Thursday, September 27, 2007

Is there a huge business opportunity at the bottom of the telecommunications market?

Everyone has a cellphone, right? Some of us have two or more. Nobody needs cable or satellite; we all have that. Maybe there's an opportunity to sell more people broadband, who knows?

At any rate, it seems as if every American who uses telecom services has more than they need. But averages can be deceiving. America's roughly 70% wireless penetration rate includes upper-income rates of 100%--everybody has a cellphone...and lower-income rates below 50%.

Hamilton Sekino, partner in Diamond Consultants' telecom practice, explored opportunities selling telecom service to the lower and lower-middle income brackets at this month's Next Generation Mobile Partnerships Conference presented by Informa Telecoms & Media.

It was a fascinating presentation. Hamilton pointed out that marketing for most telecom and cable operators focused on high-end customers. And while prepaid cellular in the US appeals to low-income customers, its high churn rates make it a daunting business.

Diamond's proposition involves someone reselling a modest bundle of telecom services (video, broadband, wireless, wireline) at a discount to this market. An example package is:

$99.99 monthly fee
unlimited local wireless (a la Cricket or MetroPCS)
unlimited local wireline using VoIP
40 channels of video
1.5Mbps broadband

The key success factor is to be able to minimize cost of acquisition (to 1 to 1.5 times monthly subscriber revenue) and maximize discounts from underlying operators. (I'd add that it would also be important to keep operational costs low, by sticking to very simple plans, billing and payment.)

Who can do this? According to Diamond, a retailer like Wal-Mart would be a perfect fit, given its appeal to low-middle income segments and ability to distribute cheaply. Or perhaps an internet portal like Google or Yahoo, or a video company like DirecTV or Dish. In the right hands, it could be a multi-billion dollar business, according to their analysis.

The response by the conference attendees: much skepticism. But I find something very intriguing about this idea. There's a market, with money (not a lot) to spend, whose needs are not being met. There are companies that could provide service to this market. Stay tuned to see if this proposition becomes a product, and if the product becomes a success.

Monday, September 24, 2007

Use your strategy to drive your acquisitions, and vice versa

It's often seemed to me that following a corporate strategy is like driving a car at night. You must decide what direction you want to go, but you have also to pay close attention to what you can see ahead of you--and adjust if necessary. As you progress, more is revealed, and you approach your destination. If you drive too fast, or focus too much on the route you've predetermined, you get into trouble.

I thought of this metaphor again when I read the article "Rules To Acquire By," in the September Harvard Business Review (link - $$). The author, Bruce Nolop, is CFO of Pitney Bowes, and in the article he describes his company's method for assessing and executing acquisitions, refined over seventy acquisitions in the past six years. It's a fascinating read, and instructive if, like me, your companies' corporate acquisition strategies were less than rigorous.

I was particularly struck by this passage in a sidebar:

In the traditional model, a company identifies—either on its own or with a consultant’s help—a new business strategy or a new space and then buys something. By contrast, we work with our board of directors to develop a general sense of our strategic direction and then refine our strategy along the way through the process of acquisitions.

It's as perfect an example of driving-at-night strategy as I've read anywhere.

(Photo: "Driving at Night" by cpurcell via stock.xchng)

Friday, September 21, 2007

Friday Haiku #3: A last lecture

If you gave a last
, what would you relate?
Watch Prof. Randy Pausch.

Worst Practices In Product Management

I had a call with Verizon Wireless yesterday afternoon that went something like this:

"I got a Blackberry recently and I was trying to use it as a wireless modem for my laptop and I'm having trouble."

Tech Support:
"Let's try some things."

...time passes. We try lots of things. Problem persists...

Tech Support:
"I checked and I found out that you need to activate a feature to enable you to use the Blackberry as a modem. The feature costs $15 per month."

"What? I am already paying for data access, by the megabyte. Modem support costs $15 more?"

Tech Support:
"Yes, I'm sorry. Would you like to speak to Customer Service?"

...on hold for a while...

Customer Service:
"Yes, sir, that feature is $15 per month."

"How come that wasn't clear when I signed up for the Blackberry service? Plus, I'm already paying you $150 a month."

Customer Service:
"I'm sorry, that's the only way we sell it... think of it this way: It's only $0.50 per day."

"But I only need it occasionally. I can't justify paying $15 per month for occasional use."

