The Quality / Expenditure Matrix: Where is your brand?
Summary: Terms like “luxury” and “utility” are used too often describe brands, each carrying positive or negative connotations. Here I present the Quality / Expenditure Matrix to characterize your consumers’ experiences, and to help determine how you can leverage that position to your advantage. E-mail. Tweet.
Inspired by my interest in amateur mixology over summer vacation, I stumbled across an interesting post, while looking for a cucumber gimlet recipe. As an MBA, I’m a big fan of 2×2 matrices, which made me particularly interested in this one…which places her cucumber gimlet recipe in the bottom left corner, indicating a High Quality / High Maintenance experience.
Courtesy of: http://fancytoast.blogspot.com
Looking at Erielle’s matrix, not only led to a great cocktail, but it also got me thinking whether brands could be classified along similar dimensions, based on the consumer experience they provide. Moreover, while a brand aspires to a certain position, what happens when they execute poorly? This gave rise to my version, called Quality / Expenditure matrix of customer experience…perhaps inspired by too many of those cucumber gimlets.
Let’s take a look at it, and some examples of brands that fall into each quadrant.
The Quality / Expenditure Matrix
This matrix looks at the customers’ experience with your brand along two dimensions:
Expenditure
The level of both money or or effort (time, energy, distraction, frequency) the consumer invests in order to engage with the brand.
Quality
The value of the product, or service, either by straight utility, desirability, or the depth of relationship forged between brand and consumer.
Let’s look at each of these quadrants in more detail.
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5 Sources of Durable Competitive Advantage
Summary: We often talk about undertaking an initiative in order to create “competitive advantage”, but what does that really mean? What are things you can, and should be doing? Here we examine, the five sources of durable competitive advantage. E-mail. Tweet.
There have been some pithy posts (for example here, and here written on creating durable, or sustainable, competitive advantage; however, the best I’ve ever seen was buried deep in the footnotes of a deck by Khosla Ventures.
In this deck it outlines five major sources of durable competitive advantage:
- “Special Access” to Scarce Supply
- High Switching Costs
- Fixed Cost Leverage
- Real-Time Business Process Advantage
- Ownable Network Effect
While the footnotes of the deck don’t go into much more detail, I’ll do my best to provide some explanation, and practical examples, on each of these.
Click here to learn more about each of these factors
What motivates startup employees? Lessons from Daniel Pink’s “Drive”
Summary: Dan Pink’s “Drive” explores the roots of motivation, and can help in recruiting, retaining, and developing startup teams. E-mail. Tweet.
After my last post on evaluating startup personnel, I was referred to Daniel Pink’s book, Drive. Here, Pink explores the major factors that underlie our motivation, and applies them to the workplace context.
He asserts (with supporting research) that for basic, rudimentary tasks money can work as a motivator; however, when tasks get more complicated, requiring conceptual and creative thinking monetary incentives no longer work. That said, you need to pay people well enough to take the issue of money off the table…or said another way, a fair salary is “table stakes” for a highly functioning team.
Applying this to the startup context, makes enormous sense, as people who join those teams are motivated by something bigger, and their tasks are never “routine”. In Drive, Pink’s findings and suggestions are directly applicable to tangible mechanisms that can be used in a startup, or any other innovation management context.
Net Promoter Score (NPS) Equivalent for Startup Evaluations
Summary: While there are many ways to rate startup employees, The “Carryover Question”, and its ‘Net Carryover Score’, can help cut through the fluff. E-mail. Tweet.
One of the most challenging thing to do in a startup is to keep your eye on employee growth and development, while fighting the day-to-day grind of helping to build your business. On the one hand, there is no point looking at employee career development since if the company doesn’t succeed it doesn’t matter, whereas on the other hand to build a sustainable and successful company, investing in employee development is a must.
So the essence of employee reviews is to make them relevant in a specific, timely, and succinct manner without any ambiguity. Let’s examine how we may do that with a single question that can sum up any other form of evaluation.
Beyond fundraising: the 5P’s of startup financial management
Summary: There’s more to start-up finance than raising money, here are the “5Ps” you need to know. E-mail. Tweet.
While I try to keep topics on this blog related to innovation strategy, and product development (rather than being a pure “startup” blog) sometimes I need to weigh in on topics that get me a little annoyed. That is, in nearly every meet-up of young startups (the best places to find the seeds of innovation sprouting) the discussion is centered around raising money. All too often venture capital financing is lauded as the holy grail for a startup, over running your business. However, if you’re supposedly operating as a “lean startup”, these are the financials you should be focused on…not raising money.
Financial Management vs. Raising Finance
There is much more that goes into the financials of a start-up (I almost called this post “Why Startup CFOs Matter”). Consider that if the core objective of a business is to make money, and likewise its death is to run out of money, it’s worth examining how the areas of day-to-day financial operations of a startup.
Here I propose “5Ps” of start-up financial management:
- Planning
- Process & Policies
- People
- Pricing
- Partnerships
Let’s explore each of these in more detail.
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Karaoke Creativity: the trap all good product designers should avoid
Summary: Blindly copying designs from one context to another is equivalent to singing bad karaoke. E-mail. Tweet.
