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In the Beginning …Was the Command Line. Neal Stephenson.1999.ISBN 0380815931. Stephenson, often called the Hacker Hemingway, is noteworthy for his well written science fiction these days. However this little book is a treasure.  ( I found it on a dusty shelf in the local Mexican library)  It relates to the computer industry in 1999, when Microsoft was bad, Apple was good and Linux was an upstart.  This was after the time of The Cathedral and the Bazaar . What sets the book apart is his gift for metaphor and analysis of how things came to be.   Just a few pearls that you can glean.Microsoft grew with out any real need to address `the user interface` because it made good financial sense to do so. Apple went for the walled garden because it had to remain a hardware company and this took on a certain mindset. MSoft as owning huge mindshare did not have to write drivers for all the peripherals ( the manufacturers did that for free) .  Both vendors were facing massive rewrites to their OS, which were tried in fits and starts, but users were met with lots of buggy software, but the two OS’s could not acknowledge how cludgy the OS’s were. Fascinating to see how things have played out in 11 years, and what residual thinking still prevails from that time.

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Cover of Prisoner of Tehran

Prisoner of Tehran. Marina Nemat. 2008. ISBN 9780143052173.   One womans true story about being falsely accused and imprisoned at 16 by the Ayatollah‘s revolutionary guards.  Through a series of flashbacks she describes life under the Shah and what led up to being put into prison. Despite being falsely accused she was beaten, tortured,  almost executed and sentenced to life in prison.  She was eventually “rescued” by renouncing Christianity, marrying a Muslim and living in fear for two years, in order to protect her loved ones at home.  Her “husband” was assassinated and her in-laws eventually had her released. When she went home to her family, they could not acknowledge all she had been through.   Eventually she remarries and finds her way to Canada.  A well written story,  I could not put it down.  Great insights into life in Iran then and possibly still.

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Marketing automation (MA)  is likely a really bad idea for you.   At one time I was selling accounting software for the first micro-computers.  Quickly we would discover (as we were implementing) that we were trying to shoehorn into a perfectly good solution,  a company that had very poor or almost no accounting systems beyond a shoebox, i.e. no  process at all.  Yah technology was going to solve their problem.  We had to step back and  first create a paper accounting system (their dime, our time so it  hurt)   Lots of scars.

The same mistakes were then made with ERP and CRM implementations (automating a bad or nonexistent process). Lots of money spent on these and on implementation. (Bigger shoehorns)   And now it is being played out with MAutomation. Since 95% of companies do not have a well thought out, strategic, successful  lead gen/nurturing process,  MA will be a waste of their money.

Perhaps  Freemium companies think they need MA to sort through the hordes of unqualified down-loaders. I suggest they take the money they would spend on automation and really work on their message, segmentation, targeting and building relevant compelling content .  At the same time really nail down a proven process.  Then use MA to  help grow your business.   Remember,  think,  then act. Things just work better that way.  (You move your spend to an investment that pays back.)

Of course this would require the CEO to know this stuff. Tell me when you meet one of these, since its always easier to buy technology than to solve the problems you have created yourself.   Marketing Automation is likely a waste of your money, but  its not the software, its you.
And that’s 30

• Confession: I Am a Marketing Automation Fanboy (funnelholic.com)
• Keys to B2B Marketing Automation Success: Experts from IDC and Quaero Weigh In (customerthink.com)
• Top 4 Benefits Gained from Adopting Marketing Automation (customerthink.com)
• The Trifecta or: How Marketing Automation, Lead Management, and CRM Are Related (customerthink.com)
• Marketing Automation Preparedness (marketinginteractions.typepad.com)
• Salesforce.com vs. Marketing Automation (demandmetric.com)
• Marketing Automation: The Beginning of the End? (mpdailyfix.com)

The third of 2011 Ready to Rocket Listings have been announced for 25 Life Science companies . Check out readytorocket.com. BC is doing awesome compared to other locals.

Posted with WordPress for BlackBerry.

The 2011 Ready to Rocket list for Information Technology and Communications Technology companies is accepting nominations for companies until 11am PT on Thursday January 20th 2011. Anyone involved with the company, whether management, an investor, director or a professional advisor, can nominate. To qualify for nomination, a company must have more than $500K in revenue and a growing base of customers. The selection committee is looking for companies that have the potential for 50% to 100% growth in the coming year, and are in good position to leverage industry trends or key industry partnerships..

Go to http://readytorocket.blogspot.com/2011/01/last-call-for-nominations-for-ict.html

Free. How today’s smartest businesses profit by giving something for nothing. Chris Anderson. 2010. ISBN 9781401310325.  I have had this book awhile and, really kick myself for not reading it sooner.  It is outstanding.  Anderson is able to debunk all the chestnuts out there around free as well as spend the time to give you some history lessons on free.  He also experimented with his own ideas on how to place the product out there for free using various methods he put forward.  Very insightful stuff . I especially appreciated his 10 Rules of Free on pp 241 and the review of the range of conversion rates one can expect from freemium on pp 247.  The key insight for me is his comment ( compressed and paraphrased by me)  that:

Price will fall to the marginal cost (in the digital bits case,  free) unless the provider has a monopoly and/or enjoys the network effect such as Microsoft (Office docs) and Facebook.  This supports a winner takes all effect, driving competitors to  very low numbers.   Facebook can not charge for new members because it has value in the network = linking new people all the time. So they will generate revenue from scale – losing with 99 % of the users and making it from a small % of ad revenue.  ( or perhaps – selling stock!)

