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.

Understanding the Quadrants of the Q/E Matrix

In each of the areas of the matrix, there is a distinct type of consumer experience, that has both a “positive” side, when executed well, and a “negative” side, when executed poorly. So it’s important to note that unlike the famous Lovemark matrix, which maps brands on axes of “love” and “respect”, I choose not to imply inherent negative connotation from brands that do not fall into the “top right” quadrant. instead, each quadrant represents a differentiated consumer experience strategy, that if the brand executes successful can still lead to a wildly successful business.

Note: My quadrants and Erielle’s won’t quite match up, since as a math geek, I had to stay true to the Cartesian coordinate numbering system.

1) Prestige Players: (High Quality / High Expenditure)
Brand in this quadrant epitomize the exclusive “high-end” of the market. Here you’ll find all of the usual suspect brands jewelery, sports cars, hotels, and others. The idea is that their high price paves the way for exclusivity, and as such a premium user experience.

When done right: you have the uber exclusive brands like Ferrari, or Raphael Nadal’s $500K Richard Milne watch.

When done wrong: you get pretentious brands, that seem to be “trying too hard”, like the new breed of Vegas hotels (and the W hotel chain in general), and bad art-house films.

2) Accessible Luxuries: (High Quality / Low Expenditure)
This is my favorite class of companies, in that they seem to provide great service “effortlessly”. While many brands aspire to live in this quadrant, very few can execute it successfully. There is a delicate balance to make the need for customer experience permeate the organization, and keep the accountants, and process geeks, at bay and not fall into the seductive trap to dilute the brand by over expansion.

When done right: the best customer experience brands emerge like Netflix, jetBlue, and Zappos.

When done wrong: you get “wannabe” brands, like the defunct airline brands Ted & Song, that execute this as well as a fake smile, which lacks authenticity, and as a result end up falling flat.

3) Convenience & Value: (Low Quality / Low Expenditure)
While “low quality” is typically seen as negative, not every type of brand needs to be a luxurious, or forge a “deep customer relationship” — if you can provide good value, cheaply then you will forge brand loyalty.

When done right: Value for money with a brand like Walmart, or even your favorite local greasy pizza joint. If you make it easy and transactions understandable — that is the customers know what they’re going to get, this model can be executed successfully.

When done wrong: There is a fine line between doing this model well, and falling into providing cheap crap, like Taco Bell or the Ford Pinto.

4) Monopolies & Utilities: (Low Quality / High Expenditure)
The most challenging category for brands to achieve successfully, since there is an imbalance between customer value and effort, in that customers need to expend more than what they receive. The only brands that can seem to get away with this, are those that are “must haves” — which are monopolies and utilities.

When done right: You have a profitable monopoly, like telcos and cable companies; however, an alternate way to look at this is when you have a dominant platform that people choose to use, like Twitter, Facebook (or Microsoft back in the day) where users have a high volume of interactions, but the value of any one of them is very low.

When done wrong: what was “necessity” becomes “nuisance”, which will inevitably lead to new entrants into the market to disrupt the current models. Examples include the Post Office, disrupted by FedEx, or a legacy carrier like United Airlines being disrupted by the aforementioned jetBlue.

Summing it up

The Quality / Expenditure Matrix is a useful tool to help you assess how best to match the value your brand imparts with the kind of customer experience it offers. With that initial assessment, you can correctly position your brand into an appropriate quadrant, which can then help guide your strategy for success, based on looking at brands with similar patterns (and anti-patterns).

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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:

1. “Special Access” to Scarce Supply
2. High Switching Costs
3. Fixed Cost Leverage
4. Real-Time Business Process Advantage
5. 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.

1) Special access to scarce supply

Controlling the source of valuable resources is well understood in the the natural resources industries. For instance the way DeBeers controls supply of diamonds, or the OPEC cartel the supply of oil, or unobtainium in the movie Avatar.

Additionally “supply” can come in many other forms than natural resources, as in the following: human talent, event tickets, awards, money, media, and data — to name a few.

What you can do:
Whatever the example, the strategies used to control access to this supply include:

1. Creating the supply yourself (technology & data companies)
2. Forging exclusivity relationships (e.g. AT&T and iPhones)
3. Stockpiling / systematically limiting access

So once you have the “supply” how do you get people to stick with you — which brings us to our next source of durable competitive advantage…

2) High switching costs

Switching costs are the penalties a customer pays when they change from an existing product, or supplier, brand to another. These penalties (or “negative utility” as economists call it) are often monetary, but can also come in the form of time, effort, or social pressure. This dynamic is especially useful in competitive markets, where there is little differentiation amongst options, and creating incentives for customers to stay with you is essential for survival.