How many times have you been in a meeting to hear “Company X has feature Y, so we should too”? Or it may come in some other variation thereof, copying enviable companies like Apple and Google, or pricing models like 37Signals, or “cutting edge” concepts like game mechanics and LBS, or whatever your industry’s leader du jour is doing.
While it’s wise to explore many other products, and to employ best practices and good ideas, the blatant copy & paste of designs from one context to another is a really bad idea. It will undoubtedly result in a poor imitation of the real thing…just like the average person signing karaoke: you can sing the right words to the tune, but you’re not going to perform like Bon Jovi. Moreover, as with karaoke, the performer (or in this case the designer / architect / developer) may think he’s doing a bang up job, but to the audience is often subjected to an awful experience.
Here we’ll look at Karaoke Creativity and some examples, as well as some steps you can take to ensure you don’t fall prey to it.
7 Dimensions of Limiting Freemium Products
Pricing your application is always an issue of hot debate, with much interesting literature and guides in the space. While there are only a handful of macro models out there, or as Shelly Palmer puts it: “I pay, you pay, someone else pays”, there are variety of ways to combine and segment for various audiences.
The increasingly popular “freemium” model, brought into the mainstream by pundits like Chris Anderson, delivers a free version of your product that enables users to try it out, and then charges for up-sells in the form of services, support, or premium features.
While the basics are easy to understand in this model, getting the details right is quite tricky, as it gives rise to a number of questions: What do you limit? How much is too much to give away? What is a “premium” feature?.
While Anderson gives a little guidance (see slide 17) on how to do this, by advising that premium features should be “time limited, feature limited, seat limited, customer limited”, it’s a little too simplistic for my liking. These are challenging decisions that require you to make some important decisions on how you shape your customer experience and prioritize development initiatives, so it seems we should be thinking deeper about these ways to limit the free version, while creating the right incentives for upgrades to the paid version(s).
Let’s look at some of the key dimensions that you can use to limit your application.
Finding Product / Market Fit: introducing the PMF matrix
Summary: Finding Product / Market Fit is the key for early stage products. The PMF Matrix is a framework to help you get there. E-mail. Tweet.
[UPDATE: This post was updated on July 5, 2010 with new slides]
This presentation centers on the concept of Product / Market Fit: what it is, why it’s important, and how to achieve it. I propose my “Product Market Fit Matrix” that helps to characterize the issues of the start-up and presents various frameworks that can help guide development. In a sense the Product / Market Fit Matrix is a meta-framework, which can be used to characterize your current situation, so that you can employ the right set of tools to achieve your goals.
I originally developed these slides to facilitate a discussion of entrepreneurial MIT alums, mainly from the MIT Sloan business school. My intention was to introduce many of the newer, leaner concepts of early stage start-up development, since MIT tends to see a lot of “technology-in-search-of-a-problem” start-ups, in their early stages.
After receiving a very positive reception, and lots of suggestions from many smart people, I’ve updated this presentation. The presentation below was developed for a talk called “The New Rules of Product Development” for MassChallenge.
See the presentation
10 places to look for mobile’s next killer app
Summary: With the mobile decade upon us, here are 10 categories where mobile’s next killer app may come from. Perhaps one could keep RIM relevant?. E-mail. Tweet.
With many proclaiming the mobile year or decade upon us, largely due to contributing factors like falling costs, better handsets, pervasive connectivity, and emerging standardization it seems we’re upon a new era of mobile development. After receiving some heat, from my Canadian counterparts, for recently berating RIM. I thought I’d be more positive, and present some ideas on where innovation may come from in the mobile application space, this year.
I’m reminded of Jeff Bezos’ quote from 1999:
“I liken it to the Cambrian era 550 million years ago, which saw the development of multicelled life. While nature tried every kind of experiment possible, the creation of new species was offset by the extinction of others.”
Searching for the next killer app
So, as Bezos implies, the explosion in the hundreds of thousands of ‘smartphone’ applications, may imply we’re just at the beginning of finding a killer app. Originally, it was voice, then text messaging, then e-mail; but what’s the next major application that will really spur the next phase of adoption and determine winners and losers?
So, I offer a classification taxonomy of how to think about various application forms, which may help determine where to look and think about what’s next. Rather than take a ‘genre-based’ approach like every other app catalog, or a technology-based organization, I’ve tried to build a framework based on customer needs, or as Clay Christensen would put it, the ‘jobs they do’, for people.
Here are 10 categories of where the next killer app may come from.
Balancing short vs. long term priorities
One of the toughest things in a start-up is to figure out when to invest in initiatives that take a longer term to payoff (e.g. channel partnerships, brand building) vs. those with immediate revenue generating opportunities. On the one hand you feel that optimizing for immediate revenue always trumps anything else; however, on the other hand, if you don’t invest in longer term market development initiatives, you can starve the customer pipeline.
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About Me
I'm Rishi Dean, currently serving as VP Product Strategy / Development at Visible Measures. This blog is centered around Innovation Architecture: the creation and commercialization of innovations. Think of it as your "Innovation Cheat Sheet". For more background click here.
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