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Qi3 Insight

How Converging Technologies Can Create a “Value Web” Rather Than A “Value Chain”

By Robin Higgons

I have just finished writing, with help from colleagues, a Qi3 Insights White Paper on the UAV sector, and it has raised some very interesting issues about the nature of the value chain. The background is that the capabilities of the UAV sector and of remote sensing are rapidly converging. UAV payload capabilities are increasing, while the size, weight and power consumption of remote sensing instruments is rapidly decreasing. The resultant ability to fly different remote sensing instruments on UAVs will open up a wide range of civilian markets in development, environment, natural resources, energy, communications, and disasters.

In these two converging worlds, there are already a number of value chains. In analysing how these may interact and form collaborations to exploit new markets, I came to the conclusion that these value chains are unlikely to merge together. They will probably form a set of connections to look more like a ‘web of value’. This is shown graphically in the White Paper.

As this happens, it raises interesting strategic questions over the best type of business model to use. Should a company focus on being a domain expert in one area, such as UAV operations, remote sensing instrument manufacture, or delivering specific applications? Or should a company go for world domination, adopting what I call the Schlumberger[1] business model of bringing all elements in-house that are necessary for the application (technology, operations, data, etc) and selling only the final service?

I am not yet sure of the best approach for different types of company. Why don’t you read the paper and see what you think.

Robin works for a wide range of companies helping them develop new markets and solve issues arising as the result of changing market conditions. If you would like to discuss his thoughts above or other such issues in your business, please contact him on robin.higgons@qi3.co.uk or 01223 422404.

[1] Trade Mark of Schlumberger Ltd

Are Customer Needs a Red Herring?





By Robin Higgons

Conventional B2B marketing wisdom tells us that we should always find out what customer needs are and focus marketing / product strategies on meeting those needs. While the logic is impeccable, I find that the approach is deeply flawed in practice.

Experience shows that customers will give good feedback on improvements to current products – tweaks, usability, performance improvements, etc, but that it is all incremental stuff, and rarely leads to insights that enable marketers to develop innovative product concepts (new or next generation) that create or maintain market leadership. Why? Well, customers often can’t see outside the picture that has been painted for them of your company’s capabilities. Their perceptions of the needs with which you can help them is highly coloured by the products and capabilities your company already has. Therefore, they can only come up with incremental needs and improvements.

As a result, looking at needs given by the customer is a red herring. Instead, marketers should focus on what customers or users want to do or achieve, and how your product can help in ways that become compelling. This is not necessarily intuitive, so let me give a practical example.

In one project I undertook on scientific instrumentation, all the feedback from customers was about resolution, sensitivity, and throughput. However, when we started asking about what the user did with the data, who the user’s customer was, and how we could make their life easier, a whole range of issues came out of the woodwork, such as set-up time, ease of use, report writing. As a result, we brought in experts to reconfigure workflow, computer games developers to transform usability, and surveyed the customers’ customer to understand key reporting issues. The result was a new product that took 40% market share in less than three years.

The key question for any marketer should be: “how can we help the customer to do their job better” rather than asking them what they need.

Robin works for a wide range of companies helping them develop new markets and solve issues arising as the result of changing market conditions. If you would like to discuss his thoughts above or other such issues in your business, please contact him on robin.higgons@qi3.co.uk or 01223 422404.

Value Propositions and the ‘So What’ Question

By Robin Higgons

At Qi3, we are privileged to work with some exceptionally clever new ideas, technologies, and services developed by our clients. Writing a value proposition for these is a joy, and testing new markets is often fascinating. However, the work also comes with a significant danger of being carried away by the brilliance of the idea.

To keep ourselves routed in reality, we often use the ‘So What’ question – ‘great idea but what does the user think it will actually do for them?’ Conceptually this is blindingly obvious, but it brings an interesting set of challenges in testing the real level of market traction.

First, interviewees normally want to help, so they will tend to give encouraging rather than objective responses. To combat this, it is crucial to encourage negative as well as positive responses. I do this by stressing the value of bad news as well as good, and asking if the idea is ‘great or barking mad’. Killing a non-viable idea can save a lot of time, money and heartache.

Second, it is essential to ‘look outside the box’. I hate that phrase. But it does succinctly capture the concept of what needs doing. Often the original target application or market is not very interested. Or the product concept is not well aligned with user needs. Evolve the concept to focus on real market needs or other markets with a stronger interest, and a brilliant idea with little market traction can be turned into a world beater.

And third, look for buying signals, which can often be quite subtle. On one project I spotted the buying signals when I had several consultant professors of Neurology at major US medical schools give me over an hour of their time on the phone and offer to provide further help. Follow the interest and the money; if there are no early buying signals, then there isn’t a market.

