5 principles of technology business, or how to change the world
This article is about what distinguishes a successful business from a failure, what development strategies are known and what developments should be used. The article discusses ideas and approaches that will help choose the right vector of development.
The author of the book “The Dilemma of the Innovator” Clayton M., conducted a study to establish on the basis of which innovations a successful business is built, and on the basis of which it is not. Innovation, conditionally divided into 2 types: subversive and supportive.
Supportive, these are technologies that improve and complicate the product, aimed at increasing the cost. Disruptive, these are technologies that simplify the product and democratize the market. Only disruptive innovations are changing the market.
')
Consider some of them:
1) The appearance of firearms.
The first firearm did not exceed crossbows and bows in range, accuracy, rate of fire and penetrating power, but it was much easier to master. It took months and years to learn to shoot straight from the bow, and any militiaman could shoot a gun and hit the target. Then, firearm technologies developed along the lines of supporting innovations and surpassed the characteristics of bows and crossbows.
2) The history of the development of computers and storage media.
The first computers occupied rooms, then personal computers appeared, then mobile devices.
Following the democratization of computing technology followed the media. With each new wave, the first devices of the new type were based on a different technology, but they were simpler than the analogues and exceeded them in a narrow number of parameters. Having found the market and received financing, the new technology began to develop and exceeded the old technology in its basic parameters.
So, Microsoft and Apple have achieved the first success thanks to the democratization of software and hardware with the advent of personal computers. Microsoft and Apple had different development strategies, but it was the democratization of technology that made it possible to make a rapid leap. Apple's second wave of success is based on the advent of mobile devices.
Disruptive innovation - a pattern in building a business that changes the industry. IKEA has democratized the furniture retail market by changing production and business processes. MacDonald's democratized the public catering market by introducing the conveyor principle. The conveyor allowed Ford to make cars available. Google and Yandex have simplified the search for information.
Current market leaders find it difficult to implement disruptive innovation. This is explained by the fact that their production and business processes are organized in such a way that they are designed for a certain rate of return per unit of product, and disruptive innovation does not allow reaching this level at the first stage.
New players initially build production and business processes on the basis of affordable profitability. And when a new technology becomes more profitable than the old one, already new players occupy leading positions.
At the same time the order of entering the market does not matter Google was not the first search engine, and Apple did not invent a personal computer. The main thing is to be among the first and make every effort.
90% of start-up companies are killed due to the lack of demand for the product. To minimize this risk, problem interviews are conducted with clients. From my own experience, it is required to interview at least 50 clients. Questions are asked about the past of the client in the open form, so you get the "real" information, and not the "imagination" of the respondent.
In my first technology business related to robotics ( KMG LABORATORY ), a market needs study was not conducted. The result - a loss of 2 years and a valuable lesson. In the next project ( DATA4 ), market research was conducted before development, which provided the best financial performance.
Remember "If a horse starts to stink, it's time to get off of it." It is better to close the project and start a new one than to continue to invest, hoping for a miracle.
Stages of technology development:
1) Functionality;
2) Reliability;
3) Convenience;
4) Price.
Analyze at what stage of development the technology, if the functionality is already “redundant” make the product more reliable, etc.
In the book "Geniuses and Outsiders" G.Malkolm explores the reasons for the success. Success consists of four components: cognitive intelligence, emotional intelligence, hard work and good luck .
To be successful it is not necessary to be very clever, it is enough to be a little smarter than average. If a person has an IQ (although this is not the only IQ) of 110-120 points, that is enough. Further growth of cognitive intelligence does not correlate with the level of success.
The ability to communicate, empathize and convince people affects success most strongly.
According to G.Malkolm, a person becomes a recognized genius in the chosen industry, if he spends 10 thousand hours on self-development. Based on my own experience, success depends on the efforts logarithmically. To achieve a growth of 10 times it takes 2 times more effort.
And an important factor is luck. As shown in D. Kahneman's book “Think slowly ... decide quickly”, the professionalism of the manager and the success of the company correlate with a factor of 0.3. This suggests that the ratio of successful companies with professionals headed and successful companies with less professional managers is 60 and 40%, respectively.
