Companies and products don’t die they become irrelevant and fade away

I have heard from many people that the startup initiative in India has been a failure but no one said why. Below is a list I obtained from a social network about the top reasons why startups fail.

 

Interestingly, a startup company had contacted me few months back asking me if I could be their mentor. Their product is on the lines of Askme.com and they were trying to market it in Kerala, my state in India. The key problem was the people of Kerala are not even fully used to the shopping mall culture yet. We still prefer buying from local grocers, medical shops etc. So searching about products on the internet is still a long way away. My question to the company was, do you know if there is a need for your product in the market you are targeting? They had no clue. This is the top reason on the above list. Lack of proper due diligence. What they wanted from me was to understand how to market their product. I told them that you need to go back to your drawing board and figure out something crucial. Simply putting your product out there is of no use. You cannot force people to use your product. So what can you offer them for using your product? You need a better product strategy before you get on to business strategy and that is where marketing strategy comes in. I haven’t heard from them after that.

Even worse is not understanding when the product is ready to be in the market. Mature companies too have new products and services in their pipeline but what makes and keeps them successful is their ability to time their launches precisely. The extreme of this is Apple launching their products whenever they want to because they have a phenomenal market following. But that’s Apple. There is a concept called Minimum Viable Product (MVP) which can help understand when to stop working on the product and launch it. How do we know this? Work on creating those aspects of the product which could create market disruption or get noticed in the market quickly. When this is successful then it becomes easy. People will take over from there. All we need is to take feedback from customers. Customer expectations will tell us which features of the product are more relevant and need to be out there in the market quickly.

There are two phases of every lifespan be it that of the Universe itself and everything within it. Evolving and maturing. Business also follows the same pattern. A friend is learning to be a professional cake maker and my advice to her was simple. If she is going to bake cakes like everyone else is, she is not going to get far. Evolving stage is the experimenting stage where she needs to mix and match and see what unique she can create. So how will she know she has matured? When customers start calling her for her cakes.

My dad has always loved cooking non-vegetarian food. He looks up on a lot of recipes on the internet but then finds his own niche way of cooking. He has been asking me to help him find a market for his food. He cannot compromise on the quality of the products he uses for cooking which essentially means he cannot target the lower and the lower middle strata of the market. If he tries to sell at those levels, he will have to lower his price thereby lowering his profit margin considerably and moreover there will be very less appreciation among those customers for what they are getting. All of this means the key is in the positioning of the products. Positioning will determine the pricing and marketing strategies.

I believe products and companies become irrelevant and fade away rather than fail. Nokia and Kodak are great examples. Nokia phones became irrelevant when their Symbian OS was run over by Android and iOS. With Kodak, the most fundamental mistake happened. They matured and stopped evolving and got run over by technology. Evolving to maturity shows the growth trajectory of the company or the product. Sustaining and staying relevant in the market demands continuous evolution of another kind. This is where the sheer genius of Steve Jobs shines brightly. In the middle of iMacs and Macbooks and iOS and iPods and iPhones and iTunes, he still found the time and space to figure out that there could be demand for a device that could bridge the gap between the Macbook and the iPhone, thus creating the iPad. I have wondered how tuned his mind was into the world of business and how he used to keep his ears to the ground. He seems to have understood the threat of stagnation and becoming irrelevant which should be the reason why he created such a huge product catalogue and a possibly unknown product pipeline on which he was supposedly working till the time of his demise.

There are great companies and greater leaders to look up to. But ultimately success depends on the course we charter and when we are able to muster the strength, wile and guile and navigate ourselves through the choppy waters of the business world.

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The exploding universe of mobile apps

The world of mobile apps has become a galaxy of apps in no time but I was completely unaware of it. Being a die hard Nokia fan (for which I get ridiculed sometimes), I tried using a few of Nokia’s smartphone models a few years back, but all the features were a bit overwhelming for me, so I switched back to a basic Nokia model. Mobile phones, for me, are just meant to be phones, to talk and to message. In the past few years, I have watched the meteoric rise of the iPhone and Android phones as Nokia’s firm grip on the mobile world loosened and collapsed. The final nail in the coffin was when Microsoft bought over Nokia’s mobile phones unit. Now I have three options when it comes to smart phones. iPhone which is too expensive, Android phones I am wary of because of performance concerns (open source means apps may not have been made with the same baseline hardware configuration) and Microsoft phones which has Windows and Windows need a bunch of security updates every now and then because Microsoft has never mastered the skill to make a fully stable operating system. Given a choice, I would still buy the Microsoft phones because their hardware was designed by Nokia and Nokia team had tested the Windows operating system thoroughly on those phones. So I am still living blissfully with one of the last Nokia models having the Symbian operating system, but one incident jolted me to reality. I was in Chennai recently and due to the high volume of calls during peak hours (6-10 am and 6-10 pm), all cab service providers are redirecting customers to their mobile apps to book the cabs. Thats when I realized how far and fast mobile apps have penetrated into Indian market.

It is no surprise though. When I was in Shanghai, travelling in metro trains were like spending time in a monastery, albeit with big crowds. Everybody’s necks would be bent down and staring into their mobile phone screens. Some would be watching movies, some would be watching music videos and some would be reading. Can’t really blame the people though. In the early 1980s, when western countries moved manufacturing to China in search of cheap labour, the only thing China asked in return was for transfer of technology. No one even imagined that Chinese people would find ways to use the same technologies to dominate world trade some day. A simple stroll on the streets of Shanghai and there will be atleast a couple of guys who would come around asking if I wanted to buy an iPhone. The phones they have look exactly like an iPhone but only the things Apple has patented like the mobile screen is different. Android, being open source and available for free has fuelled the development of a number of low cost Android phones and together with that, the number of Android app developers have also risen exponentially. For internet crazy people in countries like China and India, buying stuff through their mobile phones makes them look cool and uber. Couple all of this with the rapid penetration of internet into rural areas and there is a silent app revolution going on.

