Critical process testing: Both expensive and cheap.

How do you perform critical process testing? Critical processes are sensitive to any failure, not just the major ones we tend to worry about most. When your products get out into the real world, they encounter a mix of simple, complex and very complex environments. Likewise, they are often used in a mix of simple, complex and highly integrated workflows.

“Any failure” is often an easily overlooked, simple little environmental thing. These little things didn’t cross someone’s mind early enough in the design, creation, production and testing processes. The simplest oversight or miscalculation about the nature of environments can easily derail a complex product.

Can’t see the forest for the trees

A rather disconcerting programming-related comment I’ve heard for decades is “Works on my machine”, otherwise known as “WOMM”. In context, the full comment might be “I tested the program and it works fine on my machine.” Unfortunately, that doesn’t mean anything. As Mike Tyson has said, “Everyone had a plan until I hit them.” Likewise, every program has been “tested” until it has been deployed.

A WOMM comment implies that the program wasn’t tested in an environment more complex than the one used to create it. In other words, testing wasn’t anywhere near as comprehensive as it should have been.

Don’t be so quick to think that your shop is immune to this simply because my example refers to software. A marketing process or sales process is just as likely to suffer from a lack of proper testing. This is the classic “Can’t see the forest for the trees” situation. Those creating your products are often focused too close to the product’s development to truly understand how it is normally and properly used in the field.

Management has a testing responsibility too

Not understanding how your products and services are used in the field is a disadvantage for your creative team. A frequent problem with all testing (not just critical process testing) is that it occurs too close to the environment used to develop the process. I’ve mentioned that I often proofread a written piece by reading it aloud. I do this because the use of a second media reveals obvious problems hidden by familiarity with a piece. Adding environments to your testing process is a similar tactic.

An instrumental part of your testing is making sure that the shifts in environment are properly covered. If your teams aren’t exposed to the reality of the environments where your products and services are used, it’s more difficult to take them seriously – much less know those environments even exist.

Making this happen is management’s responsibility. Allowing your creative team to spend the money and time to experience the real world environment where their products are used is huge. Taking a step beyond that to allow time for testing in real world scenarios and environments will pay huge dividends. These investments pay off in both product quality, and with the vision of your creative team being more in touch with your clients’ reality.

Whose responsibility is multi-environment critical process testing?

Your creative types (programmers, engineers, etc) may feel the duty of testing on a broad range of environments falls entirely to your quality control team. After all, your quality control team is usually tasked with a mix of testing new changes and testing for regressions (ie: new problems created in existing functionality) across many different environments.

That might seem the same job as developing in and for multiple environments, but it isn’t. When complex environments are involved, your programmers, engineers or other creative folks might often think their time is too valuable to spend creating and testing on a number of different environments. They have a point, but that doesn’t mean their development has to occur in the simplest environment possible. Left untreated, product creation will occur on the systems and tools closest and most familiar to the creative team. This leads to WOMM but also to designs that don’t reflect the reality of the environments where your creations are actually used.

The real world is far more complex any single programmer or engineer’s work environment. If you aren’t providing a range of ready to use work environments for them, the natural thing is for them to use the tools that are already available. This isn’t ideal for them or for your clients.

Think about and invest in your creative people and critical testing process: Expose them to reality.

Ask great questions

I’m always looking for better questions to ask.

Good questions educate me about a situation or a mindset someone is in and help me understand where they’re coming from.

Great questions can open the mind of the person you ask the question of. They tend to create discussions that create slight momentum shifts toward changes previously considered “impossible”,  “too costly” or in conflict with existing thoughts, processes and mindsets that are considered sacrosanct.

Asking great questions without belittling or embarrassing the person being asked is an essential skill whether you’re a journalist, salesperson, manager or business owner. Journalists who ask a mix of good and great questions not only get good answers from the podium, but also provoke the listener or viewer to think hard about their position and what formed it.

I suspect you can think of a few questions of that nature related to the social and political issues of the day. What I would encourage is considering what good and great questions you should be asking your staff, your clients and yourself.

