Daily Archives: March 29, 2011

Social Networks Will Change Product Innovation

But not always for the better.

A recent post over on the HBR blogs declared that social networks will change product innovation because the new communication channels [will] actually force material changes not just in the way companies market their products but in the strategies and operations they use to develop and build those products.

This will happen because it is very difficult and costly to maintain a unified voice across all channels and to control information flows to the outside world. As a result, companies will need to adust to a 24/7 dialogue with consumers, investors, and other stakeholders.

This, in turn, will require changes in product strategy since the focus will have to be on products that will cut through the noise on the channels the consumers, investors, and other stakeholders are on.

But since products take money, development will be steered towards what developers think investors will want, which will, in turn, be driven by what investors say on the channels the company is following. But just like not all investors are fans of social media (even though most of the tech investors seem to be these days), not all investos are users of social media, so development is going to be steered towards the interests of a sub-group of potential investors who are regular users of social media. And if these investors are not in the target market of the product, who knows if the target market will be served at all.

For example, let’s say the target market is the average joe who makes 40K a year in a blue-collar job. This is not your aveage investor, who’s rich and able to drop 10 times that on an investment on a whim. Thus, they’re not going to be a buyer and should not be driving your development decisions, especially if their preferences add cost as a bule collar Joe making 40K a year doesn’t have a large disposable income after paying the mortgage, the bills, and feeding the family. So while the investor might like to see the intelligent toaster made out of titanium, the average Joe would be happier with more affordable aluminum.

So, at least for now, social networks aren’t the silver bullet that will change product innovation for the better.

The Forrester Wave: Ocean or Kiddie-Pool?

As one of the flagship publications in the space, this is one that, for better or worse, a lot of people look forward to come decision making time. So, just like SI tackled the Gartner Quadrant last year, it’s going to tackle the latest Forrester Wave on eProcurement Solutions (Q1, 2011) to help you understand what’s good, what’s bad, and, in some cases, what’s downright ugly. Because, in the end, if you don’t know how to ride the wave, you might just end up digging your own grave.

First off, I agree with Jason (who commented that Forrester’s eProcurement Wave Captures the State of the Market) that the Forrester ranking methodology, generally, does a better job than Gartner because it provides better transparency into the criteria that contribute to a ranking on each axis, that this report in particular does a solid high-level job of creating a credible segmentation for a sub-set of the vendors in the market, and that “there was little to broadly differentiate” among providers, at least on a feature/function level for providers that were included in the report. But better is not sufficient, high-level segmentations are pretty easy, and if you limit your report to the 800lb Gorillas, all of the solutions are going to pretty much look alike.

For example:

  • if you have to get from New York to Los Angeles quickly, rail is better than car (because even though it makes lots of stops, the train runs 24 hours a day and you can’t drive 24 hours a day), but doesn’t match the efficiency of air and a direct flight
  • there are lots of ways to credibly segment vendors — product focus vs service focus, e-Procurement focus vs ERP focus, generic solution vs vertical solutions — but such segmentation is meaningless to a buyer if it doesn’t segment according to the buyer’s particular needs
  • if you limit your search to slivery mid-sized sedans, from a distance, there’s not much difference between a Toyota Camry, Ford Fusion, Nissan Altima, Honda Accord, or a Hyundia Sonata (and you’re likely to confuse them if you’re driving fast and just take a quick look)

In other words, while this was a little better than last year’s Tragic Quadrant from Gartner — where strict guidelines were set down but vendors allowed to slip in on exceptions or technicalities anyway, where some of the evaluation criteria didn’t make any sense at all, and where some non-standard definitions were used — it wasn’t much.

Basically, for just about every fundamental it correctly included, there was an accompanying flaw. And while most of the flaws weren’t that bad, the net result is that the overall report isn’t that useful unless you’re a 1000 lb Gorilla trying to figure out which 800 lb Gorilla you should buy from. And since there are only 1000 companies in the Fortune 1000 club, this means that the number of companies that will find this report useful are few and far between, and, as usual, the burgeoning middle-market, where most of the need is, goes unserved again, and the tsunami you might have been expecting is nothing more than a weak 6-foot wave that won’t do anything more than get you a little wet.

So what were the (major) flaws? That’s the subject of tomorrow’s post.