Customer Service:
"This might solve your problem. You can activate it when you need it, then deactivate it when you're done. You'd only pay for the days you use in that case."

"I have to call once to activate, then again to turn it off? Every time I want to use it? Why don't you have a daily access?"

Customer Service:
"That's the only way you can do it."

"I might try that, but it's unfortunate that you don't have a plan that helps the occasional user, like me. And I don't like having to pay $15 or even $0.50 per day for something that should have been included with the data feature I already bought."

Customer Service:
"I'm sorry. Can I help you with anything else today?"

* * *

So: no resolution. Tech Support and Customer Service were fine, creative, even approaching that state of bending the rules to satisfy a customer. (Installing rigid processes that force this kind of behavior is a worst practice depicted nicely in a recent post by Dave Snowden.)

It's Product Management I have the problem with. First of all, an additional fee for my laptop to use megabytes I'm already paying for is bad. (It's done so that people who pay $60 per month to use the Verizon PCMCIA card in their laptop won't feel that they're getting ripped off--even though they already do.)

Second of all, not having an occasional-use plan and forcing me, the customer, to do work to synthesize this plan (call to activate, call to deactivate, every time I need the service) is also bad.

Finally, I am a $150 per month wireless customer. (VZW's ARPU is around $50.) I'm a Verizon VIP. Yet there's no accomodation built into the product for my kind of customer.

It's just poor packaging all around. And it needs to be fixed. This is one of the reasons mobile phone customers hate their suppliers.


Wednesday, September 19, 2007

Effective negotiation sometimes means staying with it even after you've lost

Negotiating skill is partly personality, mostly hard-won experience. There are a few good books on the subject (I've found "Game, Set, Match: Winning The Negotiations Game," by Henry Kramer pretty useful, despite the silly title), but they don't substitute for getting in there across from the other party and trying to work a deal.

This is because negotiating is all about psychology--yours, of course, and the other guy's. And information is hard to come by. Negotiators hold lots of information close to the vest, and release it only when they feel it's in their interest to do so. This leaves the other party guessing about the motivations and constraints of the counterpart. All in all, it's a highly complex situation, and optimal results are rare. The best you can do is a deal you both can live with.

Skillful negotiation is the subject of "Investigative Negotiation" by Deepak Malhotra and Max Bazerman of Harvard Business School, which appears in the September Harvard Business Review (link - $$). Malhotra and Bazerman point out several skills of good negotiators--mainly their ability to probe and ask questions that illuminate areas of conflict and expose possible solutions.

I was most interested in one principle they stated: "Continue to investigate even after the deal appears to be lost." The authors write:

After being rejected, an investigative negotiator should immediately ask, “What would it have taken for us to reach agreement?” Though it may appear costly to continue negotiating when a “no deal” response appears certain, if you’re confused about the reason your deal fell through in the first place, it could be even more costly to abandon the discussion.

Even if you find that you cannot win the deal, you may still acquire important information that will help in future negotiations. By staying at the table, you can learn about this customer’s future needs, the interests and concerns of similar customers, or the strategies of other players in the industry. Keep in mind that it is often easier to get candid information from the other side when you are not in selling mode and there is little reason to distrust your motives. Next time you’ve lost the deal and been asked to leave the room, see if you can stick around and investigate further. You may be surprised by what you find out.

Good advice, though staying at the table can be difficult. If the client has made the emotional commitment to go elsewhere, they may not want to spend any more time with you, especially if they feel you're still selling them. Many clients also don't want to make losing salespeople feel bad, so their instinct is to stop talking. It takes a real professional to be able to convince the client to open up after they've already decided.

If you're interested in negotiating and haven't listened to our podcast with Barbara McFadden on the topic, please check it out.

(Photo by adamci via stock.xchng)

Tuesday, September 18, 2007

Lessons learned captured in stories at Lawrence Livermore

Lessons learned practice involves examining projects for things that went wrong or could have gone better. The old name, postmortems, has been retired, I guess, because it was too graphic or too negative. Too bad. The best lessons-learned stories are from scrutinizing worst practice.

Every company tries to do lessons learned, but many fail because the exercise can easily degrade into a critique of the project team's performance rather than a search for better ways of working. The project team's defenses go up, and you get nowhere.

By contrast, read this from the web site of the Lawrence Livermore National Laboratory, one of the pre-eminent US government research labs. (UPDATE 24 March 08 - these links are no longer operable.)