Here are some of the useful questions I’ve collected over the years:

  • Why? (often asked repeatedly)
  • Why not?
  • So? (Be careful, this can come off as a bit rude)
  • What if our belief / prediction / estimate is wrong?
  • If we suspend our tightly held opinions for a moment, what else becomes possible?
  • How can I help?
  • What can I eliminate, add, accelerate, decelerate, start or stop that will help?
  • Help me understand.
  • What’s the biggest risk in doing this?
  • What’s the biggest risk in not doing this? This often works better than the prior question because most of us easily identify “Why we can’t / shouldn’t do this” items.
  • If this fails, what is plan B?
  • Why does that matter? This tends to provoke different responses than “Why?” by digging a little deeper into the Why.
  • What does this accomplish?
  • If this works, what’s the next step?
  • If this fails, is that OK?
  • How does this add value to the things we find important?
  • Can you give me a bit more detail on how you got there? Good for digging deeper on an idea or analysis.
  • How will this impact our clients’ ability to deliver what their clients need and want?
  • If this is wildly successful, are we as a company structured to handle that kind of success?
  • Is this designed to handle 10 times the input, output or clients we currently expect if we provide the necessary infrastructure to support that growth?
  • And that’s important because? (often repeated)
  • What challenges must be overcome to pull this off?
  • Can we talk about how we’ll deal with those challenges?
  • How does this impact our key performance indicators? Examples: cost per lead / new client / sale / deployment, support load, lead time, etc.
  • What opportunities does this provide to our partners?
  • Help me understand how this strengthens our core business.
  • Is this in conflict with our values?
  • How does this support our values?
  • How did the pilot program go?
  • What did our clients say about it?
  • What about this is really important to you, your crew and our clients?
  • What data will be used to monitor this project / activity? How will it be measured? Do we know what the decision points are for that data? How were those points determined?
  • Do you have what you need to do this?
  • How can we communicate this effectively to clients and internally?
  • How does this drive our “one number”? Your number might be webinar views / month, the number of after hours service calls, free trials / month, or average days between purchases. A car lot might see a visit to the lot with a spouse as a leading indicator.
  • What are your biggest barriers to success? What’s the plan to deal with them?
  • Who isn’t “on board” with this? Why?
  • If we remove our egos / need to be “right” from this discussion, what changes?
  • What are the weaknesses in this plan? Do you need help with them?
  • Who are your strongest leaders and how are you developing them to handle more responsibility?
  • What are you doing to attract new talent?
  • What expectations does this set?  How will we manage them?
  • What are you doing to identify and develop both new and existing leaders on your staff?

What good and great questions do you ask?

You aren’t the business owner you need to be

A while back, I had a conversation with the CEO of a $60 million software company that hit me pretty hard – and the lesson is one that all business owners need to keep in mind.

This CEO was talking about how he feels constant pressure to improve himself so that he can be ready to run the company that will be waiting for him in six months or so. Given their growth rate, he fully expects the business to be 20 to 30 million larger a year from now.

Despite the proven skills he’s demonstrated for years – and used to get his company to where it is today, he still feels intense pressure to be ready to run the company his company will soon become.

What hit me hard is that despite the fact that I regularly invest a fair amount of time and cash to expand my education, I was talking with a guy who also spends a lot of time and money improving his skills and education – and he still doesn’t feel ready.

Are you ready?

Think about that for a minute. Are you preparing yourself so that you’re ready to lead the company your business will be in six, nine or 12 months? Are you learning enough to be ready to manage your own company’s needs?

This isn’t just about software companies and it isn’t limited to companies with double-digit millions in revenue. Every business owner will face this challenge. Every business will push us to improve or it (and we) will pay a dear price for that.

Imagine how your staff, family and others will react if your company is being run by someone who doesn’t have the skills to run it. It’ll be patently obvious – even if you own every single penny of it.

What would happen if you weren’t ready?

It’s particularly serious for companies experiencing serious growth, or for those whose growth suddenly stopped, regardless of the reason.

