is that you never discover new grounds if you keep doing the same stuff. A business example would be the notion that start-ups cannot sell to fortune 500 companies. So people will generally tell you to not try. Why not? You have nothing to lose, call Microsoft, tell them about your product, request a meeting. Don’t think your product is good enough? Well, then your that guy sitting on the sideline saying that’s never going to work while your friend steps out of his comfort zone and get the girls. Embarrass yourself, fail, but try; you will be surprised at what you can achieve!

Give yourself over to chance
We make our decisions based on our assumptions, that means that there’s systematic errors in your decision making. If you want something new to happen you can throw a dice. Should I go to that interview or that interview? Throw a dice, let chance decide, not because there’s faith and everything is supposed to happen and so forth, no, because then you end up in situations that you normally wouldn’t be in, and then you get to think about problems that you normally wouldn’t.

Ask someone different
Take the Play-Doh example above, the solution to the problem wasn’t anything that was in the toolbox of the director or the MBA’s, it was a preschool teacher that came up with a solution. Again, if you keep doing the same you get the same results, if you ask the same people you get same answer. MBA’s are all in the same box, so ask someone that’s outside the box, maybe that can shed light from an angle you haven’t seen. If you however are a preschool teacher try asking an MBA. If you are a CEO, try asking someone on the floor, of you are an entrepreneur try asking an athlete.  Find people that are different than you, that think different, that knows less, ask them and listen to them. It's not always those that should have the answers that have them, we often just assume they do. Did you know that monkeys can pick stocks just as well as professionals? Often better? Consider this excerpt:

“In the four years since [Chicago Sun’s Monkey] has chaired and inspired this contest, his stocks have posted annual returns of 37 percent, 36 percent, 3 percent and, in 2006, 36 percent, beating the major indexes every time. It's proof that you don't have to be an insider CEO, an insider hedge-fund manager or a loudmouth on CNBC to make money in the market.”

(read the entire article)
How about that? So maybe amateur investors should stop listening to professionals and go ask the monkeys, or even start making their own theories - that shouldn't be based on the ideas of the financial advisors. (I would go get a sociologist to explain the nature of socially constructed reality if I wanted to make money on stocks, stock brokers don't even know what it is and yet the sociologist will claim thatit controls their every move).

It’s ok to be wrong
Seriously. It is. Whenever in an argument over what’s right and what’s not, try to think “what if I’m wrong”. A good way to do this is to whenever you have a discussion about something, take a break, go to someone that agrees with you and argue the other point. Often we are so sure that we are right that we cannot for the life of us even consider the alternative, but remember that the other person is just as likely to be right if that person believe in her ideas as strongly as you do!

Question all assumptions!
It’s well known that kids have an easier time learning languages than adults. Is it true? I don’t know. It takes a kid two years to learn their first language in a way that they can make themselves understood, and still it’s a couple of years before they speak it any good. I’m pretty sure I could learn French in four years if that’s all I had to do. That kids can learn to speak languages easier than adults is a cultural assumption. It’s something we all (or most of us) believe to be true. The thing is that it doesn’t have to be true, it can of course be true, but if you start questioning these assumptions when you come across them you will surprisingly often find that maybe they aren’t always true. The man running the factory in the example above assumed that his product could only be used for cleaning wall paper. His assumption was wrong, now we assume that making Play-Doh was his best course of action, maybe we are wrong? When you talk to someone, try figure out what yours and theirs basic assumptions are. Challenge them.

Crisis
When everything goes as planned it’s easy to keep routinely doing the tasks you have always done. When crisis appear, that’s when you have to think about new ways to do something. In a way crisis force you to consider option you otherwise wouldn’t, a teenager might not get into the educational program she wanted, so she has to look for new options, a company might discover that their product is no longer in demand, so they have to find new products, or new uses for their products. A new father might discover that his life is turned upside down, so he has to change his routines and his survival strategies.

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Stepping out of the box (part 1): Taking the red pill / Drinking the Kool-Aid

What is the box?
Coming up with radical inventions requires you to step out of the box, but what does this mean? Well, the box is a metaphor for your preconceived notions. The box is the Matrix. It is the world that has been pulled over your eyes and blinds you from the truth. It is said that Edison once fired a man for salting his soup before he tasted it; the reason is that this implied that the man was so blinded by the box that he forgot to check its validity. The man couldn’t know that soup needed salt if he hadn’t tasted it, but of course he assumed that he had to salt it because he had eaten so much soup that the salting was on autopilot. The box are all those things we take for granted. From the small things, such as “hamburgers are eaten with a side of french fries, not rice” to the big things, like, “the earth orbits the sun”, some of these assumptions may be true, but this isn’t really the point, the point is that the assumptions block us from thinking differently.