The authors of the book “The Strategy of the Blue Ocean” Kim Chan and Rene Moborna considered the peculiarities of the competition of companies.
Companies compete for consumers by offering a product with certain qualities. These qualities (price, implementation rate, brand awareness, reliability, etc.) are presented in the form of a value curve.
If the value curve of a product is close to the value curve of competitive products, the competition is for the same customer. This leads to a drop in profits.
If you change the value proposition so that the value curve differs from the value curve of the competitors, the product will create its own consumer segment, where there is no competition, and the cost is determined by the value of the product for the customer, and not the cost price. A new market segment often requires new product qualities, which leads to the addition of new qualities to the value curve.
We illustrate the value curve with the example of the circus Du Soleil.
The change in the value curve allowed Cirque Du Soleil to withdraw from the competition for the “parents with children” client segment and to offer the product to the “adults and corporate clients” segment.
When promoting a product based on disruptive innovation, customers will have different levels of skepticism.
Customers are divided into 5 groups:
1) Innovators. They want to use the product first, are willing to put up with imperfections, do not have a large budget.
2) Early followers. We are ready to overpay for the right to be the first to take advantage of a competitive advantage.
3) Early majority. Ready to buy a new product at a competitive price, subject to the presence of leading positions. Buy only industry-proven products.
4) Later most. Ready to buy goods at a reduced price in order to "jump on the outgoing train."
5) Lagging behind. Skeptics are not ready to purchase goods.
70 - 80% of the market falls on the early and late majority. Early majority customer behavior is different from early followers, making transition difficult.
To bridge the gap between early followers and the early majority, concentration on one product and one client niche is required. When a product becomes “familiar”, the early majority begins to buy it. Otherwise, there is a risk of using up resources before overcoming the “gap” between types of clients.
In more detail this topic is covered in the book “Overcoming the Abyss” by D. Moore.
If you want to change the world and build a successful company:
1) Democratize current technology;
2) Explore market needs;
3) Be smart, sociable and hardworking;
4) Develop your own value curve;
5) Concentrate on the product and client niche.
And may luck accompany you in your endeavors!
Disruptive technology
The author of the book “The Dilemma of the Innovator” Clayton M., conducted a study to establish on the basis of which innovations a successful business is built, and on the basis of which it is not. Innovation, conditionally divided into 2 types: subversive and supportive.
Supportive, these are technologies that improve and complicate the product, aimed at increasing the cost. Disruptive, these are technologies that simplify the product and democratize the market. Only disruptive innovations are changing the market.
')
Consider some of them:
1) The appearance of firearms.
The first firearm did not exceed crossbows and bows in range, accuracy, rate of fire and penetrating power, but it was much easier to master. It took months and years to learn to shoot straight from the bow, and any militiaman could shoot a gun and hit the target. Then, firearm technologies developed along the lines of supporting innovations and surpassed the characteristics of bows and crossbows.
2) The history of the development of computers and storage media.
The first computers occupied rooms, then personal computers appeared, then mobile devices.
Following the democratization of computing technology followed the media. With each new wave, the first devices of the new type were based on a different technology, but they were simpler than the analogues and exceeded them in a narrow number of parameters. Having found the market and received financing, the new technology began to develop and exceeded the old technology in its basic parameters.
So, Microsoft and Apple have achieved the first success thanks to the democratization of software and hardware with the advent of personal computers. Microsoft and Apple had different development strategies, but it was the democratization of technology that made it possible to make a rapid leap. Apple's second wave of success is based on the advent of mobile devices.
Disruptive innovation - a pattern in building a business that changes the industry. IKEA has democratized the furniture retail market by changing production and business processes. MacDonald's democratized the public catering market by introducing the conveyor principle. The conveyor allowed Ford to make cars available. Google and Yandex have simplified the search for information.
Current market leaders find it difficult to implement disruptive innovation. This is explained by the fact that their production and business processes are organized in such a way that they are designed for a certain rate of return per unit of product, and disruptive innovation does not allow reaching this level at the first stage.
New players initially build production and business processes on the basis of affordable profitability. And when a new technology becomes more profitable than the old one, already new players occupy leading positions.