Our businesses change rapidly. Other people, our own people, the market, clients, competitors and our own growth (or lack of it) all have a way of “moving our cheese“.

Be there to meet the cheese

Years ago, Wayne Gretzky was asked about the difference between a good hockey player and a great one. He replied that “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.

Somehow or another, Gretzky would often be where the puck was going to be, ready to do something others could only observe. Some may never have figured out that Gretzky was like a great chess player who visualized the next umpteen moves in his head and as such, knew where to be on the ice.

Running a business isn’t much different. If you aren’t ready for your business when it arrives at that future spot, it could slide right by – just like opportunities (and the puck).

What areas need attention?

You may have run your small business for years, nurturing it from the time when you did everything with nothing and slowly built it to the stable, if not growing, situation you enjoy (I hope) today.

So what do you change to be ready for the company yours will become next year? What do you learn? What do you need help with?

For large companies like the one discussed earlier, finance is where the learning usually needs to occur. But not everyone is looking to create a business that large.

What if you’re not planning to be that big?

The things I see that hold businesses back, or keep them from being able to take advantage of opportunities zipping by are the ones I frequently talk about here: sales, marketing and operations – and things that cause big, sudden changes in any one of those.

Do you have a sales staff? If so, do they have a process for working leads? How would your process hold up to a 20% increase in leads? How about a 20% decrease?

Is your marketing planned, consistent and strategically thought out or does it happen at random?

Are your operations ready for a 20% change in volume? If your best salesperson got a massive multiple location deal tomorrow, how would that affect your ability to deliver?

These are the things a business owner needs to be ready for.

 

 

Customer relationships – Do yours mature and adapt?

One of the things that separates people from most machines and systems is their ability to adapt their interactions as the relationship matures.

A tough-as-nails 61 year old grandfather who supervises workers on an oil rig in North Dakota’s Bakken adapts his communication to the recipient when training a new guy to stay alive on the rig, and does so again when chatting with his three year old granddaughter about her Hello Kitty outfit via a Skype video call.

He doesn’t coo at a young buck and he doesn’t growl at his granddaughter. He adapts. It’s common sense.

Our systems, processes and communications don’t do enough of this.

Adapt to the relationship state

Why do our companies, software, processes, communications and systems so infrequently adapt to the state of our customer relationships?

An example I’ve used a number of times: You get mail from a company offering you a great deal “for new subscribers only” – despite being a subscriber for decades. It’s annoying, not so much because someone else gets a better price for a short time, but (to me at least) because they don’t appear to care enough about their existing customers to remove them from a lead generation mailing.

It’s a trivial exercise to check a list of recipients for a new marketing piece against a current subscriber / client list. Why don’t “we” do it?

For mailed items, it would reduce postage and printing costs. It would cut down on the annoyance factor in clients who inappropriately get special lead generation offers – regardless of the media used.

Adapting your marketing (for example) to the state of the relationship you have with the recipient is marketing 101. It’s a no-lose investment.

Adapt to the maturity state

Like the grandfather, most of us alter our face-to-face speaking to the state of the relationship and maturity of the other person.

Sometimes we don’t, but that’s usually because we haven’t had the opportunity to determine the maturity of the other person in the conversation.

I’m speaking of the maturity of the customer relationship as well as where the client is with your products and services. There’s far more to this than simply adapting to a client’s intellectual and age-related maturity.

Remember that “tip of the day” feature that was popular in software not so many years ago? The half life of that feature was incredibly small and the value it delivered was tiny when compared to its potential.

Why? Because few software development companies took the feature seriously once it had been coded and tested.

How can I say that? Easy. Did you turn that feature off once you realize the tips were of little value after an hour’s use of that software? Did you turn it off earlier than that because the tips were of no use at all?

My guess is that one or both of those are true. The tips weren’t there for users throughout their lifetime of use with the software. In fact, most of them weren’t very useful beyond the first hour of use. Every time we move the software to a new machine, it’s likely we have to turn it off again. ROI for that feature? Not so high.