What you can do:
Some examples of how to create these switching costs are as follows (derived from this paper by Paul Klemperer of Oxford University):

• Need for Compatibility: such as add-ons and extensions seen in razors & blades, cameras, Keurig coffee makers, iPhone apps, and other such “platforms”
• Transaction Costs: where the incumbents levy penalties for switching, such as bank account closure fees, or the effort of migrating your iTunes library to anything else
• Learning Curves: anything that creates increased training time when switching from one brand to another — such as switching from a PC to a Mac, or iPhone to Blackberry (not like anyone would ever do that)
• Quality Uncertainty: where the familiarity with the existing product creates fear, uncertainty, or doubt in the quality of the new brand such as with over the counter medications, or athletic equipment
• Loyalty Mechanisms: frequent flier miles, coupons, or other “membership” bonuses are used to lock customers in problematically
• Psychological & Social factors: non-economic factors such as “brand-loyalty”, or being part of an elite group…no kid on the schoolyard wants to have a Zune.

3) Fixed cost leverage

Companies that can create high “operating leverage” are able to reap more profit from each additional sale, so long as they don’t have to increase costs to make those sales (or as economists call is low “marginal cost“). The idea is to have higher setup costs, and little to no additional costs with each transaction, to get “economies of scale“.

This is what fuels the high Price to Earnings ratios for software companies — lots of upfront investment to create the application and little to no cost with each additional user or sale. Besides technology, this dynamic can be seen in other industries where there is are large “property, plant, and equipment” (PP&E) costs and little variable costs such as investing in a large scale tooling, airlines, and others.

What you can do:
The key here is to figure out how to wring out marginal costs by using technology or other types of upfront investment, that will enable you to scale at rapid, highly profitable rates…I think this section may have just made dogmatic “lean startup” disciples’ heads explode.

4) Real-time business process advantage

The ability to capture and act on data in a predictive manner, is what underlies this dynamic. This 2004 New York Times article discusses how Wal-Mart used predictive analytics to increase the supply of strawberry Pop-Tarts in the wake of Hurricane Frances. Another classic example is from this HBR article by Gary Loveman, CEO of Harrah’s Entertainment, on how they use real-time predictions to increase guest loyalty.

What you can do:
The idea of all of these examples, is to create tools and processes to systematically gather information, analyze it, and then act on it in a timely manner. Tools such as Salesforce.com, or analytics packages (such as my own Visible Measures) are practical ways to do this; however, the biggest barrier to overcome in employing these methods are often cultural to create data-driven processes.

5) Ownable network effects

In the Khosla deck, there is an explicit mention of what creates not just a network effect, but an “ownable” network effect, that you can reap the benefits of.

For this they outline seven tests your product has to meet:

1. Groups who interact
2. A system that greatly improves interaction
3. Adoption creates value for users – gets better as others use it, without action by owner
4. Solved chicken & egg problem – can prime pump, get usage by groups. Many such systems have little value until broadly use
5. Scale matters, and you can get leading scale
6. Can own, and deter users from moving to lower cost alternatives
7. Can tax – i.e. you can charge for it

What you can do:
In this case the seven tests provide an explicit guide whereby you can create direct, positive network effects. So to find the durable advantage from an ownable network effects, the first step,prior to these tests, is to design the system around your product such that there is inherent value in your product for the first users, and increasing value as more users are added. To kick-start this, you’ll need to ensure that there is are “initial adoption” incentives for the early customers, followed by intense focus to acquire those initial customers into the network to a point where you can reach a critical mass where the network value takes over.

One other takeaway

If this alone was not illuminating to you, at the very least this should be a reinforcement to always read the footnotes.

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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.

The Three Factors of Motivation

In the video below, you’ll see a great visual, from RSAnimate, over a talk he gave. In it he describes the three major factors that lead to better performance & personal satisfaction:

1. Autonomy: The desire to be self-directed
2. Mastery: The urge to get better at stuff
3. Purpose: Making a contribution to something larger than oneself

Keep up with Daniel Pink’s Work

I previously had a chance to read another of Pink’s books:
A Whole New Mind: Why Right-Brainers Will Rule the Future, which is also a great read. You can also keep up with him, as I do, on Twitter.

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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.