I see that  Guy Kawasaki and Tim Ferris both used ideas from Anderson in their recent promotions.  Guy generated more “reputation” currency by offering free downloads of the Macintosh Way to people who “liked” his new book facebook page.  Tim Ferris drove buys of the new 4 Hour Body , by offering a pdf of the 4 Hour Workweek to those who bought the new book.  Tim drove his book to the top of Amazon very quickly = increased sales and reputation.

This is the best treatment of free and freemium out there. If you buy this very readible book, read and digest it. It contains numerous money making ideas. Do not treat it lightly! You can get the audiobook still free at Chris’ website:

• “Ten Rules for Maker Businesses” by Wired & DIY Drone’s Chris Anderson Chris Anderson (adafruit.com)
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Cutting for StoneCutting for Stone.Cutting for Stone Abraham Verghese. 2009. ISBN 9780307357779. Set in Addis Ababa during Selassie‘s reign this is a trip back in time and a full dip into the Africa of the time , set in the world’s oldest Christian country.  You lie the life of two twin boys, separated from Father and Mother, raised in a Mission hospital. Follow their lives into med school and training ( and weave in Eritrean  independence and Marxist  rule in Ethiopia.) One stays behind, one goes onto America . See the winding paths of their lives and how it all comes together in the end. A masterful story. Total enjoyment.

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Do More Great Work. Stop the busy work and start the work that matters.Michael Bungay Stanier. 2010. ISBN 9780761156444.   This is the expanded book that follows Find Great Work,  I reviewed Get Unstuck and Get Going and this is a worthwhile adjunct to it.  The book has utility for the employed and self employed.  I think it speaks strongest to those who seek to get going in an organization.  For the legions of Gen Y and Millennials out there, here is the what color is your parachute,   for your generation.   Short and concise the book is a very useful read, full of get-to-the-point-quickly activities.  Check out his website,  domoregreatwork.com

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Most profit, product or service?

What generates the highest profit margin, product or service? Pricing part 3.

This was a surprising data point from our Oct 2010 survey on pricing.  I was expecting that the impact of  product commoditization, SaaS, web apps, tied freemium offers and the ample opportunity to up sell present clients would have made an impact on the survey from other times. Most analysts say that products are being commoditized and true value is coming from services.  But it seems not.

Mature companies like SAP and Oracle are able to create huge profits from their services group. IBM has swung the majority of its revenue with huge profits from services.  Best Buys Geek Squad has bigger profits than the stores (its a growth department and they generate 60 % of income on products that come from competitors) .

At Rocket Builders we see in this data a reflection of a less mature approach to the market and ultimately pricing errors due to poor value communication in the surveyed companies.  Yes, the technology community is a youthful one , but the companies have been around for a good length of time through many cycles, with ample opportunities to build more mature business models.

A company might have very valid reasons for not getting more margin from a services group. Perhaps:

• The customers say they will not pay for services
• The competition does not charge for service
• Its part of a short term penetration strategy
• The services  may not be valuable
• There are no salable  services

Perhaps you have lower services margin for preventable reasons such as:

• You do not up sell services
• You do not track margin erosion through the services group
• You “toss” services in with the product sale
• You never thought about it
• You do not know how to do that
• Its part of your history and culture
• You do not grow your services departments soft skills and technical expertise
• Your customer experience is just not that great
• Field services does not sell

Service revenue should be a large and growing profit center for a well run company.  It requires current customer knowledge and the extraction of the value you help a customer get out of your solution.  But these are areas where knowledgeable and experienced marketing and sales departments can really bring the value stories back to the services department. Customer testimonials are the gold that will fill your mint.

Not getting the profits you deserve is preventable. If you want to know more about how to get more value  for your services, give Rocket Builders a ring.   Bringing out customer value is what we do every day.

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Does finance still set your prices?  If this is true, its time to get into a more recent century.  Along with this,  lazy companies often set their prices as cost plus – which according to Thomas Nagle, under prices for some customers while penalizing others.  In my experience cost plus pricing was used to set a list price, which no sales guy ever followed.  Every customer received some form of discount along the way from order to delivery.  Forrester tells us 95% of customers get a discount.

Another sin is being unable/unwilling to track all initiatives, contracts, and discounts all the way through each transaction.  This is used in the concept of a price/margin waterfall.  In essence the company does not really know how much profit it received  from every transaction.   How do you know which clients are “at risk”  for being poached and which ones are chronic “outlaws” in getting maximum discounts if you do not track full transaction margin?   Bringing some up to date financial controls to this area will result immediate profit uptakes. Plus Finance will be able to play a proactive role in your pricing strategy.

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