The content of these tips was everything (in fact, the only thing) to the user of that software, yet the content in most tip-of-the-day systems appeared to be rushed out as an afterthought.

What does a software’s tip of the day feature have to do with your business? Everything.

Take your time, implement well.

That the tips rarely were of use to new users beyond the first hour or so of use shows a lack of investment in their content.

Imagine if these tips were sensitive to the maturity of the user’s knowledge and use of the software.

Some cars do this. They automatically adjust the seat and mirror locations when Jerome unlocks the car and use different seat/mirror positions when Carmen unlocks it. Adaptation.

What if your systems, products, services, marketing, processes and other client interactions recognized and adapted like this?

Adaptive interaction isn’t an all-or-nothing thing. It can mature over time, as other things do. Take your time, do it right. You tend to get only one chance to break a relationship with a client, but you can strengthen it with every interaction.

Adaptive behavior is all about making your business personal.

Perfect is the enemy of done – or is it?

A couple of weeks ago, NASA celebrated the one year anniversary of Curiosity Rover landing on Mars.

As someone who has been taking pictures since the ’60s, I still find it amazing that we can tell a satellite orbiting Mars to take a picture of a Jeep-size spacecraft parachuting to its landing 62 million miles away and have the photo on my laptop 20 minutes later.

The photos and video of the landing and all that led up to that event reminds me of the oft-quoted remark “Perfect is the enemy of done.”

Does it need to be “perfect”?

While shipping something and iterating its benefits, features and quality are perfectly acceptable strategies for many products and services, I think we shortchange ourselves if we don’t keep in mind that there’s a time and a place for “better than done”.

I was trained by engineering professors during my college days, so “perfect” means something well beyond “done” to me, often well beyond four decimal places.

Perfection is extremely difficult to achieve and even harder to prove , so let’s settle on a “Much better than where it is now” definition so we can keep the engineers happy.

Using that definition, perfect makes no sense for most work under most circumstances. For example, software programs are never “perfect” and while you can always sand a surface with a finer grit of sandpaper, does it matter if you take an 800-grit-smooth surface to where 10000 grit will smooth it?

Perhaps a better question is this: Is the cost and time investment worth going past “good enough/done” to reach for those “perfect” four, nine or 27 decimal places?

Going beyond a seemingly ridiculous number of decimal places is one reason why Curiosity made it to Mars and still rumbles across the Red Planet today – yet it’s unlikely that Curiosity is perfect.

BUT… it is extremely well-designed and resilient.

Design and Resilience

My point is this: while perfect is certainly the enemy of done for much of the work that you and I deliver, that doesn’t eliminate the need to put serious thought into the design and resilience of our best products and services – if not all of them.

It’s not unusual for us to design something based on immediate and short-term needs, never taking the time to consider what happens if it encounters situations and customers our short-term design never considered.

The information we don’t have is often as important as what we know and assume at design time.

When you send a product like Curiosity to Mars, you don’t get an opportunity to replace a part you didn’t think through as well as you should have. You can’t make a service call or throw a tarp over it while you rip it apart to figure out how to resolve today’s problem.

Instead, your design time process has to include what *could* happen and how your product would react and extract itself from an unexpected situation….long before you load it onto a rocket, pallet, download page or Fedex box.

What if your product…

  • Finds itself being used by a customer 10 times bigger than your design-time’s “Ideal Customer”? Or 10 times smaller?
  • Is being used in an unfriendly environment? A high-security or low-security situation?
  • Lasts 10 years longer than you expected? Remember – the work or result it provides still reflects on your business.
  • Cost 250% more to replace once it’s installed – and that installation takes 253 days  (the time it took for Curiosity to reach Mars).

When Curiosity lifts off, it was too late to turn a screw, change a part’s materials, or sand and polish it to an even-higher tolerance fit.

Think about your best stuff – no matter what you do. What would happen to it under the conditions described above? Would it be worth more if it handled those things without breaking a sweat?

