All posts by joeztube

Culture Missions

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While reading Faisal Hoque’s article “How to Create a Culture of Innovation” I fixated on a reference made to mission: “An understanding of and commitment to the organization’s mission will guide employees when confronted by the unexpected for which no rules exist.” This statement is both bold and instructive. Bold because it defies the prevalent cynicism surrounding company mission statements. Instructive because it reminds me that an effective mission statement must address not just the value a company seeks to produce but also the way in which it seeks to produce that value. Summarizing the way a company produces value in the form of a mission statement is a very useful way to understand, commit to and ubiquitously communicate company culture. In its heyday, HP’s culture was known simply as “The HP Way” and everyone in HP knew exactly what that meant. The heyday was sustained for a good long run because it helped guide employees when confronted by unexpected circumstances for which no rules existed. Faisal’s article mentions Lou Gerstner’s realization that “…culture isn’t just one aspect of the game–it is the game.” This wisdom helps explain Gerstner’s success reinventing IBM as a thriving services company as its “legacy mainframe” business was maturing and making room for new technologies in the portfolio.

Increasingly, startups are promoting cultural missions publicly, not just to help their employees align with their vision, mission and strategy, but to appeal to customers and partners that might value the approach taken. This is clearly an important step toward more holistic business management. Here are a few examples from my recent browsing of various companies:

Looker (Business Intelligence)

We’re an inventive software company from Santa Cruz, California building new data experiences. Looker is run by a lean team of high-tech upstarts. Pioneering a new kind of business intelligence (BI) that gives anyone the ability to interact with live data, Looker is creating true discovery-driven businesses and unlocking the value of their data, one customer at a time.

For me, the key words that attract customers and help all employees honor the culture are: inventive, lean, high-tech upstarts, pioneering, anyone, Santa Cruz (this mission is overlaid on a photo of the team enjoying an evening barbecue on the beach).

PosIQ (Restaurant CRM & Big Data)

PosIQ is the ultimate combination of seriously experienced software and restaurant people, in one amazing, vibrant (and sometimes chaotic) office in downtown San Jose, California. We’re not just restaurant people trying their hand at software, or “dot-com” guys that think they know how to run a restaurant. We are both. This combination makes us passionate and driven to help every restaurant we work with succeed and flourish, and to change how the entire industry does business.

This paragraph is from PosIQ’s “Company” page…another example of defining the company in terms of the team, their backgrounds, their mission and their methods.

Google (Search et al)

Google’s mission is to organize the world’s information and make it universally accessible and useful.

Ten things we know to be true

We first wrote these “10 things” when Google was just a few years old. From time to time we revisit this list to see if it still holds true. We hope it does—and you can hold us to that.

  1. Focus on the user and all else will follow.
  2. It’s best to do one thing really, really well.
  3. Fast is better than slow.
  4. Democracy on the web works.
  5. You don’t need to be at your desk to need an answer.
  6. You can make money without doing evil.
  7. There’s always more information out there.
  8. The need for information crosses all borders.
  9. You can be serious without a suit.
  10. Great just isn’t good enough.

Each of these ten philosophic principles has at least one paragraph describing its meaning, and here you will find the details that help guide the Google culture. Given Google’s size and diversity, the depth is well worth the deviation from brevity. It’s hard to argue that “The Google Way” is the “The HP Way” of the current era.

I could have supplied several examples of publicly promoted mission statements that lack cultural references – these are much easier to find and in my opinion reflect a less confident and less holistic method of describing one’s company. The comfort zone for these companies tends to be centered on product features, which we all know is not a best practice in marketing. In between lie the many companies that are able to link their offering to the market need and some vision for their customers, which is better but still misses the opportunity to leverage the public persona to display – and thus commit to and guide employees to – a specific company culture.

The Value Onramp

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ValueOnrampIcon

A company’s value proposition forms the core of its identity, reason to be, and future potential. But having a clear and compelling value proposition is just the beginning. To be successful, a company must catalyze a flow of interest in its value proposition; I like to refer to the head of this flow as “the value onramp.” Value onramps should make it easy for prospects to experience your value proposition and become customers. Compelling and “self-service” value onramps are the primary reason that new Internet-based companies are able to sustainably grow customer adoption and revenues so much faster than the big ticket enterprise solution providers that preceded them. While many big solution providers have leveraged anything-as-a-service (XaaS) models to ease and accelerate the implementation of their complex offerings, most have yet to master a value onramp strategy that emphasizes grass roots marketing, customer pull and product adoption rather than top-down sales, vendor push and contract signature. When product adoption precedes sales engagement, you wind up with users that step forward to purchase (or request that their purchasing department do so). When sales engagement and contract signature precede product adoption, you indeed capture the first sale, but the ultimate end users of your product may resist or delay product adoption, which can jeopardize recurring revenue or worse, relegate you to shelfware.

Free But Fitting

When offering a free version to catalyze the value onramp, it is very important that this free version adequately represent the gist of your value. After all, you are trying to establish your brand with a new user and thus want them to experience what your brand stands for. If you reserve most of the value for your premium offering, your free offering won’t be compelling and therefore your fremium onramp will be ignored. When we decided to open source Aerospike’s server software, we made sure that the open source Community Edition was screaming fast and super scalable. Meanwhile, we held back valuable but less brand-centric features (e.g., cross-data center replication, fast restart) to reserve for the Enterprise Edition. Another notable example is Splunk, whose free version was packaged as a tool that enabled operations personnel to troubleshoot logs. Each user soon ran out of the storage allocation provided in the free version, but not before getting hooked on the simple user interface and the cumulative value of analyzing larger and larger stores of log data.