This explosive app industry has astronomically increased the volume of one thing: Data. There is so much data coming through from the apps that companies have sprung up which are trying to analyze the data and find patterns that can help app owners to improve the performance and usability of their apps. Attribution analytics and retention rate analysis are some of the new words buzzing around. Big Data and Hadoop have become job markets by themselves. In-app monetization is another buzzword, which essentially means generating revenue from the apps. The idea is to keep app users engaged with the apps through discounts and reward points so that these users will continue buying things through the apps. Some companies are even going the extra mile to do predictive analytics to give greater insights about the performance of the apps to the app owners. Then there are companies that run marketing campaigns for these apps to understand their popularity among the people and there are companies that advertise these apps in different websites. There is a huge ecosystem that has been created around the app industry and it is growing phenomenally.

Cut a few years back in time and there is a retail giant in the UK for which I worked on one of their projects for a while. They have fabulous stores, lots of space and amazing ambience. They weren’t very keen on ecommerce and selling on the internet so over a period of time, their sales dropped. Then they realised their mistake and invested hugely to set up an ecommerce enabled website. But then, the number of visitors to their stores trickled down rapidly. So the dilemma they had was, how to attract people to their brick and mortar stores and make them feel the experience of regular shopping. One of the few ideas I suggested was to put up video cameras all over the stores so that customers who connect to their website can view the products and interact with the customer service executives. This would give the customers a sense of regular shopping though virtually. Now when I think about buying things through apps on mobile phones I am thinking on similar lines. How to give customers the experience of buying from a real store through the app? Maybe a hologram that represents me walking through an app that represents a real store and use a camera and kinetics to manage the hologram? Wouldn’t that be interesting? I am sensing that this idea is already being worked upon or is already out there in the market but I am not aware of.

The giant slaying of Nokia

Yesterday, when I updated my social network status saying that I had an inkling of what was coming to Nokia all along, a dear friend asked why didn’t I predict it earlier. Analyzing companies is one thing, but predicting strategies is a totally different ball game. SWOT, Porter’s Five Forces, PEST and financial analysis all help us to get a very good picture, but there are other factors as well.

So why did Microsoft make the move at Nokia now? Analysis of both companies gives interesting insights. I knew something was cooking in Microsoft’s strategy kitchen the day Stephen Elop announced that he was joining Nokia from Microsoft. That was a time when Nokia was beaten black and blue by Apple and Samsung. Nokia has one of the best talent pools but when it came to strategy, they lost it completely. They didn’t have a direction for their Symbian OS and they started looking at MeeGo, but I guess they got confused about that direction as well. Their large number of mobile phone brands, which worked so well for them in the past, started becoming a liability once smartphones captured the market. Apple became successful with iPhone because they had, well just iPhone and they were able to devote all their resources and strategy on one product. Samsung found success only when they focused on the Galaxy series. Nokia did not have something to compete this with, that’s why even though they had sales (of normal phones) to show, their profit margins kept nose diving.

So how must have Microsoft played this out? They like to have their fingers in every pie at the same time, but coming up with a smartphone was something that burned them bad. Nokia had two fundamental weaknesses. Lack of a smartphone that can compete with Apple and Samsung, which was partially because they did not have the right OS and Symbian and MeeGo didn’t make the cut for a smartphone. Looks like the whole exercise of Elop getting into Nokia was to see if they can master Nokia’s mobile hardware with Windows.  Both companies must have built common strategies to fit Windows on Nokia’s hardware. Finally success came in the form of the Lumia series. Now what’s left for Microsoft to do? Put the Microsoft logo on the Lumia phones. Exactly what they are doing now. For all the success of Android platform, there is one serious flaw with it. It’s open source, so app developers build apps with their own hardware configurations. When apps built under different hardware configurations work in a single device, it can cause serious resource utilization issues. This is a pain area which is going to hinder the growth of the Android market. Apple and Microsoft don’t have that problem. They have solid hardware baseline configurations and hence they can offer very good stability with their mobile phones.

So Microsoft was successful in developing a short term strategy into a long term one. If they had realized that they couldn’t get Windows to adapt to Nokia’s hardware, they would have had left the scene a long time back. They have used all the analysis tools very well. They identified their strength as their Windows OS, weakness as their inability to enter the mobile market and Nokia as an opportunity. Nokia has the best brand name especially in Asia and Microsoft has huge stakes in the Asian markets. But is it just about the analysis and the strategies? I don’t believe so. This has to be more about the prestige factor, about having a successful Microsoft smartphone in the market, about making a statement that we can have our own too . I do not think beating Apple and Samsung is a strategy Microsoft has for now. Selling a phone by replacing Nokia’s brand name is no easy game, so I guess Microsoft will wait it out for now and see how the transition works out. Profit margins will depend on what strategies Microsoft develops for Lumia and if they have more smartphones in mind and also on how Apple’s and Samsung’s pipelines look like. Apple has already applied for a patent to build hydrogen batteries for their mobile devices (rumor has it that hydrogen batteries need to be charged only once in a month) and if that becomes a reality, it is going to put an ocean’s distance between Apple and everyone else. For now, we are going to see the demise of a brand that has become a part of our lives and we have come to love and trust so much. RIP Nokia.