How would you react when that extra bit of design effort pays off? What revenue will result? What will that first few seconds of success feel like?

PS: The sum of *all* NASA spending over the last 50 years is $800 billion. Lots of money. Yet that 50 years of exploration and discovery were cheaper than the government bailout of Wall Street, which cost $850 billion. A stunning comparison of ROI, even before thinking about the spin-off technologies from NASA’s work that have trickled down to business and industry, much less the things that impact our daily lives.

Things a software vendor should never say

Are you damaging the relationship with your customers when you respond to their requests for help?

If the staff receiving feedback reacts to bug reports and questions as if they’re a personal insult, you probably are.

Snarky remarks, veiled insults and/or disdain have no place in the feedback loop, yet they happen far too often.

Here are a few ways you might be sabotaging your business when handling customer feedback and how to improve each of them:

“You’re the first one to report this.”

Even if I’m a beta tester, it’s an irrelevant piece of information unless the word “Thanks” is at either end of the sentence.

The implication is that if you’re the first to report it, it must not be a legitimate problem.

Better: Investigate the why and the what, rather than prosecute the who. Even if you tell your customer they’re the first to report the problem, at least one thing is necessary: Thank them. A lot depends on your attitude when sharing that fact. Even more depends on what happens next.

The alternative is that they give up on reporting things because your company takes an attitude with them. If they don’t report things they’ve encountered, what opportunity cost does that have? What does it say about your relationship with them?

“It works fine on my machine.” aka “WOMM”

This one makes me think “Well, I’ll be right over, so be sure to have my favorite coffee ready. Oh, and make me a sandwich because I’ll likely be at your desk for a while.

Seriously, telling the customer it works on your machine is fine, but only it’s said without the “You’re an idiot user” attitude. It’s not a bad thing to let them know that the problem is not well-known. Treating as if they’re an idiot is.

Better: It’s OK to let the customer know it works for you, but do so in context – while letting them know that this probably means there’s a simple solution.

“You’re using it wrong.”

While this could be another parallel to WOMM and a statement that the product’s usability isn’t what it should be – it’s really focused on blaming the customer. Keep in mind that if your UI, UX, error management and such are bad enough that the user could do something that would provoke such a remark – you should be focused on something other than blaming them.

Better:  Try “You’re doing something we didn’t consider during our design and testing. Can you tell me more about what you want to happen?” If the customer is doing something the system isn’t designed to support – this isn’t the time for criminal prosecution. It’s time for advocacy for both your development team and the customer. They may be about to describe a new market for a slightly altered version of your software – if you’re willing to listen for it.

“Why would you want to do THAT?”

This response to a request for new or altered functionality is usually spoken in a tone that gives you the impression that the vendor thinks you’re an idiot. You’ve set the wrong tone for a conversation that could have revealed a new market, a new segment of your existing market or more.

Better: This response needs to parallel “You’re doing it wrong”, as it can indicate UI and UX issues. However, this reaction is most often connected with opportunity. Market opportunities are lost when the user is about to describe something that would benefit them, but before they can, they’re insulted with “…THAT?“.

Benefits sell products. More benefits sell more products and help retain customers. Listen…you might actually hear something.

“It works fine on Windows XP”

This one is a close parallel to “It works fine on my machine”, but it also tends to send the message that your vendor, their support people or their developers are worst case stuck in 2001 when XP was released and best case in 2008 when Windows XP SP3 was released.

Supporting XP is OK if your market demands it for whatever reason. Ignoring the fact that there have been three releases of Windows since that time – sorry, can’t apologize for you there. Is this the kind of message you want to send to new customers? To prospects (yes, your comments will get out).

Better: If you haven’t completed tested on the OS release that your customer is using, try “We’re still testing on that version. Can you describe how it acts for you? I’d like to report this to our (install / development / testing / QA / management) team(s), so it would help to have as much information as possible.” Of course, if you can come up with a workaround until your OS support is more complete, do so.

