I read this term today while I was reading the book The Bezos Letters by Steve Anders.
I just finished reading the 1997 letter to the shareholders and started reading the first chapter of the book. I was astonished by the amount of emphasis Jeff Bezos places on successful failure.
I keep writing about testing everything because only the market has the right to decide what will succeed. You may have the best product, the most expensive and elaborate media roll out, but if you don’t first test and see, it can bomb.
But Bezos takes it further, he’s talking of billions of dollars that he’s spent on failures, learnt from them and made other things successful and made many more billions.
In marketing and product management, especially when you are a small company , you need to be very agile at testing continuously, learning and adapting to make your product more attractive in the market.
When you do testing ensure you only do with one variable at a time, to keep reducing the risk of a complete disaster. Never try multi variable testing because you will never be able to figure out the interplay between two variables which could create an indeterminate third variable.
Everything that you do has risk. You mitigate it by testing, identifying the failures and then converting into success.
Till next time then.
As a product manager you look at creating extensions to meet needs of different markets. However not all segments are created equal.
While it’s good for the ego to know that our product is present in multiple segments, some segments are more profitable than others. As a product manager you need to be aware of it because otherwise some finance guy may draw up his own conclusions and shut down your product line.
There could be various ways of doing an analysis of each segment. One method that I have found easy and quick to use & keep me aware is suggested by Richard Koch in his seminal book The 80/20 Principle. If you have not read this book, I would recommend you stop doing everything else and pick it up at the Kindle store.
His suggestion is to segment your market by competitors. The segment where you face the same competitors you club together. Whenever the competitors change you account as different segment. Now fighting different types of competitors in different market segments requires bandwidth of all kinds of resources.
If you know against which competitors you win more easily and also make more money because of scale or whatever else, then as a product manager you should do everything to win even more so that the absolute profit that your product line creates grows.
On the other hand if there are segments, where you find it difficult to win against other types of competitors then you should avoid.
There was a time when I was carrying a product line of an operating system . Now I could sell services to end customers for managing their operating systems, I could sell them training on those operating systems for corporate customers and individuals who wanted to pick up the skill.
While it was easy to sell services and training to companies, when it came to selling in retail our systems were failing against dedicated retail training companies. So even though my product remained the same, in the retail market my competitors were different and I had to leave that segment. Till that time I had not read this book. Now I like to keep evaluating on regular basis how my different product lines are doing in different competitive segments.
Till next time then.
Last week I put up a post in which I highlighted the top issues that we need to focus on when looking at the product management in a technology environment. Product Management being a subset of marketing, some of the core items remain the same. However the focus changes a little. In my opinion, B2B technology buying needs to prioritize as follows:
- Understanding the ecosystem for technology adoption
- Getting footfalls (incase of a store) or hits on your website or people coming to your webinar
- Cost of various media to get you the traffic
- Cost of converting the footfall into a buying public
Perry Marshall calls items 2-4 as Traffic, Conversion and Economics. The reason I put the ecosystem first is because there’s a huge dependency on the existing infrastructure for the technology to be adopted. Most technology products that fail are because the ecosystem did not exist for the adoption.
Since 80/20 is fractal within each of these there’s a further 80/20 which exists. So within each database/list, there could be about 20% who would respond 80% of the times or even within the ecosystem there could be a 4% which accounts for the 64% of the ecosystem dependency.
If you are able to identify the few challenges in the ecosystem that you will face which can have a major impact on the success of your product, addressing them will ease your product launch or product entry or penetration dramatically. Its the small hinges which move doors in all areas.
Till next time then
A few posts back I had written a post on how giving too many choices actually reduces the chance of success.
I used to hear a lot of gurus in the stock market talk about being focused with not more than 10-15 stocks to get the best returns. If you read the Wealth Creation studies by Raamdeo Aggarwal, he gives a lot of examples of how being focused can give much higher returns. If you want average returns then you can just take an Index ETF.
The other day I was listening to an interview of Garrett Gunderson with Joe Polish on YouTube. And he happened to mention this term in passing and it kind of stuck with me. Garrett has written a very nice book Killing Sacred Cows: Overcoming the Financial Myths that are Destroying your Prosperity.
Even in marketing if you try to do too many things trying to see which will succeed is because you are not sure of yourself either on your offering or on your market or a whole lot of other things. Most of the time we try to do multiple things at the testing stage to see what sticks and what falls. But once you start seeing what sticks you need to start improving on that. You can’t be testing multiple variables simultaneously. It never works.
You cannot be testing multiple offerings in different markets and also seeing which message works. I have done this at different times and flopped badly. Sometimes these were done because I fell in love with multiple brands and thought I could get them launched at the same time but then eventually realized I could not do justice to all of them. It was definitely my ignorance then. At other times I was in a tight spot and had to somehow get something moving and thought at least if a try so many things simultaneously, I will be able to get success somewhere.
Eventually I have come down to some very specific things for B2B marketing. I need to identify only one target market and niche it as much as possible when I am launching a new product / service. If your segmentation is done well and then you get your database / list based on that you have already come a long way. After that you test your messaging.
The 80/20 that I have been talking about in the last few posts is exactly the opposite of diversification. Its about focus and the knowledge which comes from focus. Like the image above, a few colors in a pattern can give a good look but putting too many colors on the same rug, assuming some one will like some color is ignorance.
Whether its finance or marketing or even other areas of your life you can spread your self, diversify and be shallow and ignorant or go deep, focus and be knowledgeable and get great results.
Till next time then.