Probably the very first “Lessons Learned” experience for Lab employees was the failure of Ruth, our first nuclear test. Rattled and discouraged from their efforts falling flat, scientists sat in a room after the test and waited for Professor Lawrence’s entrance and, most certainly, his scathing judgment of their failed efforts. When Lawrence finally burst into the room, his first words were, “Well, what did we learn from that?”

As you can imagine from the above, it takes a powerful learning culture and leadership to truly take advantage of the lessons-learned approach. And, as if to validate that thought, Lawrence Livermore has published some important lessons-learned stories on its web site. The stories stand out for their clarity, their openness and their unfailing humor. Here's the headline from one story: "During Project Pluto, scientists tested a flying nuclear reactor and ended up with a flying 600-pound nozzle."

The lessons-learned stories (six out of a hundred total in a priceless gallery of corporate narrative) are a treasure trove not only of "worst practices" but of evidence that exposing and confronting those practices is the most direct path to excellence. (UPDATE 24 March 08--sadly, links no longer operable. They were at

(Photo: the JASPER gas gun. Courtesy of Lawrence Livermore National Laboratory)

Monday, September 17, 2007

Tech support: an area where user-generated content is here to stay

There's a lot of hype out there about user-generated content. Most humorous to me are authors who want their readers to help them write their books. Very Tom Sawyer of them.

In one area of technology, however, user-generated content is king. And that's product technical support. Good manuals are hard to come by, but user forums can answer just about any question you have. Here are two examples.

I just got a BlackBerry World Edition phone. The folks I called from any public place noticed lots and lots of background noise from my end of the conversation. BlackBerry and Verizon's web sites (and Verizon's tech support line) disavowed all knowledge of a problem. Yet the CrackBerry forums had more than forty posts related to the item. No solutions out there yet, but numerous ideas and, at minimum, corroboration that this is a real problem.

I also just got a MacBook Pro, and I was having trouble playing mp3 CDs that I burned on the MacBook in my car CD player. Forget the iTunes or Mac documentation (there's very little of that). But it took 30 seconds at Apple forums to find my issue and suggestions for remedying it.

The unsung heroes here are the users who troll these forums and answer questions for newbies like me.

As for the manufacturers of these products, the least they can do (as Apple does) is to sponsor these forums and make it easy for their users to find them.

Product managers also may want to read them (even if they might not like everything they learn), to really know what's going on with their products.

Friday, September 14, 2007

Friday Haiku #2 - a review of the Blackberry World Edition smartphone in seventeen syllables

Good: world data/calls.
No camera, unlike Curve
Mic: much background noise!

Book marketers figure out "sense and respond" strategy

I talked in a recent post about marketers' inability to control their audiences (there are more and more examples every week about this difficulty). It's rare to see evidence that marketers are hearing that message--but some arrived today in a page one Wall Street Journal article.

As reported by Jeffrey Trachtenberg, Penguin Books has nurtured a breakout bestseller in Elizabeth Gilbert's memoir "Eat, Pray, Love" by reading the weak signals coming from the market, responding to them, and persisting. The book sold a respectable number of copies in hardcover (likely less than 100,000), but is now on the way to selling millions as a $15 trade paperback.

Here's what Penguin's marketers noticed:

  1. As it is published in hardcover, the book is chosen to be excerpted in O Magazine.
  2. February 2006: a very positive front-page review in the New York Times Book Review.
  3. March/April 2006: the book spends four weeks on the New York Times bestseller list (never rising above #12)--one week comes after the author's appearance on the Today Show.
  4. The author receives hundreds of emails from readers stating how the book affected them.
  5. Booksellers such as Barnes & Noble reorder the hardcover steadily through year-end.

Penguin felt that the book could be a paperback bestseller, and so ordered a large print run of 175,000 copies. They sent the author on a second book tour (seeing that her personality was an asset to marketing the book), and placed ads in outlets like Yoga Journal because of the spiritual themes of the book.

The book entered the paperback nonfiction bestseller list on February 11, 2007, and is still there today.

The "Eat, Pray, Love" story is not easy to replicate. It takes energy, confidence and persistence. It won't always work. But it shows two things: the customer is king (queen?). And marketers' best strategy, for more and more products, is to expose and nurture, not to push.