Market Dimensions for One Goal Console

Estimating market size depends on four different cuts of market data: (1) demand, (2) addressable market, (3) realistic opportunities vs competition, (4) targeted selection of "winnable" market opportunities. Discuss with respect to your team's new business.

(1) demand – The demand for products centered on systems integration is very large, so long as those products can satisfy Meaningful Use and Affordable Care Act requirements. These laws and federal mandates are driving hospitals and healthcare facilities (in some cases begrudgingly) to adapt electronic systems to capture patient data and transmit it between systems and facilities. Marketing material for OGC should heavily emphasize these benefits as this is the main area where our product can add value to facilities both small and large.

(2) addressable market – while the total size of the ‘addressable market’ can be defined as any healthcare delivery facility, our discussions have led us to understand that, for the purposes of a launch, addressable market should be narrowed down to be smaller healthcare facilities for whom a product such as this yields considerable gains at not much cost. Specifically, facilities that are on the road to integration, but cannot afford the larger, more expensive 'all-in-one' systems that come integrated out of the box.

(3) realistic opportunities vs competition - As far as realistic opportunities are concerned, the above customer segment is really the most realistic opportunity; the competition in this market is growing ever tighter, and as budgets get smaller and smaller, the need to demonstrate ever-increasing value at ever diminishing cost takes on additional importance.This is an area where OGC can actually excel, since the product meets a very specific need, and can be priced as such; many integration solutions offer a broad array of functionality; small facilities with very specific integration goals benefit more from the OGC than they would from other comparable products.

(4) targeted selection of "winnable" market opportunities - we've chosen to target smaller outpatient and extended care facilities as the most 'winnable' segment for launch. Since these facilities want to access government stimulus money for meeting Meaningful Use and ACA requirements, but do not have large discretionary budgets, a product like OGC can enable them to real rewards for not a lot of cash. 

Survival is not enough

The question is asked as to whether a firm can survive on inbound marketing alone.

My response beings with a question: is survival merely enough?

Survival implies maintaining a status quo; just barely staying afloat. But as any investor will tell you, growth is the lifeblood of any firm, and a firm that is not growing is dying.

So perhaps a more fitting question is, 'can a firm grow on inbound marketing alone?' To which the answer is, 'it depends.'

In the case of small businesses which are financed with equity in the form of venture capital, the driving financial goal of the business should be to realize returns which are in line with the expectations of the investors. and any kind of decision which could conceivably inhibit your ability to deliver those returns should definitely be considered a Bad Thing, and inadvisable. An explicit reliance on inbound marketing, which places an emphasis on organic growth and is very resource-intensive, could conceivably handicap a small business.

That said, if a firm's hurdle rate is low, and they have enough cash to not have to worry about a runway, sticking to your guns becomes much more doable, and in the long ron can even be a strategy for growth, if you are in a market which places a premium or corporate branding and integrity.

Relying solely on inbound marketing as a growth strategy is inherently risky, because the yields on inbound marketing increase as a firm, product or service's user base increases, and the venture must  reach a certain 'critical mass' in order for the firm to see any significant returns.

Now that said, every once in a while firms get lucky, and the right combination of product, placement and price causes a firm to see significant organic growth based solely off inbound marketing and superior product design. But these firms are the exception rather than the rule, and while it may be tempting to idealize their successes and believe we can apply the same formula, it is as often as not chance as much as anything else... even Apple, one of the largest and by any measure most successful firms, employs extensive outbound marketing to raise awareness about new products and their features.

So perhaps the question should be 'if Apple doesn't rely solely on inbound marketing, why should you?'

"Why Big Companies Can't Innovate" or, "Yes, they can"

(Note: I loathe using Apple as an example of anything within the context of business because of their status, but they really are a shining example in this respect.)

Apple is one of the most innovative companies by any measurable standard. Their products make their customers salivate, and more ink is spilled speculating on what the next game changer out of Cupertino might be than on the product line of any other company.

People think Apple is the company it is today because Steve Jobs was a visionary who believed in the power of amazingly designed products to change the world. And that is all true. But it is not the reason Apple is the company it is today.

iRobot built a vacuum cleaner that cleans your house for you... Think about that: they built Rosie from The Jetsons? How is that not one of the most inventive and innovative products ever built? The answer is that it is, but iRobot does not come close to being the juggernaut that Apple is. Why is that?

