Start Up Blog

The Service Shift

Posted in entrepreneurship by Steve Sammartino on September 26, 2011

I recently tweeted something that, I think deserves a more detailed explanation:

This is true for a few reasons.

A direct world: all customers can and will contact brand controllers directly. Information services and direct brand channels such as twitter mean that customers deserve and expect direct answers and interaction. Something only traditional service companies would once provide.

The manufacturing gap: Every year the chasm between between brands and manufacturing is widening. In fact, many of the worlds most adored brands don’t make what they sell. They either design and direct (eg Apple) or only make information (Facebook / Google). In fact consumer manufacturing stalwarts like Kraft and Proctor & Gamble produce far less than they ever have. The gap between makers and marketers will only continue to widen. And require traditional brand owners to become more service oriented in the process.

The virtual replacing the physical: Increasingly we are making and selling virtual goods. Goods that are consumed intellectually. Think video games – and then think far wider. Just because we can’t touch something, it does not mean it doesn’t provide significant utility. Paid for mobile apps and software are great examples, as is music in digital format. The CD only provided utility in that it delivered the music, nothing more.

Recently Marc Andresseen, was quoted as saying ‘Software is eating everything’ which is a very important statement. The shift is happening, and even if we still make stuff – increasingly our service orientation will be how we win.

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Revenue Compression

Posted in entrepreneurship by Steve Sammartino on July 22, 2011

When chasing new business in startup land or any business for that matter, the time to revenue is more important than the amount or revenue.

It’s easy to believe that a big $500,000 project is better than a little $5000 project.  Maybe the big one takes a year. Maybe the small one takes a week or two.

I say the small projects rule! But before I choose, the questions I usually ask myself include:

  • How long will it take to get the revenue?
  • What is the potential for expensive mistakes?
  • What is the probability that the project will go over the time estimate?
  • Are we paid in time put in or final completion of said project?
  • What level of resources need to go into pitching & winning the project?
  • Will we get more smaller projects after successful completion of the first?

When we answer these we usually find that the $5000 project that takes a week is a far better option than the $500K project that takes a year. And the reason that they are better is that the revenue is compressed.

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The office & the factory

Posted in entrepreneurship by Steve Sammartino on February 3, 2011

I’ve been thinking alot about the differences of various businesses I’ve been involved with. I invested the formative years of my business life working in consumers goods companies. Classic fast moving consumer goods companies that thrived through industrial revolution and then boomed during the TV industrial complex.

I’ve since invested most of my time in service based internet businesses, startups and advertising. They both have relative advantages and disadvantages that I only ever realised once I had time to digest the dynamics in each of them. The most interesting observation I’ve made is the difference when the office and the factory are the same thing. This occurs in  service / web based business. In consumer goods the office and factory tend to be separated.

The key advantage that the consumer goods scenario has is that the office is not linked to output. It creates time for thinking. The immediate concerns of what needs to ship today are somewhat removed. The urgent, doesn’t get in the way of the important. Yet, the challenge here is that we can become out of touch with how things work.

The key disadvantage of  the service scenario (office is the factory), is we don’t have as much time to think and consider. There is always something that needs to be created, done or fixed. Over time our mental flexibility declines as we get absorbed in shipping what we make and meeting deadlines. Yes, we know what is happening, but we get too close to it. We lose vision and creativity via also ‘being’ the production process.

The important thing for startups and marketers alike is to know which environment we are operating in, and to work real hard on the area of disadvantage.

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Rebranding – how not to do it

Posted in entrepreneurship by Steve Sammartino on June 10, 2010

Recently the Victorian metropolitan train system has not been working very well. So much so that the incumbent Connex trains was sacked and replaced recently.

It’s created an interesting example of how not to re-brand something. And before I rant further, I’ll remind you of the startupblog definition of a brand:

Brand: A cognitive shortcut from which informed decisions can be made.

The brand is always the acummulation of the many interactions consumers have with the product or service. So with Connex, the brand was the overcrowded, delayed, cancelled, crime ridden, dirty train service. In fact much of the bad experience can be attributed to the inherited infrastrcutre. And it’s here that the key lesson lies. Whenever a re-branding event occurs, the brand custodians can’t wait to tell everyone how it will be different this time. They go off and implment a shiny new logo, make an advertisment, and paste the new brand, word or design on all the physical elements that represent the brand.

Wrong, wrong, wrong.

The reason the brand sucks, is because of the experience people are having with it. A new word or logo will never fix this. Re-branding should go all the way back to the start. A total product / service re-design, or maybe even an infrastructure update is needed – as in the case of Melbourne trains and Connex. If we want to re-brand anything with success, first we have to prove it’s better with real evidence. Slapping a Metro logo on the broken Melbourne train system will only damage the brand before it even begins. They should have fixed everything first. Even if it means not branding anything for a year or two. Having no name trains running on the tracks. Radical, maybe. Correct, no doubt. Fix the experience first, create cognitive associations later.

For entrepreneurs the idea is simple. Our brand will only ever be the memory of the experience our people had when interacting with us. If we want a new meaning, we need to create new experiences.

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