Daily Archives: April 25, 2018

What Impact Will Digital Automation Have on Your Business?

How do you plan for the future of automation?  When I’m teaching college students, I ask them to look at the jobs they’re planning to obtain in the next decade and to think through the extent to which automation, robots and algorithms are going to change those jobs. Decades ago, ATMs began weeding out bank tellers; the algorithms of Uber and its competitors, especially with driver-less vehicles is transforming the world of yellow cabs and black car services. When CEOs and I have the conversation, we look at their companies and others, to see how robots and software change how we manufacture and distribute products, work with customers, pay for goods and services etc. So I started looking for a framework that to help people manage the transition as we progress with smarter AI, bots, etc.

Frank, Roehrig and Pring offer one in What To Do When Machines Do Everything: How to Get Ahead in a World of AI, Algorithms, Bots, and Big Data.  They propose the AHEAD model, which outlines five distinct approaches for handling such digital systems:

  • Automate: Outsource rote, computational work to the new machine (e.g., ATMs)
  • Halo (or Code Halos): Instrument products and people to leverage the data they generate through connected and online behaviors to create new customer experiences and business models. (e.g., General Electric enable their products to collect halos of data, increasing the value proposition for the products)
  • Enhance: View the technology as a means to complement what you do in your job, so you can offer increased productivity and satisfaction. (e.g., GPS has made the entire driving experience easier, just as technology has enabled professionals (from sales to medicine) to know more about customers and service them better).
  • Abundance: Use the technology to drop the price of your product/service so you can make them available to new markets (e.g., RoboAdvisors now enable investing novices as well as experienced investors to make decisions based on information never before at their disposal).
  • Discovery: Leverage AI to conceive of entirely new products, services and industries. (e.g., smartphones, with apps).

Each of these offers a different way of looking at how technology can change your life and that of your company, today and tomorrow.   Share with us your experiences at adopting AI, Algorithms, Bots and Big Data.  At what level of the AHEAD framework are you working?  Try moving to the next step in the transition.  As the authors point out, the machines probably will never do everything (at least in our lifetimes), but how can they free you up and support your effort to do deeper, more meaningful things?

Do Potential Customers Really Want Your Product?

Since the 1960s, Everett Rogers introduced the concept of adoption-of-innovation, there have been some excellent examples of what works and what doesn’t. (He applied it to the adoption of corn by farmers; I used it to explain the use, and non-use of birth control by teenagers as part of my doctoral dissertation.) This week I used it to discuss two electric car companies – Tesla’s success and Better Place’s failure — an observation also noted by Greg Satell in his Digital Tonto blog. Peter Drucker was right: the key to any business is creating a (profitable) customer.

Over a decade ago, Shai Agassi led a team to create a pioneer electric care company – Better Place. Recognizing the limit of battery charges, he envisioned a world where people could drive in relatively inexpensive electric cars, by adopting the idea of “gasoline-filling stations” and creating “battery switching stations”. Drivers would drive into the station on the way to their destination and it would remove the old battery and switch it for a fully charged battery quickly. He raised money to test the idea in countries and states with defined travel limits (e.g. Israel, Hawaii and Denmark) and build enough stations so local people could travel.

However, it failed because the business model didn’t take into account the need of customers – partners and end-user) for this venture. The goal was to have a car company manufacture and sell cars to-end-users who would get the batteries from Better Place. This meant that the car manufacturer was not selling a totally workable vehicle! This presented a problem for insurance companies and discouraged car manufacturers from investing in building vehicles that weren’t self-sufficient.

As a result only one company (Renault) agreed to manufacture the car and less than 2000 small cars were produced. Most people didn’t want them, so they didn’t rush to buy, and the company failed.

There are two analogies worth noting. Almost two decades ago, Webvan raised billions of dollars to create a food delivery service where people could order on-line and have it delivered within 30 minutes. The company invested in warehouse infrastructure, when it should have spent more time understanding customers’ buying patterns. By creating no minimum size purchases with almost on-demand delivery, almost empty delivery trucks were delivering unprofitable purchases. The company closed within a few years. (Its operation was folded into Amazon!)

Similarly, TATA, an Indian conglomerate realized that families with 3-4 people were taking motorcycles to work and school – creating a safety hazard for the passengers. They created a small, basic feature care called the Nano; it was slightly more expensive than a motorcycle (e.g., $2500 vs. $1800), and provide safer transportation. In its first year it only captured 10% of the anticipated customers! Why? It offered almost no “comfort-features” (e.g., glove compartments). Since then it has raised its price almost annually adding more features…and still is failing. One reason is that other companies started offering cars people liked and bought, even though they cost $6000+.

In contrast, Elon Musk took a customer-focused, adoption-of-innovation approach with Tesla. He did not focus on the mass market, but the limited number of early adopters: people who love new ideas, can afford them, and when satisfied serve as role models (e.g., celebrities and high net worth individuals committed to showcasing sustainability). His first model, Roadster, was designed to attract this audience; he priced it at $100,000, which enabled him to listen to customers, and improve it for future growth. Second, because batteries have limited distances, he focused on customers who already had another (gas) car that they could use for long distances or who only needed it for short distances. Now, Tesla offering a model for “the rest of us”, priced, like GM’s Bolt, at under $40,000.

In sum, to develop an innovation and have it successfully adopted, you need to address the needs of all the initial customers/partners. Never lose sight on the business goal: to create a profitable customer. What’s your experience? Share it.

Focus on Prospects’ Need-to-Know

All too often, presenters fall in love with the “genius” idea behind their business idea – and ignore what the prospect needs-to-know. As our ADAP formula instructs, the only way to succeed is to share What’s Important Now (WIN) from the audience’s perspective (Audience-Driven, Authentic- Presentations). Over and over again, we need to help presenters get the message, because the people who are designing the presentation are focused on their “unique” idea or making sure the presentation meets the format requirements of their institution. What a shame.

This week, I met with a former client with a distinguished career in raising money for a wide-variety of companies – from start-ups to public companies focusing on M&A. His team recently developed a unique, cost-effective, risk-minimizing financial structure for creating a fund for a new business accelerator. He brought in the draft presentation, and we spent time reviewing the concept he developed. It’s impressive for its scalability capabilities for investors and investment opportunities.

When he asked for help in developing the presentation itself and its delivery, I had to disappoint him by telling him he needed to do more homework. Nowhere in the presentation were answers to the key questions that investors have, especially those focused on early stage ventures to give them confidence that the money will be invested in companies with the right market opportunity, the right customer value proposition, and right management team to execute the plan successfully.  Of course, it was too early to list specific companies; so the investor needs to have confidence that the Fund management team has current (not just past) expertise to attract a large universe of likely candidates and the ability to select a few winners based on a unique screening process. We discussed two other similar companies who had successfully accomplished what they wanted to do: both demonstrated multi-step screening processes that allowed them to sift through 1000 candidates to pick two winners. One actually raised a $100M opportunity fund, using such an ADAP presentation.

The lesson is one we see often at Presentation Excellence where clients come to us with high-stakes deals: it’s okay to fall love with your idea, so you can authentically sell it. But if you’re not audience-driven, it will not persuade the prospect. What’s your experience? Share it!

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