As OS vendor development cycles shrink and they move to smaller and more frequent iterations, these situations are going to increase…unless you dedicate yourself to being ready for them. It’s simply a part of leading your market. Last week’s Build conference made it clear that Microsoft is serious about decreasing the time lag between OS releases. You can treat this change in speed as the enemy or as a competitive advantage.

The bottom line

It only takes one snarky comment to become an adversary at a time when the customer is asking for help.

They didn’t contact you to have a more negative experience than they’re already having – they asked for help. Customers are hard enough to keep without your staff running them off with remarks that tend to come off mean or snarky.

React with courtesy, intelligence and understanding even when things aren’t going well. Customers notice and remember.

What to do if you aren’t ready

If you ask anyone who has kids how long you should wait before having kids, you’ll probably get an answer like: “You’re never really 100% ready, so if you want kids, just have one.”

The same goes for the things you’re not doing in your business.

We always think we need one more piece of knowledge. One more employee. One more location. One more revenue increase. One more class. One more tool.

So we wait.

The Fear Muscle

Thinking we need one more whatever is our subconscious “fear muscle” protecting us from some little piece of unknown, as if the one possible obstacle we can think of is enough to prevent us from starting, much less succeeding.

That one thing is usually not a start/stop choice, much less a project-ending obstacle. It’s usually just something we have to deal with – and it might not become an issue for weeks, months or even years. The scope of the project, the market and who knows what else could change by then. This hesitance tends to be an internal protection mechanism that we really don’t need. As a species, we’re far more adaptable than we realize, but our subconscious loves to protect us from what feels like an unknown.

In business, it’s protection we rarely need. In fact, if we need protection from anything, it might be protection from the inertia that keeps us from starting things.

Inertia is often the biggest obstacle we face. We tend to be afraid, or at least hesitant, to start as if we can only create the perfect child by having that child at the perfect instant in our lives. Anyone with kids knows better. Anyone who has started and built a business (or anything of substance) already knows this – but sometimes we still wait.

We’re not talking about the normal kind of afraid, just the “well, I need one more whatever to be certain this will work” kind of afraid.

Really, you don’t need that one more whatever. You just need to start. Start on the next project, the next service, the next journey or the next challenge and see where it takes you.

Do one thing

I know, it sounds simple. It sounds like common sense. Yet how many times have you waited and then later, wondered why you waited so long?

If you have to backtrack or stop to learn something, so what? It’s part of the process. You may zig or zag now and then, but that’s no different than what Marissa Mayer, Richard Branson or Warren Buffett deal with. Maybe the scale and probably the resources are different for them, but the PROCESS is the same.

Just get started…and keep moving.

Whats coming sooner than you think? The R word.

What’s coming sooner than you think?

Retirement.

Don’t run away, 20 and 30-somethings.

Even if you’re 22 and three years into your new business, these issues should be on your mind unless you want to do more or less exactly what you’re doing now for the next 30-40 years.

We’re talking about the difference between building a business and building a job.

No one will buy your job. Lots of people would be interested in buying your business – if you can show proof of the things people want to buy.

So what’s the difference between the two?

  • A job has no cash flows. It has a salary exchanged for day in, day out work. Vacation/sick time aside, a job doesn’t generate income when you don’t work.
  • A business has cash flow. It delivers revenue whether you work or not.

To quote Mary Meeker (Kleiner Perkins partner and investor): “The value of a business is the current value of future cash flows.”

Business buyers are always interested in buying an income stream. They’re never interested in buying a job.

Model the outcome you seek

Last week, I was having a conversation with someone about upgrade pricing for their core product.

It led to a conversation about pricing a new product and pursuing new customers, which lead to retirement-after-selling-out discussions.

Why did that happen? Because we had to settle on some parameters for the retirement/selling out discussion before we could have a coherent discussion about product pricing.

Pricing shouldn’t be random. Sure, it has to reflect the value you deliver, but it also has to reflect your business and personal goals. Much of the time, it seems to reflect little more than whatever your competition charges, plus or minus a little.

“What the market will bear” is what sets the price for commodities.