Looking at the Net Promoter Score for inspiration

The Net Promoter Score (NPS) was popularized in an HBR Article (that you can download from here) by Bain Fellow, Frederick Reichheld. The NPS boils down customer loyalty & satisfaction into a single question, where the net positive answers have a strong correlation to a company’s growth. See this graphic from the creators below, which sums it up:

Net Promoter Score from Satmetrix via http://www.netpromoter.com

What’s so beautifully elegant and simple about the NPS is its capability to take so many ambiguous and complicated factors and synthesize it into a single question. So, when managing all of the aspects of a startup, I wondered whether there was a logical equivalent? As the article writes: “if growth is what you’re after, you won’t learn much from complex measurements of customer satisfaction and retention, you simply need to know what your customers tell their friends about you.”. The quest is to find an equivalent for startup employees and the startup’s chance of success.

The Performance / Potential Matrix

One that we’ve been using is the Performance / Potential Matrix, which is well detailed by Dan McCarthy in his post. This model is great in providing two simple dimensions to evaluate performance, and provide a set of actions, as seen here:

Performance Potential Matrix from Dan McCarthy

As you may know, while I love a good matrix, and this one is very succinct, it still leaves results open to interpretation. For instance, is performance related to the organizational structure, extenuating circumstances, or another factor. In essence, I think while moving in the right direction, this model still leaves ambiguity.

The Netflix “Keeper Test”

Another place to look is within one of the best reads on company culture and values, as authored by Netflix. Their legendary deck has been well-circulated in outlining the “Nine Behaviors and Skills” the Netflix team looks for in its recruits and employees, and underlies all of its personnel evaluations. However, while the nine performance areas are excellently defined, Netflix has a single unifying question, called the “Keeper Test” to sum everything up:

“Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight to keep at Netflix?”

While excellent, I feel it needs a slight modification to better match the needs of a small startup, which gives rise to what I call “The Carryover Question”.

“The Carryover Question” and its corollary

For a startup I believe nothing says more about a commitment to a team member than whether you would work with them (or hire them) again, for the “next gig”. That is, would you want this person to be a co-founder, or early team member; bottom line, would you ask them to come with you if you were launching another startup. This gives rise to the “carryover question”:

How likely is it that you would want this person to join your next startup?

The corollary to this question, which is similar to the Netflix Keeper Test, when viewed through the eyes of a startup lens, would look something like this:

How likely is it that you would be worried if this person joined a competitive startup?

The idea here is that if you launched another company, and an current team member joined a competing new startup, how scared would you be?

I think these two questions are extremely telling, and great predictors of the effectiveness of your team. Moreover, while I don’t have the empirical evidence behind the studies in the Harvard Business Review article, I would assert that startups that have high “Net Carryover Scores” (calculated as % of ‘carryovers’ minus % of ‘leave-behinds’) would have greater likelihood of success…or at least, are better places to work.

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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.

1) Planning
The first ‘P’, addresses all of the modeling and forecasting (both macro & micro) that help determine you you will manage the financial health of your business, en route to achieving your goals. Some of the relevant data points you’ll need to know to do this effectively are:

• Understanding sales activity average deal sizes, # of deals, segments, sales cycles
• Tracking profits…and since you’re a startup it’ll mostly be losses
• Managing cash flow vs. growth (e.g. bookings and recognized revenue)
• Diagnosing your “full” costs, including  those to acquire and serve customers (and projected lifetime value)

2) Process & Policies
To accomplish #1, it is essential to institute the right procedures that will help keep things in check, and give you the visibility into key metrics so you can effectively monitor your progress.

• Setting up reporting systems, including workforce and salesforce management tools
• Instituting proper contract, billing, and collections policies
• Managing key metrics, and keeping expenses in check

3) People
With personnel often clocking in as the largest business expense, it’s critical to get this right. To do so, you’ll need to think of things like:

• Compensation plans and overall incentive structures
• Employee benefits
• Utilization model for customer, or professional, service organizations

4) Pricing
While many factors go into determining optimal pricing models (we won’t tackle that in this post). Optimizing your revenue mix, increasing average deal sizes, lowering costs to serve all factor in. Clearly this is all conditional on what model you choose, freemium models have different dynamics than inbound models, which are different than enterprise models. Nonetheless, this is decision that has the biggest impact on your ability to drive revenue.

5) Partnerships
Finally, if you’re trying to avoid crafting Barney Deals, and create a real partnerships that drive financial returns, there are a number of things to think about. While your lawyers can handle the details of the contract, you’ll need to drive the key economics and rights issues…essentially the core mechanics of who writes the check to whom, and for what.

Wrap-up
There are many resources out there to dive into more detail of the CFO role. The point is that there is more to managing the financial health of your emerging, or established, business than raising money and selling out. The day-to-day financials matter, as they impact every other area of your business. The 5 P’s framework is an easy shortcut to help you keep track of the thing you need to be on top of…and staying on top of those will help anyway for when you actually do need to raise money.

