B4B – Reinventing the Customer-Supplier Relationship – Book Review

I just finished reading B4b: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship and it helped me understand the company I’ve been working for and others in the industry.

One of the models the book puts forth is one of 4 levels of companies. A company can stay at one level or try and progress to next levels. The authors put emphasis on the need for adding levels with AND, instead of OR.

The four levels are organized by the complexity of the offer and the result the customer is expecting.

  • Level 1: Simple Offer
    • This is like a simple product company, where the manufacturer distributes product to re-sellers that distribute to end users. An example might be a company that sells toasters.
  • Level 2: Complex Offer
    • This is like an IT or enterprise software company that sells a complex system. This offer requires someone to manage the system after purchase. This level of company will sell the product to a customer, like a hospital, and then leave and let the hospital engineers maintain the system.
  • Level 3: Optimize
    • This level of company offers complex products, but adds additional services. An example might be a software vendor that sells a product with an annual maintenance contract. This vendor might remotely monitor the software or perform routine maintenance or other programs to make sure the customer is able to use the product.
  • Level 4: Outcome
    • This level of company offers customers outcomes. An example is a copier machine company that does not sell copiers, but puts copiers in office buildings and sells per page. People are not buying copiers, not buying maintence contracts, but are buying a copy. Another example is Amazon Web Services offering servers by the minute.

The book takes these categorizations of companies and spells out useful advice for each. The Level 4 companies require more automation and not just per-outcome pricing. The authors warn that if a Level 4 company tries to sell using Software-as-a-Service (SaaS) pricing without the necessary level of automation, then it will cost the company a lot more. This is because the company will have guaranteed an outcome, but without automation, the delivery of each unit will vary. We know this in IT because depending on the employee and depending on different factors, the time required to set up a server can vary.

A lot of small and medium size traditional IT and software vendors are doing Level 2 and Level 3 offers, where they offer complex products and selling annual maintenance contracts. The book makes the argument that because customers are getting introduced to Level 4 companies in the consumer space, that they will increasingly expect Level 4 companies, like Salesforce and Amazon in the commercial space.

B4B makes the case that many software vendors products offer way more features than are actually used by any individual customer. This gap between the customer’s usage and available capabilities is something that software vendors should take notice of. What ratio of your developers work is going to adding new features, that might not actually contribute to value-add for the customer? With this feature/usage gap, those developers have cover to use an increasingly larger portion of their work time to implement the underlying platform needs, to bring their company to Level 4 automated offers. This requires deep instrumentation and understanding how customers use the product.

Employing AI

I plan on writing two blog posts in the coming days.

  1. Hiring My First AI Resource/Employee
  2. Managing a team of AI Resources/Employees

These are not about employing people, but employing AI agents for different business responsibilities. This is an area that I think will grow more relevant as our digital assistants get smarter and more manageable.

First, we employee individual assistants, like Cortana on Windows. I use this assistant to add appointments to my calendar or check the whether. I also use Buffer to schedule tweets for my business. Buffer will let me manually schedule a time or “pick the best time” to send my tweet, based on its own intelligence.

I use MailChimp to send email newsletters for my business. It has similar smarts to Buffer and can tell me the quality of the individuals I am emailing, compared to their interactions with other newsletters also sent through the service.

Now that I’m relying on these AI agents, it’s time for me to raise this abstraction layer up a level and apply intention to managing them individually and as a team. Ultimately, I don’t want my AI agents to be silos of activity, but I want Cortana to interact with Buffer and MailChimp and coordinate Twitter and MailChimp activity. I want these services to monitor my Google Analytics to know when one of the tweets or email newsletters is increasing traffic to my site beyond the original newsletter links being clicked. How can I generate a positive feedback loop?

What Kind of Software Business are You In?

Strategy is about making choices between what to do and what not to do. Richard Rummelt says good strategy is a “coherent response to – and approach for overcoming – the obstacles to progress.” How do you define progress?