Arriving at your number

So how do you get to “your number”?

Let’s say you want $5 million when you sell. If you settle for three times annual cash flow (it could be one, it could be 10), that’s $5MM/3. At what annual revenue do x customers get you that number every year? What do you have to sell them to make that?

For the sake of discussion, we’ll assume it takes 500 customers. There’s your average. Where are you now? How many new customers do you need to get to the right number? How much more do you need to come up with in real value to get that from existing customers?

Finally, for those who have their sights set on making it big with an initial public offering (IPO)….don’t let the haters dissuade you, but do pay attention to history.

No one has ever IPO’d a job

IPOs aren’t a phenomena limited to Silicon Valley, though the resources there make it easier to put the right conditions together. Despite that, it can happen anywhere. In fact, it has happened right here in rural Montana.

From KPCB again:

Build something that will run on all cylinders even when you’re sick, on vacation, caring for a parent or simply want to take a random day off. Over the long term, perhaps your leadership will be needed, or perhaps you’ll hire someone who leads better than you do. Five years (or five days) from now, you might find something else that gets you up at 4 a.m. raring to go.

Rather than close that other business you built – find a great manager to run it. You can’t do that with a job.

You may love what you do and think you can do it forever. You may be right. Positioning your business so that you can change if you need or want to, will also position you more ideally for whatever your future holds.

Somewhere down the road, it’s likely that you’ll want to sell your business. If you can show recurring cash flow that doesn’t depend solely on your labor, it’ll be a lot easier.

Where you are today

If your business is “just you” and really does resemble a job, that’s OK. As you look forward, consider how you want things to look as time passes – particularly when selling the business crosses your mind.

One more time…. “The value of a business is the current value of future cash flows.”

Meeker 2012 – What should small software businesses do?

KPCB operating system trends
Credit: KPCB

Mary Meeker’s annual Internet Trends presentation is always an attention getter.

For some, a wake-up-call, for others… a reminder.

No matter what it is for you, there’s some valuable trend info there worth looking at in the context of your software business.

“Rapid mobile adoption still in early stages.”

Think about that for a moment. Apple has more than 100 million mobile devices sold (65 million iPads in 8 quarters) and dominates US smartphone sales. Android does the same for the rest of the world…and we’re still in the “early stages”.

This isn’t a surprise, but it’s a common mistake for entrepreneurs to feel like if they aren’t first, they’re worst – and for some, that they shouldn’t even try. Someone has to be first – and sometimes their most important achievement is to show everyone else that the market is viable.

It’s still very early for mobile, despite what you might gather from industry doomers, but there’s plenty of time to be the second mouse who gets the cheese.

Look around your clients’ offices. Are their salespeople 100% mobile? If they have any kind of fleet, are their drivers/pilots? What about their warehouse / lot / logistics people? Are their in-house pickers on mobile devices yet? What about their salespeople? Can they enter a lead, produce and email a quote and close a sale – including accepting a check, depositing a check, getting a contract signature, emailing the signed contract and/or taking a credit card – from their mobile phone?

All of those things can be done today with a phone. You can even deposit a check with your stodgy old bank’s mobile phone app.

What about your product line?

Can they use their mobile phone to perform core functionality like this in your software? My guess is… Probably not.

Some of your software might never be on a mobile device in its current form. Yet parts of it might make sense, particularly for outside sales and other mobile workers. One thing is almost certain: This kind of mobile flexibility will be difficult to avoid in the future because customers will demand it or move to someone else who delivers it.

One of the more challenging aspects of the move to mobile is the cross-architecture requirements. A few years back, you could dictate mobile hardware because phones couldn’t do the work. You’d have customers buy expensive ruggedized Symbol devices and that allowed you to control the scope of development.

Not anymore. Today, you need to be ready to consider adding iOS, Android, WinRT, Java, HTML5 and who knows what else to your development efforts. Now maybe you don’t start development on all of those at once but you’d better be considering how each of them apply in your market.