At the same time the order of entering the market does not matter Google was not the first search engine, and Apple did not invent a personal computer. The main thing is to be among the first and make every effort.
Market research
90% of start-up companies are killed due to the lack of demand for the product. To minimize this risk, problem interviews are conducted with clients. From my own experience, it is required to interview at least 50 clients. Questions are asked about the past of the client in the open form, so you get the "real" information, and not the "imagination" of the respondent.
In my first technology business related to robotics ( KMG LABORATORY ), a market needs study was not conducted. The result - a loss of 2 years and a valuable lesson. In the next project ( DATA4 ), market research was conducted before development, which provided the best financial performance.
Remember "If a horse starts to stink, it's time to get off of it." It is better to close the project and start a new one than to continue to invest, hoping for a miracle.
Stages of technology development:
1) Functionality;
2) Reliability;
3) Convenience;
4) Price.
Analyze at what stage of development the technology, if the functionality is already “redundant” make the product more reliable, etc.
The secret of success management
In the book "Geniuses and Outsiders" G.Malkolm explores the reasons for the success. Success consists of four components: cognitive intelligence, emotional intelligence, hard work and good luck .
To be successful it is not necessary to be very clever, it is enough to be a little smarter than average. If a person has an IQ (although this is not the only IQ) of 110-120 points, that is enough. Further growth of cognitive intelligence does not correlate with the level of success.
The ability to communicate, empathize and convince people affects success most strongly.
According to G.Malkolm, a person becomes a recognized genius in the chosen industry, if he spends 10 thousand hours on self-development. Based on my own experience, success depends on the efforts logarithmically. To achieve a growth of 10 times it takes 2 times more effort.
And an important factor is luck. As shown in D. Kahneman's book “Think slowly ... decide quickly”, the professionalism of the manager and the success of the company correlate with a factor of 0.3. This suggests that the ratio of successful companies with professionals headed and successful companies with less professional managers is 60 and 40%, respectively.
Value curve
The authors of the book “The Strategy of the Blue Ocean” Kim Chan and Rene Moborna considered the peculiarities of the competition of companies.
Companies compete for consumers by offering a product with certain qualities. These qualities (price, implementation rate, brand awareness, reliability, etc.) are presented in the form of a value curve.
If the value curve of a product is close to the value curve of competitive products, the competition is for the same customer. This leads to a drop in profits.
If you change the value proposition so that the value curve differs from the value curve of the competitors, the product will create its own consumer segment, where there is no competition, and the cost is determined by the value of the product for the customer, and not the cost price. A new market segment often requires new product qualities, which leads to the addition of new qualities to the value curve.
We illustrate the value curve with the example of the circus Du Soleil.
The change in the value curve allowed Cirque Du Soleil to withdraw from the competition for the “parents with children” client segment and to offer the product to the “adults and corporate clients” segment.
Bridging the abyss
When promoting a product based on disruptive innovation, customers will have different levels of skepticism.
Customers are divided into 5 groups:
1) Innovators. They want to use the product first, are willing to put up with imperfections, do not have a large budget.
2) Early followers. We are ready to overpay for the right to be the first to take advantage of a competitive advantage.
3) Early majority. Ready to buy a new product at a competitive price, subject to the presence of leading positions. Buy only industry-proven products.
4) Later most. Ready to buy goods at a reduced price in order to "jump on the outgoing train."
5) Lagging behind. Skeptics are not ready to purchase goods.
70 - 80% of the market falls on the early and late majority. Early majority customer behavior is different from early followers, making transition difficult.
To bridge the gap between early followers and the early majority, concentration on one product and one client niche is required. When a product becomes “familiar”, the early majority begins to buy it. Otherwise, there is a risk of using up resources before overcoming the “gap” between types of clients.
In more detail this topic is covered in the book “Overcoming the Abyss” by D. Moore.
Conclusion
If you want to change the world and build a successful company:
1) Democratize current technology;
2) Explore market needs;
3) Be smart, sociable and hardworking;
4) Develop your own value curve;
5) Concentrate on the product and client niche.
And may luck accompany you in your endeavors!
Source: https://habr.com/ru/post/411127/
All Articles