Some people use activity as a synonym for progress. However, progress is knowing the result and working towards it. If you substitute a result for a different result and say that you will resume working toward the original result after completing the substitute result, then you are no longer making progress on the original result. Substituting vaporware for programming the real thing to meet a deadline is no longer making progress on the original result.

Activity measures inputs, but results are the measure of outputs. Progress is measured by completed outputs. Software is invisible. Software is executed as code made by programmers, but its purpose fulfilled when used by the customer for the results it provides the business.

Software can be sold as something to help realize a solution, in which the intellectual property characteristic of software might be second priority to realizing the solution for the end customer. In this case, the seller might not be a software intellectual property company, but more of a systems integrator building custom “glue code” between other software companies systems to realize a specific implemented solution for a single customer. These kinds of software companies use skilled personnel and their time to achieve the output of individual solutions. Because these companies do not produce intellectual property that can propagate in a way that’s decoupled from their personnel’s interaction, then this software business is managing a personnel system to reach customer implementation milestones. This kind of software company leverages code to be used in the most specific of ways to the customer.

Software can also be sold as intellectual property, letting external system integrators leverage the intellectual property to realize a solution. These kinds of software companies make different decisions. They prioritize for distributing their intellectual property in a way that is decoupled from their personnel’s time. The skilled personnel and their time in these companies is spent on creating and honing the intellectual property so it will have a balanced set of characteristics. These characteristics are distribution, maintainability across multiple customers and environments and leveraging code to be used in the most high value scenarios.

Progress in one of these businesses means something different than progress in the other type of business. Both types of companies act in the same world. The difference is in how they approach the world and the marketplace. Both kinds of companies might use software modules, but how they use them is different.

If your business is the tight systems integrator for other software products, then you will need to manage more people to scale. Creating line of business applications for large customers, by integrating other peoples intellectual property will mean that it will be considered a waste to focus energy on the distribution characteristics of your software. This is because it is assumed this solution is so tightly coupled and paid for by the large business, that it will not be distributed to any other business. This type of business does not benefit from the type of $0 incremental unit cost characteristic of software intellectual companies.

If your business is the intellectual property creator, then you will need to manage people and make sure they are producing software with a different set of characteristics. Distribution technology is important because in software business you must distribute inexpensively and in a guaranteed installation process to realize the main benefit for being a software distributor. That benefit is that each additional unit sold is near zero cost to distribute. Producing the software is the main cost and selling/distributing it to just one more customer is near $0 cost. That means software gets cheaper the more customers you sell to.

Powerful 3D Printing Entrepreneur Hacks

Your outcome: Design a 3D printer business that leverages the next wave of technical innovation to achieve results at least 10x faster and cheaper for your customers. Are you prepared to take advantage of new opportunities available to 3D printer entrepreneurs today? Are you bundling 3DP with your current offerings, designing viral things and growth hacking your 3D printer business? If you ignore it now, you might be disrupted in the future.

Ways 3D printing can propel existing businesses forward, help entrepreneurs start new businesses and help kids learn better.

  • Want to be creative and make a new block stacking game to teach kids about gravity and weights? Then read about the opportunities to use 3D learning to go beyond e-learning.
  • Want to propel your existing small business forward with 3D printing? Learn how to bundle 3D printing with your current offerings and other strategies.
  • Learn how to launch a 3D printed product. We are still early in this new wave of technology. Like the wave of the web and mobile apps before it, there will be people that only tinker with code and people that transform their lives and the lives of the people around them by launching products that people use every day. This new age lets THINGS go viral. Teens with computers connected to the web could create websites that disrupted established companies in a few years. Now, your physical product company is just as vulnerable as teens design wildly more relevant and social designs and host them on the web for anyone to 3D print. Design over the weekend + 2 weeks on the web = thousands of users in the world of 3D printing.
  • Bootstrap your 3D printer business with a few hundred dollars to find a local 3D printer using MakeXYZ that will 3D print prototypes or small batches for you as orders for your 3D product come in.
  • There are many tools for 3D printer entrepreneurs to get a web page up for hosting 3D printer designs, promoting designs with a blog and more.
  • Learn awesome life hacks to be a better 3D printer entrepreneur. If you want to take your game to the next level you need to recognize when you need to change your assumptions, not just your tactics.