If you aren’t, are you ready to give up the testimonial-writing, market-leading customers in your client base? They’ll often be the ones who move first to new solutions that leverage advanced technology – even if it’s just to do a pilot and set their next long-term strategy.

Globally, only 18% of people have mobile access, but the growth rate was 37% over the last year. In the U.S., 29% have a tablet compared to 2% three years ago.

Rethink your apps.

“8% growth in internet users, driven by emerging markets”

79% of the U.S. population has internet access today, while only 10% of the population of India has it.

Of that 10%, 44 million use a smartphone. The rest use a mix of desktop/laptop and cell phone. For those who get to the net via mobile device, it doesn’t always happen on a smartphone. Meeker noted that 200 million farmers in India receive ag subsidies via their cell phone.

Intuit recognized this situation early on by having business development people in place in India. One of their success stories there is a service that delivers daily pricing information to farmers via text message. They’re adding 20,000 users a week to this text message based service, which helps farmers get more for their produce at market.

“Suddenly” the translation to Farsi and adaptation to “non-smart” cell phones seems more interesting…

For U.S. software companies, these are areas of concern. At 79%, our climb only has so much headroom left. International is a natural next step given the growth numbers.The U.S. is number eight in growth rate of new internet users, behind China, India, Indonesia, Philippines, Nigeria, Mexico and Russia.

Why worry? Because small U.S. software companies tend to avoid internationalization. Grab 10 small software company product downloads off the net. How many of them support other languages? Other currencies? Other taxation systems?

If internationalization is a problem, how functional is business development outside the U.S. for American companies? How else will you get accurate business development knowledge in those countries? Add to that, many countries have barriers to outside companies building a presence inside their borders – just like the U.S. does.

This is an area of great potential, but it doesn’t come without serious work. It isn’t as simple as running your product’s text strings through Google Translate.

Don’t forget Android. In 13 quarters, Android has lined up 250MM mobile phone users, with the majority outside the U.S.  Combine that with a different platform with many different screen formats and this is where you mull over your answer to “How bad do you want it?” when looking at the potential return.

Smartphone upside

As the smartphone enters the developing world en mass, there’s still a big upside. In the U.S., we think we’ve seen it all. Globally, there are 953 million smartphone subscribers. Seems like a lot, after all that’s about 3 times the size of the U.S. population.

Yet for all mobile phones, the smartphone subscribers number jumps to 6.1 billion (see image below). Compare those two numbers carefully when considering your near term app strategy.

Many would suggest you build a smartphone app for these developing markets ASAP. I suggest you consider where you are now before taking that step. In particular, think about “the reason to get a sale“.

Show me

Many will read these numbers and think “Yeah, but…”  The “but” is about where the buyers are and where the traffic is.

Currently 10% of global internet traffic is mobile. It was 4% two years ago.

What about buyers? Meeker said 8% of e-commerce is mobile-based and that the click through rate on mobile is still 1/5th of what desktop click through is.

8% globally is a big number and has little choice but to go up. Can your site handle it? Can your clients’ sites?

In India, there is now more mobile-based internet traffic than there is traffic from desktops/laptops. Breathe that in before your next long-term product strategy meeting.

Reimagination

These three graphics tell a lot of stories. There is one thing they don’t say.

One thing these graphics don’t say is “Who’s next?”

Spring Training

That’s how early things are. Meeker called it “Spring Training” because there are so many opportunities related to the net and mobile that the season really hasn’t started. Maybe in the U.S., we’re jaded to the opportunity that remains because we have this habit of assuming that everyone is like we are. 15 minutes on your tech support line will clear that up.

For those willing to think and work differently…different results are possible. Look back over these slides and my comments. How will they, how could they impact your business?

Thanks to KPCB, I’ve included the slide deck here…

The other shoe

Meeker’s talk wasn’t all good news. She referred to KPCB’s now-famous (and sobering) USA Inc. video/report that looks at the financial performance of the U.S. as if it was a business. Regardless of your politics, it’s worth a look. An October 2012 USA Inc slide deck is here and the 2011 video is here.