My answer, and the answer I riffed about on the discussion board for this class, can be summed up in one man, and his name is NOT Steve Jobs. It's Tim Cook. For reference, here is the riff about this topic I posted on Blackboard:

 In my mind, innovations at a broad, general level, fall into one of two categories: Product Innovation and Operational Innovation.

You could also model these as 'Customer' and 'Corporate' innovations; 'Sexy' and 'non-sexy;' 'Demand-side' and 'Supply-side.' Ultimately the question comes down to which side of the transactional unit of business the innovation in question delivers value to. The consensus seems to be that smaller firms (i.e. startups) are better able to innovate on the side of adding customer value (i.e. sexy, product-centered innovations) whereas larger firms innovate 'under the hood;' they tweak their business model or value proposition or operational apparatus to deliver more/better value than their competitors. This does not necessarily mean churning out sexy new products every 6 months, but it can mean revamping your product testing paradigm to be more efficient, thus freeing up capital to either a) invest in new ventures, or b) stay competitive on price with your current offerings and adding value this way. 

My beef with the HBR piece is that it trivializes this second sort of innovation and comes very close to demonizing it as corporate bureaucracy and greed. As a business student with an operational bent, this is abhorrent to me. I once said in an argument with a friend over several pints at a bar that Tim Cook played as big a role in making Apple the juggernaut that it is today as Steve Jobs. I hate using Apple to draw corollaries because it's such a copout, but it's the best example I can find. Shire Pharmaceuticals is another. 

Operational innovations are not just eking out a few more cents on the margin; it can be a radical fundamental overhaul of any part of the firm. Just because it does not deliver tangible value into the customer's hands today does not make it any less of an innovation, or any less bold.

Apple has shone as a company that innovates on both sides of this coin: their products delight their customers, but their operational apparatus is one of the best and most efficient that's ever been built, and that is the work of Tim Cook.

Fortune Magazine ran a dynamite profile of Tim Cook back in '08, when Steve Jobs' health first started to decline (http://money.cnn.com/2008/11/09/technology/cook_apple.fortune/index.htm); this article really underscores the impact Tim Cook had on Apple's bottom line, and how, if the company does not have the cash they saved by adopting Tim's operational methodology, they don't have spare earnings to plow into product development, which is what they're known for.

So when Max Wessel laments that 'Big Companies Can't Innovate' it upsets me because it undermines and marginalizes the kinds of innovations that enable companies to be better at what they do, and make more and better investments in products and technology.

No Pain, No Gain: An analysis of StormCloud

Toyota A3 Report and Entrepreneurship

What sticks out to me about the Toyota A3 approach to problem analysis and resolution, and what makes it a great asset to entrepreneurs and those seeking to start their own venture is the degree to which mentoring and oversight by senior managers plays a role in the problem solving process.

Often times in engineering and technology, there is a belief that experiential learning is the most effective and 'sticky' way for younger, fresher employees to internalize and master the day-to-day nuts and bolts of their chosen vocation; just jump into the work and pick at the problems until you come up with a solution, then, deconstruct the work with a more senior partner to identify areas for improvement or possible mistakes… this is where we get the code review from.

But in the small business/startup world, the stakes are too high and the variables too many to have a 'dive in and swim' approach… you need context, experience, and the ability to see in all directions of you are to make the best possible decisions for your firm.

That's what makes the Toyota approach so interesting when viewed through the lens of entrepreneurship… as the article states, it '…creates an organization full of thinking, learning problem solvers.'  By baking oversight and mentorship into the problem analysis and resolution process, they invite a more thorough transfer of wisdom and experience form the teacher to the student.

This is similar in principle to the goal Entrepreneurship In Residence programs seek to create- pair a senior entrepreneur with a young gun, and immerse them in the world of their ventures. In software development, we call this 'pair programming' and its a great way for junior programmers to get up to speed quickly, learn a new language or framework, or master all the ins and outs of a codebase.