Caveat Emptor: As always, you’ll probably need to take anything I say with a grain of salt. In his case, I’m one of those few people I know that graduated from business school without taking any of the core finance classes…and I’m proud of it. But more on that another time.

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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.

Types of Karaoke Creativity
Karaoke Creativity is porting salient design features without thinking through many of the issues of authenticity and consistency. The result often manifests itself in one of the following forms:

• 1) High Investment Knock-off: when a company or organization makes a large investment trying to recreate the mojo of another company, and results in a cheap imitation of the original. Some examples come to mind such as Microsoft’s Zune, the RNC’s Michael Steele, Airlines Ted & Song, and many, many others.
• 2) Foolish Consistency: channeling Ralph Waldo Emerson, this type refers to the group-think that results from copying successful examples, and results in tired cliched designs, that all resemble one another…some companies, like in the auto business, even do this intentionally.
• 3) Cargo Cult: is the most egregious form of “imitation without understanding”. This type seems to be more prevalent today than ever due to the proliferation of accessible, commoditized design tools and how-to tutorials. For instance, how many corporate websites are littered with meaningless stock photography? A better take than I can ever write can be found here in Smashing Magazine.

Internal consistency is the key to avoid Karaoke Creativity
Karaoke Creativity is a shortcut to the presence of real skill and hard work, so there are no easy answers beyond those; however, here are some things to keep in mind along your journey.

• Characterize the problem, and your audience, in detail
• Have a vision for success, and a value prop that speaks uniquely to that audience
• Deliver a solution consistently addressing the constraints you actually have, not those of others
• Innovate along lines that reinforce your core value, or address specific areas of need (especially the ones that stop you from making money)
• Recognize it’s OK to be wrong – having a point of view is much better than “playing it safe” and going nowhere as a result

We can do better
While I recognize this is a little harsh, the complacency and uninspiring nature of Karaoke Creativity is the antithesis of innovation, and therefore irritates me deeply (hey, look at the title of this blog). Let’s not be lazy, and realize w’re capable of so much more.

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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.

Seven Dimensions of Limiting Freemium Products

1. Capacity: For applications that require storage or bandwidth this makes a lot of sense, along with limiting based on users. You can also imagine any kind of throughput metric (e.g. downloads, uploads, # of items) would also fit the bill here.
2. Capability: Limiting the ability to accomplish certain “jobs” is another way to go. Often applications will try to cordon off “power” or “enterprise” use cases in its free version.
3. Specificity: Particularly in data-centric applications (e.g. analytics), limiting the granularity of reporting is another alternative. Another instantiation of this dimension is personalization, in the sense that it’s used to provide more relevance to an individual user…not to be confused with our next item.
4. Customization: This dimension could take the form of any of enabling users to save settings and preferences, adding their own images or custom fields, provisioning vanity URLs, or providing source code.
5. Timeliness: Changing the latency of information is another way to limit applications, especially those that are information driven (e.g. time delaying stock quotes).
6. Usage rights: Often you’ll see non-commercial use of the application be free, whereas increasing levels of commercial activity be charged for. Sometimes this is enforced via limiting features or adding watermarks to images to ensure usage rights are adhered to in the free context.
7. Expiration Date: As Chris Anderson points out, providing the entire application for free for a limited time is another method that can be employed.

Choosing which dimensions to employ
While there are no hard and fast rules for which dimension you pick to limit your application — and in most cases it will be a combination of dimensions — here are some guidelines.

• Deeply understand the problem your application solves: The goal of freemium is to enable a compelling, but limited, use case for your customers. So, having a clear hypothesis of what that problem is from the outset will enable you to select the right dimensions to employ. Of course that’s likely to morph over time, but picking a reasonable starting point will help guide your decision.
• Keep it simple: For a freemium model to work effectively to scale, customers need to understand the value you provide through using your free version, and therefore how their experience would considerably improve by upgrading to the premium version. So, making the upgrade very clear is important, and the more dimensions you layer on the harder it will be to translate those features into creating value.
• Don’t be paralyzed over “giving too much away”: If you have something customers want it will be clear, and if you don’t it’s a moot point. Its harder to succeed than fail, and if you’ve adhered to the other principles I’ve outlined, you’ll get to market with your minimum viable product, such that there is a backlog of stuff that you could put in, but more importantly it’s what you learn from your initial launch that will help guide further feature development.

Hopefully this provides some clarity – are there other dimensions I’ve missed? Are there other resources here that you would recommend? Feel free to comment and share your expertise.

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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.

Here is the link to the previous set of slides.

