TECH TALK: My Mental Model: of Integrated Solutions (Part 2)

Even as the goal of building the ecosystem stays that is the only way for long-term growth of the new industry, in the early days, it is very important for a single entity to provide the whole solution. This is because of two reasons: the customers want a whole solution (the assembled car, and not the sum of the parts), and trying to co-ordinate and convince various other players and making them see the future through the eyes of the entrepreneur can be extremely difficult.

So, even as the entrepreneurial firm is trying to build an ecosystem, its strategy needs to consist of two stages: the first, in which it leads the way through pilots or prototypes to show how the whole solution can open up the new, invisible markets; and later, by allowing specialised service providers to offer specific parts of the solution as the industry modularises, since that is the only way to achieve rapid scale and growth.

Putting the whole solution together may seem like a bad idea, because it calls for the firm to do things it is not necessarily good at. But there is no choice at the outset. Customers need a solution that is complete, even though it is much easier to delight them because they are nonconsumers at this point of time, and thus their expectations from the product are not very high. So, a good-enough whole solution is the need, rather than a perfect sub-system. Over time, as others start seeing the new markets being created, they will start coming into the market with their expertise, and that is the time when the innovator needs to be focus on its core strengths and working to build out the ecosystem.

Let me give two examples in the context of SMEs and rural markets. In the case of SMEs, it is my belief that the need is for an IBM-type organisation which can be the single interface to the end customers. Be it hardware, software, support or services, this firm should be able to offer all the services that the SME wants, and not require the SME to assemble the services from a multitude of options. This is because the channel which should be playing the role of aggregating the services is not doing it it is stuck in a low-equilibrium situation. As the channel starts seeing the customer demand, it will rise to the occasion, driven purely by a profit motive, which is when the innovating firm should step back and leverage the channel to multiply reach. The key point to remember here is that the channel will not help the firm become successful, but will want to ride on the coattails of the success.

It is much the same with the rural market as we seek to propagate the idea of RISC. I have reached the conclusion that we will have to build, own and operate a few centres to demonstrate to the various entities who should be joining that there is money to be made. The upfront costs of co-ordination and convincing, in terms of time and effort, are simply too high. Once the RISC centres are built, then we will have multiple players who will be interested. But if we do not take up the initial role of creating the solution in an integrated manner, the idea will remain just that.

Tomorrow: with Local Distribution

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Dell on how to attack a New Business

As quoted in Business 2.0 – part of a “how to succeed in 2004” series:

We first understand how the customer is being served, how can we add something unique, and how can we eliminate cost. We look also for large adjacent markets that are standardizing. These are often characterized by prices that are too high. Our business model is applicable across a broad cross section of the IT industry, where technologies are standardizing, products cost too much, and Dell’s distribution advantages can be brought over. Also there is a complementary nature to these new businesses. The same people who buy desktops buy printers, storage, projectors, services, and network equipment.
We really got serious about the consumer business in 1997. At the time, about 95 percent of our revenue was business and institutions. Now it is 85 percent, and 15 percent is consumer. If you look at what is happening with digital music and broadband, increasingly you have this idea of the digital home, with the PC at the center, connecting things that used to be proprietary. So there are now multipurpose monitors that can be a computer monitor or a TV. And there is the idea of an IP-based wireless network in your home where you have different nodes, whether for audio, video, or printing output, with a PC at the center. Users are asking us for these things.

Still, we cannot do everything at once. We have to prioritize which opportunities are best for us and for our customers. But it’s a good day for customers when we enter a new market.

Microsoft-SAP Battle

News.com writes about the war for the IT infrastructure for small businesses between the two former partners:

When it entered the software niche known as enterprise resource planning (ERP) two years ago through a series of acquisitions, Microsoft made a pledge that it would steer clear of longtime partners SAP, PeopleSoft and Siebel Systems. The giant said that instead of selling its wares to the world’s largest corporations as SAP and its traditional rivals do, it would target a largely untapped market: millions of small and medium-size businesses.

But with Microsoft expanding the scope of its applications and SAP looking to challenge Microsoft for small, high-volume contracts, the gloves are about to come off.