Why should we step out of the box?
First let’s look at why we are in the box. Our minds are designed to maintain the reality we believe exists, and generally this is very useful. What if you had to rethink how to open a door each time you walked through it? What if you had to decide if you liked your girlfriend each time you met her? What if the doctor had to convince you that the drugs you are taking actually will help each morning? It would make life extremely tedious, and the strain on our cognitive ability would be very high, so that our brains would require a lot more energy, i.e. we would need bigger brains and more to eat, which isn't good from an evolutionary perspective. Another reason we are in the box is because it is useful to maintain a sense of stability and reality. Research even shows that after people make a decision on any topic the brain will start to justify the decision so that you won’t change your mind so easily. This also goes for belief. Think about politics, when you decide that a certain party or politician is the one that should be elected it is really hard to change. This is called cognitive dissonance, and is just one of many mechanisms that help us maintain a healthy sense of continuity and reality, it makes us feel consistent. Historically this was useful because it freed up the brain to solve more important issues with its limited resources, in modern day society it's useful for that very same reason.

The problem with our sense of continuity is that it blocks our ability to think about what the world would be if it wasn’t the way it is. This is why US presidents are reelected more times than not. We strive for continuity, because we don’t understand how the world could be different. Stepping out of the box allows us to think about the world in new ways. It allows us to see things that others cannot see. First when you free your mind from the idea that transportation is either by foot or by horse can you start thinking about cars. Did you know that the wheel was never invented on the American continent before the Europeans arrived? They had circles, but no wheels, how weird is that? And no one can blame them, this is how our minds work. We see everything that exist as obvious and natural (the wheel for you and me), and everything that don’t exist, well it generally doesn’t occur to us.

Let me give you an example. I heard an anecdote that goes something like this: Once upon a time, in the olden days a man was running a factory, this factory produced a type of malleable sticky clay that was used to remove sot from the walls. You see, back in those days people warmed their houses by burning coal, and this left residue on the walls. A person would then buy some of this clay-like substance and roll it on the wall, the sot from the coal would then stick to the blob. Since the blob was white the coal would color it so you could even see when it was so dirty that you had to get a new one. One day however the sales started declining, a thorough market analysis revealed that people were using less coal to heat their houses, thus the demand for white clay-blobs fell as well. The manager of this factory started to worry, so he hired the best MBA’s in the kingdom to figure out what to do. The MBA’s effectivised the routines, lay off people, streamlined shipping and so on until they had reduced the cost of the factory to the point where it was impossible to reduce them further. The factory was however still in a crisis, because the problem of course wasn’t the cost, it was that no one needed their product. So what was he to do? In total despair he went to dinner to his sister, she was a preschool teacher, and as casual dinner conversation he explained everything and that he was probably going to lose his job and would have to shut down the entire business. His sister asked if she could look at the product and the manager fished out a piece of white clay from his pocket, his sister started molding it into shapes, and decided to bring it to her daycare the next day to show the kids. When she came back, she suggested making the clay in different colors, calling it Play-Doh and marketing it to kids. Today this business is much bigger than the wallpaper cleaning business of decades past ever was.

The moral of the story is of course that when you look outside the box of your usual surrounding you find solutions that you wouldn't otherwise find. This manager hired MBA’s, and no offence to MBA’s, they’re great, but they all think alike. If you need someone to think different, then don’t use people that think like you and each other. If you do the same, then how come you expect different results? MBA’s have a set of tools, and when you have a hammer, a surprising amount of problems looks like nails. Only when the manager (by chance in this case) got someone that thought differently to think about the problem could a radically new idea come about. To continue reading click here.

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Do I launch my product or do I develop it further?

As a start-up you will eventually end up in a situation where you have to make a choice; do you spend your last money on improving the product, or do you spend it on launching your product and marketing it? Most marketers will tell you that you should always have a perfect product (you see the “product” is one of the four P’s in marketing). But I disagree.

Imagine that you have $1000, but you are afraid it will get stolen, the only way to avoid this, it seems, is to buy a safe. Unfortunately the safe cost $1000. Would you buy the safe? The same concept applies here, do you make a fantastic product that no one will hear about or do you make a mediocre product that many hear about? I would chose the latter and then use the money I make to improve the product later. This will grow your company quicker. And let’s face it, you have no idea what the consumer want in a product anyway. Just face it.

This is of course assuming this is a new product to some extent, you probably don’t know what people want, even if you think you do. Edison started rolling out electricity at an alarming rate, the killer application, was of course electric light. This meant that when people first got electricity, the outlet was a socket that matched the light bulb, not the socket we know today. Little did Edison know that washing machines and electrical irons would come along and that a socket where you had to screw in the cord would become dangerous. Everything, as we know now, worked out well for Edison, but he had no idea what electricity was going to be, or how big it was going to be. Start rolling out your product, make money and adapt your product to the feedback you get, who knows, maybe the technical improvement you have in mind isn’t what you should improve at all?

I also talked to a former product developer at Phillips once, he now runs his own company. He explained that Phillips, and the other big ones, never launch with their best product. Launch with your number two, price it in the stars, and then when your sales decline, introduce the next generation at the same price and lower the price of the last generation. And never launch a new generation until the next is in a drawer somewhere ready to launch

If you liked this post or any other post feel free to click the “follow” button to the right to stay tuned to new posts when they appear. You can also follow me on Twitter as @vetleen.