For MIT alums 0-15 years out, in the Boston area, we’d welcome you to join in on our monthly meetings at the MIT Sloan Entrepreneurs Breakfast Club.

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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.

1) Communication
The mainstay of mobile so far, this comprises uses such as personal communication (voice, text, e-mail) but also deep & shallow forms of communications from developing ad-hoc networks (e.g. temporal group based on proximity); microcasting media of all forms (e.g. sending text, sound, image, video to Twitter); and let’s not forget the business uses such as web conferencing and virtual tours.

2) Checking status / staying current
This category covers anything that we see today such as scores, weather and stock prices to more innovative examples like “nanny cams”. Essentially this category is anything that connects you to a a quick “check-in” or update.

3) Experience augmentation
Ways to pass the current moment, or enhance the experience you’re having with elements such as casual & social gaming, music, books, or other entertainment related experiences.

4) Extending the desktop / keeping productive while on the go
There is certainly a category of making what you do on the desktop, or other platform, available on the mobile device. While the apps today such as presentations, spreadsheets, notes, and contact management exist, we may see better examples emerge that tie what is done well on one medium with that of another such as Salesforce.com, which allows entry in relevant setting where you would in mobile, but management to happen on the desktop.

5) Activity recording
The ability to capture photos and voice can help play into broader activity recording; however extending that with accelerometers and GPS also enables applications like like NIke+, and other exercise monitors. I’m sure we’re just scratching the surface in these few domains.

6) Device replacement
There are many applications that use the wi-fi, infrared, Bluetooth, sound, and sensing capabilities of the mobile device to replace another mechanical / electrical / electronic device. We’ve seen clocks, alarms, levels, flashlights, tuners, baby monitors, barcode scanners, electronic keyrings, universal remotes, and so many others — where there are many more to come in this category.

7) Contextual query / response (my fave)
One of my favorite categories, these applications look at accessing timely and relevant information based on where you are and what you’re doing (see my earlier post referencing these aspects of Search). From Google Goggles, to augmented reality apps, and even personal concierge type services, I think this category has the most room for really interesting developments when coupled with sensing devices.

’8) Digital Wallet & Identity
Since the mobile device is this century’s wallet, it naturally lends itself to be a great ID authentication system. We’re already seeing it as a means of providing ticketing via 2-D or audio barcodes, and also (similar to #6) to be your garage door opener or remote car starter. Clearly melding some sort of biometrics in conjunction with the device could activate the correct functionality also.

9) Transaction Execution
As a follow-on to #7 and #8, it seems relevant to execute on on searches and authentication. Here we should see an extension from the classic web-based transactions (e.g. buy a book, make a reservation) to those that access funds from the device itself, akin to NTT DoCoMo’s service in Japan.

10) Utilities & Administration
Certainly with the proliferation of applications and devices we’ll need a way to organize, clean-up, and maintain the health of our devices. These may be tools such as offering “Norton Utilities” functionality, synching files and devices, to anything else that makes categories 1-9 faster or easier.

Summing it all up
I’m sure I’m just barely scratching the surface of what’s possible here; moreover, interesting applications will also come out of hybrids of one or more of these categories. Which innovations will take off will certainly depend on various factors.

Let me know which categories I may have missed, or where you see mobile’s next killer app coming from.

Maybe he’s not stupid…just spineless
While there is likely a lot of gamesmanship on the part of Bettman to gain leverage with the IOC to set the terms of the NHL players participation, it’s plain stupid for him not to seize the opportunity to promote the game…especially since the NHL is in financial trouble. Saying things like the impact on season to great “balancing act”, and blaming “foreign Olympics” maybe coy; however, by not taking a stand Bettman comes across as a a weak commissioner, and calls into question whether he’s committed to delivering a great product for fans.

In situations like this it’s better to take a strong stance to say “the Olympics are great for our game and we’ll do what we can to be there” engenders more confidence than Bettman’s tip toeing. Fans (or customers), and the legions of prospective customers who were activated by Sunday’s game, won’t commit their attention unless their is a strong stance and identity….and Bettman blows the opportunity.

Follow the data
When faced with the decision to balance long and short term priorities, if you have data you must consider it. For instance can you model out the net financial impact of each option? In Bettman’s case there is a lot of precedent to draw from, using previous Olympics or even events like the Canada Cup and World Cup of Hockey…and if that doesn’t work, you can always look at yesterday’s SportsNation poll.

When the choice is clear, take a stand and move on
While making these trade-offs can be a difficult challenge for most start-ups, as life doesn’t often give you black and white decisions, here it’s pretty clear. So when you’re handed a decision like this on a silver platter make the right call and move on.