Microsoft insists it’s competing largely with a collection of several thousand software makers around the world that cater to small businesses. Unlike the high end of the market, the segment Microsoft is chasing is populated by many tiny competitors “below the radar screen of people on Wall Street,” said Doug Burgum, senior vice president of Microsoft Business Solutions Group, the unit that develops and markets Microsoft’s ERP software. “Our biggest competition is really ‘other’, not SAP,” Burgum said.

Likewise, SAP says Microsoft poses no major threat. “The market for software applications, even in this challenging business environment, is big enough for all of us,” SAP representative Herbert Heitmann said.

In a sure sign that the company’s moves are aimed squarely at Microsoft, SAP has stealthily sought to recruit Microsoft Business Solutions software dealers to sell its new competing product line. One major advantage Microsoft has in the small-business segment is its network of 4,500 software distributors. SAP typically sells directly to customers, and the lack of such a network has proved to be a stumbling block in previous attempts to reach smaller businesses.

Learning via Informal Networks

[via Smart Mobs] Jay Cross writes:

Everything is connected. Each of us is enmeshed in innumerable networks. Youre linked to telephone networks, satellite networks, cable feeds, power grids, ATM networks, the banking system, the Web, intranets, extranets and networks that are local, wide, wireless, secure, virtual and peer-to-peer.

Social networks interconnect us in families, circles of friends, neighborhood groups, professional associations, task teams, business webs, value nets, user groups, flash mobs, gangs, political groups, scout troops, bridge clubs, 12-step groups and alumni associations.

Human beings are networks. Scientists are still conceptualizing the human protocol stack, but they affirm that our personal neural intranets share a common topology with those of chimps and other animals. Once again, everythings connected. Learning is a whole-body experience.

Learning is that which enables you to participate successfully in life, at work and in the groups that matter to you. Learners go with the flow. Taking advantage of the double meaning of network, to learn is to optimize ones networks.

The concept that learning is making good connections frees us to think about learning without the chimera of boring classrooms, irrelevant content and ineffective schooling. Instead, the network model lets us take a dispassionate look at our systems while examining nodes and connections, seeking interoperability, boosting the signal-to-noise ratio, building robust topologies, balancing the load and focusing on process improvement.

Does looking at learning as networking take humans out of the picture? Quite the opposite.

Most learning is informal; a network approach makes it easier, more productive and more memorable to meet, share and collaborate. Emotional intelligence promotes interoperability with others. Expert locators connect you to the person with the right answer. Imagine focusing the hive mind that emerges in massive multiplayer games on business. Smart systems will prescribe the apt way to demonstrate a procedure, help make a decision or provide a service, or transform an individuals self-image. Networks will serve us instead of the other way around.

Stuart Henshall Interview

I have been reading Stuart’s weblog for some time. It is always interesting to read interviews with bloggers you like because you get deeper insights into their thinking and writing.

Excerpts from a Robin Good interview around one of his current obsessions – voice communications:

a collection of new products suggests that there is a cost revolution in the making.

To date my perspective of Web conferencing is best characterised by WebEx. Id admit I find these clunky.

Theres always a parallel phone call running with the data that is on the screen. So the environment is overly structured from the beginning.

Book the call. Have the presentation, no or limited back chat etc. Plus it is simply expensive. Yep it is cheaper than flying people around and saves time.

I see more control coming to the desktop to enable more spontaneity, and rapid answers.

I personally believe that voice centric IM is coming (eg Skype +) and will be adapted to conference calls. Behaviour will change dramatically when organizing no longer pre-empts need action now. Automated synching of presence is rocketing towards us.

Ive also seen some products that suggest new virtual conferencing support amongst real physical conferences. These could really leverage social aspects, Spoke, ZeroDegrees etc. type spontaneous meetups.

These mini-conferences may just be the place we see a real explosion. Some of these require no network at all just Wi-Fi cards and a group of people in the same place. Thus the old idea of getting business cards may just be supplanted by networking new introductions and connections more efficiently.

Then there are some new collaborative ways of using information that may revolutionize the moments in which we collaborate.

Software is going P2P, Voice call costs are trending to zero.