Monetize 3D Printing

Take action, take steps often and use each step to learn and make changes. You will be more prepared than most to take advantage of the 3D printing opportunities available today and in the future.

My 3D printing marketplace MakerShop.co is a great tool for 3D printer entrepreneurs to host and distribute designs, promote designs and connect with fans using the included blog platform. We also regularly post new useful techniques and patterns to help entrepreneurs to succeed.

MemoryCoin: Innovation Mixing Cryptocurrency and Company Structure

This is a very interesting alternate cryptocurrency. MemoryCoin is trying something brilliant by adding positions for Chief Executive Officer, Chief Technology Officer and 3 other positions that get paid a percentage of the miner reward. Currently it’s about $362 per day.

The part that makes this decentralized is that the owners of MemoryCoin (you and me) get to vote on who holds each of the 5 positions. The voting can boot someone out or vote someone in at a moments notice.

Value Realization

Value realization, rather than potential value, is the value agreed to be delivered in the business case or original proposal that is actually achieved. JD Meier has two great guest blog posts on value realization. Understanding value realization is to understand what the customer values, execution to deliver that value through change + measurement.

Delivering a project on time and within budget is a part of value realization, but the entire story also includes the customer getting the return on investment (ROI) that was defined in the business case at the beginning of the project. To be in the game for the long-term and build a client base with repeat business it is not good to enough to only deliver a project on time and budget, but to make sure the value was realized by the customer.

Paul Lidbetter on Value Realization

“Paul is an Enterprise Architect on the Microsoft Enterprise Architect and Strategy Practice in the UK.” Here are the main parts of the topic Paul goes over.

  • Why value realization is hard.
  • Value needs to be measured over the lifetime of change.
  • Value realization vs. potential value.
  • Value realization needs to be planned from the start.
  • It’s no longer good enough to pretend that value just appears.
  • Accelerating business value and driving adoption and change.
  • Focus on value integrated into the Program Management Office (PMO).
  • Providing snapshots in time of value realized.
  • How to enable value realization.

Martin Sykes on Value Realization

“Martin has been involved with Enterprise Architecture and IT Strategy for 15 years and is today a coach in Microsoft Service’s Enterprise Strategy Centre of Excellence.” Here’s the main parts of the topic Martin discusses.

  • Value is in the eye of the customer.
  • Who cares?
  • What is value?
  • How can we be sure we are getting what is promised?

How to Create a 3D Printer Small Business

I wrote a new blog post on MakerShop yesterday on specific ways you can start a 3D printer small business. I’ll describe one of the best examples, the emerging industry of 3D printed marketing collateral. Go read the blog post over at the MakerShop website for more ideas.

3D Printed Marketing Collateral
Some people are scared that 3D scanning and 3D printing will let people steal designs or “pirate” things. I see this in a different light with a lot of opportunity for businesses to add value though. 3D printed collateral can help businesses generate demand for their products and services.

This is a huge practical opportunity for 3D printer designers to get started today!

For example, there is a local hotel that has a famous chess set that was actually used by Napoleon. Instead of “protecting” the chess set from being 3D scanned and put on the web to be downloaded and 3D printed by anyone, they should do this themselves right now. They should pay a 3D printed marketing collateral company to reproduce the chess set as a downloadable design and then give it away free on their website. Promote the fact that anyone can come to the hotel’s website and then 3D print Napoleon’s chess set. This will generate demand for people to stay at the hotel so they can play on the real set. Just like 2D collateral that would feature the chess set in a brochure with text and a picture, a 3D printable piece of collateral would increase awareness and engage the prospect in a new more powerful way. This also lets the hotel control its asset, because once it has posted the design on their website it is not worth it for anyone else to try and “pirate” it.