Prospecting vs. Community Development

Your website must function as the optimized communicator of your value proposition and thus must reflect the structure of your value onramp. One track through your online value onramp is for prospecting. This track presents information, demos and free product editions designed to convert browsers to evaluators and evaluators to buyers. The prospecting track also features a registration gate that requires visitors to provide contact details that sales can use to follow up. The registration gate should be placed to optimize sales, not registrations. Meanwhile, a second track through the onramp is required for any company that is developing a community as part of their go-to-market strategy. This track must strive to present a “no strings” experience for community participants. A community participant will only provide contact details in exchange for valuable community deliverables, such as open source software updates, product and training materials, development tools and utilities, and in some cases, t-shirts. Using these contact details to apply sales tactics to community participants is a sure way to kill the community. When we open sourced Aerospike, we created one section of the website to serve our new open source community, and a different section that allowed prospects to download a mix of free and registration-gated assets such as white papers and other pre-sales tools.

Simple Pricing Vortex

Simple pricing eases the sales cycle for both initial and expansion sales. For any given product, it’s best to structure your price around a single unit of value. While you may “leave some money on the table” by not charging for all value variables, the simplicity of a single unit tends to make up the difference. At Aerospike, we charged by terabyte of unique data stored in the database, even though this meant that customers with small data sets and high transaction rates could be leveraging our performance without paying much. This latter customer segment turned out to be small and therefore the choice proved successful. The database storage pricing model is also beneficial in that customers could easily predict their future budgets based on projections of their data set size. At Sensage, we simplified the pricing model but had to stick with CPU cores as the unit of value because it was the best way to optimize sales. The downside was that initial and expansion sales required a relatively complex sizing exercise performed by our pre-sales team. Granularity is another useful attribute in the pricing model, as it allows customers to buy more product as they need it rather than in large chunks that require external and internal selling. While pricing granularity can increase your SKU count (for those that are bothering with SKUs), it doesn’t add to complexity and is well worth the inches added to your price list.

Directing Traffic

Once you structure your onramp in a way that reflects these principles, you will want to feed it with various programs that generate visitors, interest and engagement. Make sure you are prepared to measure engagement within each part of your onramp and conversion ratios between each part of your onramp. As you gather and analyze these metrics and resulting trend lines, take note of internal and external changes so you can correlate what’s going on. You might launch a great new program and see poor results, only to find out that your competitor has increased its marketing budget and is drowning your ability to drive increased interest. I have found it useful to monitor engagement volumes and conversion ratios on a weekly basis – the importance of these metrics is too great to wait for monthly reviews. With a weekly measurement cadence, you can stay on top of the pulse and observe tactical patterns while using monthly reviews for deeper analysis of trends, correlations and necessary adjustments.

Vend me a volleyball…on the beach!

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You know those gadget vending machines that are showing up in airports? I’d like to see them show up at the most popular sand volleyball courts, capitalizing on my need for a good volleyball when I wind up at such a court without one. What began as a random impulse this morning evolved into yet another venturing daydream. I would pay a premium to rent a good ball by the hour. I would even risk a premium payment to ultimately purchase the ball if I forgot to return it or returned it in a condition that didn’t pass the vending company’s return standards. This return audit could happen some time later, once the vending company has a chance to inspect the ball. I would use an app to rent the ball and await my fate on the inspection after returning it. If I failed the inspection audit, the company would mail me the ball and charge my account the purchase balance relative to the original rental payment.

Using reasonable quality volleyballs is probably the best call, as they would expand the market by satisfying the high end and providing a good experience for the low end of the market. A rental fee of $5 per hour seems like a great convenience and a great profit opportunity for a ball whose cost could be below $25. One downside of this choice is that the purchase price could intimidate the low end of the market (e.g., $60 for a Spalding King of the Beach), but the benefits of a single product SKU could compensate.

The cost of the vending machine operation is central to the business model. Offering other convenience goods in the same machine could help with infrastructure cost payback, but if the rental and inspection process forces the vending machine to hold an inventory of balls that can be rented once, then returned to await inspection, there would be less space in the vending machine to sell other goods.

A way to reduce power consumed by the vending machine: allow the machine to be user-activated. Use bright colors that allow the machine to be seen well enough without fancy lighting running all day and all night. Use a nice glass that allows reasonable viewing from a distance to draw in customers. Then have a button that activates lighting on a limited timer so that the purchase experience is well-lit, but then the energy consumption goes back to zero when the machine is idle. This is the best idea in this blog…and it is probably already widely used, but if not, I called it first! An extension of this concept is to have a battery-operated radio on continuously, signaling for a charging cycle from the main power when needed, and therefore the whole system can be pinged for data at any time from the central service.

Security is probably the biggest hurdle. Airports have attracted high-end vending machines because there is high traffic from an attractive market (those that can afford a plane ticket) and they are heavily patrolled with security. Those vending machines sitting out on the beach at dusk, all alone…are begging for theft. There are probably advances in secure vending machines with adequate viewing glass…but this seems like the biggest obstacle, along with the issue of having enough traffic to drive enough volume to produce profit, as opposed to subsidizing the convenience of having a nice ball to hit when you happen to be on the beach…