Archive for January 12, 2012

David Beats Goliath with a Rock (Solid Approach to Market Entry)

I recently received some great feedback on my University of Maryland Doctorate of Management paper on “Globalization and the Small-to-Medium Enterprise (SME).”

Despite many challenges, I argue that there remain some tremendous opportunities for SMEs to gain market entry in a global environment through alliances, virtual organizations, and symbiotic relationships with other companies both large and small. At the end of the paper, I included an interview with Ian Bothwell of Rover Technologies, a technology-based SME.

Here’s some of the good advice Ian passed along regarding how to launch technology-based products and services in a global marketplace.

Play the Field: Market in More Than One Segment

“The ability to market your technology to more than one segment is valuable. Multiple segments implies the potential to also scale in a larger market, while the risk of failure is reduced in any one segment. However, switching segments is usually not practical very early in the market entry process, primarily because customer acquisition and product customization costs can be prohibitive.”

Horses for Courses: Find the Right Niche

“A scaling strategy in the face of an established market is extraordinarily difficult, in terms of differentiating oneself and establishing presence and credibility. For SMEs scaling is predicated on finding useful niches and entering with an attractive price/performance and matching customer needs. In Phase Two, upsell the early adopters.”

Jack Be Nimble: Use Size to Your Advantage

“The primary advantage an SME has is its size. There is no market too small or any customer too unattractive. Its agility and willingness to take risks makes it a potent market force. For technology-based products and services, this advantage means being able to adapt to diverse customer needs without incurring significant additional development, testing, or market validation costs. This requires an inherently ‘flexible’ product that can be customized rapidly, easily, and at low ‘delta cost.’”

Pipe Dream: Rapidly Introduce New Products/Upgrades

“In order to scale in a segment, while sustaining first-in-class momentum, you must introduce product improvements in a rapid tempo, usually more than once a year. This calls for a fundamentally superior design concept and flawless execution by the product team. A useful concept here is product line architecture (PLA), which has become the rage with large enterprises in their drive to eke out efficiencies.”

Triumph of the Commons: Design for Rapid Product Evolution

“A well-designed product line embeds a superior design of sufficient abstraction and commonality that it allows for the assembly of a majority of ‘common’ elements along with a small number of unique variations—to yield rapid development of a range of product forms. R&D advances fed into the pipeline allow for variations to take advantage of these technologies first before they are incorporated into the enterprise. This provides a viable implementation framework for a large range of products prior to the market entry of even the first one! Synergistically designed software and hardware provide a powerful foundation for an affordable and efficient PLA to leverage an SME’s agility in order to make a big market impact.”

Fully Baked: Design Agnostic Hardware

“Hardware design needs to be device agnostic to allow for significant upgradeability for emerging technologies that are as yet undefined. Similarly, scalability has to be ‘baked-in’ at the outset, since the PLA supports different products with widely different scaling needs. The use of standard interfaces allows for interoperability of different classes of devices, opening the door to a variety of application concepts with the same hardware framework.”

Reading the Future: Use Services-Based Software

“Software design needs to mirror the abstraction of peripheral devices. Core software design must generalize these device constructs using a meta-framework to define and model them, to allow software to understand device types yet to be developed. A services-based software framework can encapsulate various aspects of product-related functions and allow the development of common and unique services.”

Observations on OODA, or Does the Machine Know?

Before you read this blog, watch this great clip from The Office and think about Michael’s situational awareness, decision-making process, and ability to update his “reality baseline!”

There are many theories that attempt to codify the decision-making process. One that has had a big influence on my decision-making approach is Boyd’s “OODA Loop.”

Col. John Boyd was a fighter pilot and military theorist whose analysis (and practice) of aerial combat led him to formulate high-level strategic military theories (including one that formed the basis of the Gulf War military plan) and general cognitive theories, including the OODA Loop, which has since become popular in business and sports.

OODA stands for Observe, Orient, Decide, Act. It is Boyd’s shorthand for the way humans interact with and control their environment. The idea is that individuals, businesses, armies, etc. that master the OODA loop gain the advantage.

These are the four simple steps in a dynamic OODA Loop:

  1. Observation: Take in data about the overall situation.
  2. Orientation: Analyze and make judgments about the situation.
  3. Decision: Determine a course of action.
  4. Action: Execute the action, then observe the decision (to start the loop again!)

When engaged in a game, business decision, battle, or otherwise, Boyd insists the successful “get inside the OODA Loop.” One strategy for success is to execute OODA loops faster than opponents, thereby improving situational awareness while the opponent loses effectiveness. Mistakes made by individuals or groups result from old information or mis-guided situational assessments and decisions.

Boyd suggests that organizations that execute the best OODA loops strike a balance between decentralized (and therefore nimble) decision-makers and top echelons that monitor from afar just enough to ensure that lower rank decision-makers adhere to a grand strategy. Not surprisingly, this describes the military hierarchy pretty well!

However, what is not specifically called out in the OODA model is the reflexive, critical thinking that can help refine and improve the connections between the OODA steps. American pragmatist thinkers—Dewey, James, Peirce—have much to say along these lines. Other theories that complicate OODA come from Karl Weick—his “Theory of Sensemaking,” for instance, examines the roles that ambiguity and uncertainty play in observation, analysis, and decision-making.

In fact, I keep in mind Weick’s Theory of Sensemaking at all times because my business requires constant and complex situational awareness, especially when collaborating with other organizations.

Michael from The Office probably should have updated his “reality baseline” rather than blindly trust his TomTom—he made a poor decision in the face of a common sense alternative. Writ large, a silly human error like his can become a colossal groupthink failure!