The Hard Part

If you are dealing with products that have been around a long time market conditions change slowly and there is a lot of infor­mation available on what customers want and how they perceive value.  On the other hand, the impact of disruptive technologies on a market is more difficult to recognize and market infor­mation isn’t  easily available.

Confusing Interest with Value

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 it. 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 “Your 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.”

IRG’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?

Dealing with Disruption

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 IRG 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. IRG’s methods have proven very effective for attacking these problems however.

The Internet

The DOT.COM collapse has left a lot of confusion about what the Internet revolution really is and where it’s stands. In brief, here’s the IRG 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 are in the middle of an infor­mation technology revolution that well 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 you 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 ahead. 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 along.

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).

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