Seven Sources (well, really four)

Peter Drucker defines the seven sources of innovation as:

1. THE UNEXPECTED
2. INCONGRUITIES
3. PROCESS NEEDS
4. INDUSTRY AND MARKET STRUCTURE
5. DEMOGRAPHICS
6. CHANGES IN PERCEPTION
7. NEW KNOWLEDGE

The idea here is that each or any of these sources of cognitive dissonance can server as a catalyst for an innovation. I think before we focus too much on the sources themselves it's worth nothing that there are two kinds of innovations:evolutionary and revolutionary: I want to focus mostly on the latter, as the former to me, while an important part of the innovation economy, tends to be more technical and syntactic by nature, and thus does not lend itself well to an analysis of the art of innovation.

Within the context of Revolutionary innovation, one could make the argument that all seven sources can be in play, but in my mind realistically, revolutionary innovations most often are associated with sources 1, 2, 6, and 7. Let's examine how.

The Unexpected: Broken Buildings: 

When Drucker talks about the unexpected, what he really means could probably better be described as 'The Accidental.' This is not to discount the role serendipity plays in the innovation process; just to say we should call a spade a spade.

To me, the unexpected is in the eye of the consumer, not the manufacturer. Nutrasweet and Post-It Notes may not have been what the engineers who created them set out to create, but that does not by nature make them unexpected. The Unexpected is all about satisfying a need for a consumer in a way they -you guessed it- weren't expecting. The easy example to give here would be the namesake of this blog; chunky spaghetti sauce. But seeing as how I've riffed about that already, let's go for revolutionary and not just evolutionary.

(The iPod is another example, but I believe using Apple as an example is a copout, because everyone in business schools everywhere is using Apple as an example. We can do better.)

Let's try for something more interesting: Broken Buildings (true story: that was the runner-up for the name for this blog.)

Frank Gehry is an Pritzker Prize-winning architect who broke buildings. How does an architect- a vocation whose very nature is to design and construct buildings- break buildings? This Is How. By changing what it meant to build a building, and making people feel things they were not expecting to feel, Gehry broke our previously held conceptions of what a building was, what a building could, or should, be. Critics panned Gehry's work when it was first making waves... now his structures are badges of honor, and command some of the highest commissions in the architecture world.

Incongruities: a tale of Frogs and Flies:

Ever try to swat a fly with anything smaller than a flyswatter? It's unbelievably hard. A flies eyes enable it to see just about 360 degrees, meaning there's no way you can sneak up on it.

Why is it, then, than a frog- an amphibian whose brain is barely a drop in the bucket when compared to a human brain- can snatch a moving fly out of the air with its tongue? 

Because a frogs eyesight is optimized for only seeing things that are moving; the faster something is moving, the more clearly a frog can see it... if you ever want to catch a frog, wait to make your move until your hands are just on top of the thing- the slower you move, the more invisible you are to the frog.

So what does this have to do with innovation? 

We are so inundated with information and data over the course of our day that, much like the frog, if something is not moving (i.e. different), we ignore it. 

Only firms and products that can cut through the noise and create a stark incongruity have a shot at egging out a slice of the market.

Changes in Perception: You Are What You Eat: 

Are eggs good or bad? How about butter? Red Meat? How about cigarettes? Running? Contraception?

Each of these things has gone from bad, to good and back, in some cases multiple times. In some cases, we don't know. Other, it depends on what you believe. Here's a witticism I just thought up: Perception Predates Product. People's belief systems and conclusions about what they like or don't like exist long before you got there. So saying you've got a better mousetrap means bunk to me if mousetraps aren't broken for me.

New Knowledge:  

Three times a year, The Economist publishes a series of articles on emerging technology called Technology Quarterly. To give you an idea of the kind of stuff TQ covers, this most recent iteration had stories on self-driving cars, energy weapons (literally, lightsabers), and a new kind of toilet that can cut down on occurrences of diarrhea, cholera, dysentery, and other third world diseases which kill hundreds of thousands in underdeveloped countries.

Not all of these ideas will make it to market, and more still may never see the light of day- but a couple of them will get through, and its on those leaps that the entrepreneur must focus their energy.

SWOT analysis of Google