So, for your great new product or service, test the value proposition with real end users as soon as possible. Make sure you get bad news as well as good. Learn how the product or service can be changed to make it more attractive. If you get early buying signals then follow the money. If you don’t, stop and rethink, because you probably don’t have a commercial proposition.

Robin works for a wide range of companies helping them develop new markets and solve issues arising as the result of changing market conditions. If you would like to discuss his thoughts above or other such issues in your business, please contact him on robin.higgons@qi3.co.uk or 01223 422404.

Is Your Business Model Fit for Purpose?





By Robin Higgons

I recently came across a fascinating article in the Harvard Business Review on ‘Reinventing Your Business Model’ by Johnson, Christensen, and Kagermann (2008). Among the many good points they raised, one stood out for me in the context of the challenges that we see in many companies – ‘Few companies understand their existing business model well enough—the premise behind its development, its natural interdependencies, and its strengths and limitations. So they don’t know when they can leverage their core business and when success requires a new business model.’

It reminds me of a saying by G. K. Chesterton – “It’s not that they can’t see the solution. They can’t see the problem.” For most companies, the challenge is not reinventing the business model, as was being explored by the authors of the article, but evolving the business model as market requirements change. Businesses often remain wedded to their business model for far longer than they should. As the inevitable issues of market share erosion, pricing pressures, and declining profit margins pile in, good operational strategies are adopted to ameliorate the situation, but rarely are the underlying causes evaluated.

I have never seen a company write down a clear statement of its business model, nor have I seen discussions of business model development / evolution on the agenda of board meetings. Yet this can be critical to the success of the business. I strongly recommend that every company writes down its business model on one side of A4, following the golden rules of brevity, clarity, and empathy (for the customer).

There are a number of tools to help do this, with the “Business Model Canvas” being well respected. The exercise will often be a challenge, but will bring a clarity of thinking about the strengths and weakness of the company’s business model that will dramatically improve its strategic thinking and its success.

Robin works for a wide range of companies helping them develop new markets and solve issues arising as the result of changing market conditions. If you would like to discuss his thoughts above or other such issues in your business, please contact him on robin.higgons@qi3.co.uk or 01223 422404.

Social Media, a Grumpy Old Man, and the Road to Damascus





By Robin Higgons

Here at Qi3, we decided some time ago to research the value of social media in B2B marketing. We wanted to dig under all the hype and find out if social media is another fad, or if it has real value, and if so, how and where. The first step was to review
the academic literature in order to evaluate some, hopefully, objective information. Amazingly there is virtually nothing published in this area, at least not in the academic journals. A check by our intern with his Professor of Marketing confirmed this.

We then took a look at reams of material published generally on the subject, and amongst the dross and drivel we found a few very useful pearls of knowledge, published by practitioners who like us are trying to understand the real value of social media in marketing. However, it all related to B2C marketing, and by this time I was beginning to enjoy my role as grumpy old man, viewing the whole area with a high degree of scepticism.

So, with little objective evidence available, we decided to undertake our own research and ran several test campaigns with key social media platforms such as Linkedin, Twitter, and Facebook. The experience was quite revealing, and as a grumpy old man on my own road to Damascus, I had a number of revelations.

First, social media is simply another communications’ route, alongside snail mail, fax, telephone, semaphore, etc, for getting the ‘Public Relations’ message out to the target audience. And as such, all the disciplines of good practice that have been built up in the past still apply, but with a key difference. Traditional PR channels have gatekeepers such as journalists, editors, or peer review, who sift out the drivel and dross from quality content. Social media channels don’t have these gatekeepers, so anyone can publish, making it difficult for your marketing message to stand out.

However, social media has four performance advantages over traditional channels that have real benefit to B2B marketers – speed (instantaneous delivery), reach (global coverage), metrics (the ability to measure what the recipients do in great detail) and networking (people can forward information they find interesting through their business networks).

And it adds another dimension to successful audience targeting. Some people like to watch social networks from the side-line, picking out information when they are ready (known in B2C marketing as Lurkers), while other people want an instant stream of the latest information. Profiling audience behaviours and choosing appropriate platforms for different groups is crucial

So, is social media going to revolutionise B2B marketing? I think not. Ten years ago there was tremendous hype about how internet retailing would replace ‘bricks & mortar’ retailers. In reality the two have merged resulting in an adaptation of the retailers marketing strategies. Social marketing will be incorporated into the armoury of weapons available to B2B marketers and will need to be used with the same skill and vision as other channels.

So, my conclusion is to be cynical, objectively test the real value of social media to your business, but if the value is proven, then adapt and adopt quickly. In our case and based on the evidence we put together, this grumpy old man has taken his own advice, and actively supported the use of social media in our own marketing programme.

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