A common fallacy of many high-tech "marketing" efforts is
to confuse interest with value. Engineers, with an interesting idea in hand,
will ask if prospective customers are interested in hearing about. In most
cases the answer is "yes" but what does that mean? At a further meeting, the
idea is presented and discussed, and the prospective customer’s interest
sampled again. It’s often high, but what does it mean? Often it means simply
"You are right! That’s an interesting idea. Clearly you’re a bright person, and
you know much more than I do about this area. I can’t find any flaw in your
reasoning."
NRG’s methods go a simple but important step beyond. We
ask our interviewee to fit the prospective solution into their current
budgeting categories. We believe that there is no better measure of real
interest (and value) than to study where someone is spending money today.
Where the fit is high, it shows in the budget. Early caching adopters found
the value in network scaling, and typically network scaling was their
largest budget item. But you can pass all the tests above, and still only be
in the curiosity category. Most technology-driven companies never ask this
vital question – how much will you pay for it, when push comes to shove?
A lot of our work has to do with what others have called
"disruptive" technologies or business models. Some use "disruption" as a
mantra. We tend to think of it as an important but specific marketing
problem. Something is disruptive if it doesn’t show up as a natural
refinement of existing businesses. The PC was clearly disruptive for IBM.
The problem with disruptive opportunities is that straightforward marketing
processes often don’t identify the value. Christensen’s seminal work on
disruption ("the entrepreneur’s dilemma") was built on a study of disk
drives. New generations of disk got physically smaller, but the new
generations were rarely an improvement for existing customers. There are
lots of examples of important disruptions all around us on the Internet. The
wireless Internet is clearly disruptive. If you like browsing on a broadband
connected PC, you’ll hate the comparable wireless experience because the
bandwidth is lacking and display awful. That’s not to say that the wireless
Internet won’t be big business, just that the opportunities aren’t obvious.
Streaming is another disruptive opportunity. The NRG methodologies are well
suited to attacking disruptive opportunities. When we interview people, we
talk about values and problems, not just about the fit or applicability of a
specific product or technology. Identifying and sizing disruptive
opportunities will always be more challenging that evolving an existing
business forward. NRG’s methods have proven very effective for attacking
these problems however.
The .COM collapse has left a lot of confusion about what
the Internet revolution really is and where it stands. In brief, here’s
the NRG perspective. First of all, the Internet is a very big deal. We
believe, like Peter Drucker (in his Atlantic Monthly piece) or Don Tapscott
(in Digital Capital) that we in the middle of an information
technology revolution that will ultimately be comparable in importance to
the invention of moveable type and the industrial revolution. To a large
degree, the Internet catalyzes these changes. This revolution has little or
nothing to do with trying to sell pet food or even on-line advertising. It’s
much bigger. It has to do with how your structure and run enterprises. It
has to do with how you develop and deliver software and information systems.
The Internet is driving ongoing and rapid change, but the timescale is
certainly years and sometimes decades, not 12-18 months. We’re clearly in a
hangover and reevaluation period, compounded by macroscopic economic
uncertainty. But all this will stabilize and everyone will realize the
Internet train is still chugging alone.
So we clearly believe that the Internet is immensely
valuable. We also think in many respects it is a practical disaster, barely
usable. Much of our work to date has been right in this area: how can one
cleverly leverage what the Internet can do and avoid the liabilities, in
order to move forward in this revolution. The opportunities and values can
be huge, as the content delivery network use of caching technology clearly
showed.
These problems would be exciting if everything else was
standing still. They are compelling given the parallel developments of new
applications that leverage the Internet, and new application models (e.g.
Web Services).
