Category Archives: business

A “Felt Need” Is What Makes Us Buy

A “felt need” is what dif­fer­en­ti­ates a vit­am­in from an aspir­in: when we crave some­thing (relief from pain), a product that sat­is­fies that desire becomes a must-have rather than a nice-to-have. Real­ising this and re-fram­ing a product in terms of this crav­ing is an import­ant step in ensur­ing a pro­duct’s suc­cess, say Dan and Chip Heath, authors of the excel­lent Switch and Made to Stick.

Becom­ing aware of this idea is what led to the suc­cess of Net­flix and NetApp… as well as the demise of count­less oth­er com­pan­ies. In a brief art­icle describ­ing how re-fram­ing a nice-to-have product as a must-have is all about dis­cov­er­ing and exploit­ing a spe­cif­ic “felt need”, the Heaths look at Ray Bards failed attempt at get­ting his “vit­am­in” book pub­lished and how real­iz­ing this idea of a felt need led him to become a suc­cess­ful pub­lish­er.

If entre­pren­eurs want to suc­ceed […] they’d bet­ter be selling aspir­in rather than vit­am­ins. Vit­am­ins are nice; they’re healthy. But aspir­in cures your pain; it’s not a nice-to-have, it’s a must-have. […]

That aspir­in qual­ity is what Bard now looks for in a book. He says that suc­cess­ful books address a deep “felt need” – that is, read­ers hun­ger for the answers the book provides. Clas­sic examples would be diet books, per­son­al-fin­ance books, and books that prom­ise you mega suc­cess if you’ll just radi­ate pos­it­ive energy to the uni­verse, indic­at­ing your receptiv­ity to mega suc­cess. Bard has become a tal­en­ted diviner of felt need. Fully half of the books that he pub­lishes become best sellers. […]

You’ve heard the old say­ing “If you invent a bet­ter mousetrap, the world will beat a path to your door.” Don’t bet on it. The world’s felt need isn’t for a bet­ter mousetrap. It’s for a dead mouse. […]

When engin­eers or mar­keters or entre­pren­eurs get too close to their products, it’s easy to mis­take a vit­am­in for an aspir­in. If your team is flirt­ing with delu­sion, a little love might point you in the right dir­ec­tion.

The Inefficiencies of Local Bookstores

We should not hold Amazon in con­tempt for pres­sur­ing loc­al inde­pend­ent book­stores to the brink of clos­ure and instead should embrace the com­pany for tak­ing advant­age of inef­fi­cien­cies, fur­ther­ing a read­ing cul­ture, and–believe it or not–helping us ‘buy loc­al’ more effect­ively.

In response to Richard Russo’s recent New York Times art­icle berat­ing a recent not-so-well-con­sidered Amazon pro­mo­tion, Far­had Man­joo takes a dif­fer­ent per­spect­ive on the Amazon vs. inde­pend­ent book­stores debate, this time com­ing down firmly in the Amazon camp.

I get that some people like book­stores, and they’re will­ing to pay extra to shop there. They find brows­ing through phys­ic­al books to be a med­it­at­ive exper­i­ence, and they enjoy some of the ancil­lary bene­fits of phys­ic­al­ity (authors’ read­ings, unlim­ited magazine brows­ing, in-store cof­fee shops, the warm couches that you can curl into on a cold day). And that’s fine: In the same way that I some­times wander into Whole Foods for the lux­uri­ous exper­i­ence of buy­ing fancy food, I don’t begrudge book­store devotees spend­ing extra to get an exper­i­ence they fancy.What rankles me, though, is the hec­tor­ing atti­tude of book­store cult­ists […] when they argue that read­ers who spurn indies are abandon­ing some kind of “loc­al” lit­er­ary cul­ture. There is little that’s “loc­al” about most loc­al book­stores. Unlike a farm­ers’ mar­ket, which con­nects you with the people who are sea­son­ally and sus­tain­ably tend­ing crops with­in driv­ing dis­tance of your house, an inde­pend­ent book­store’s shelves don’t have much to do with your com­munity. Sure, every loc­al book­store pro­motes loc­al authors, but its bread and but­ter is the same stuff that Amazon sells—mass-manufactured goods whose intel­lec­tu­al prop­erty was pro­duced by one of the major pub­lish­ing houses in Manhattan. […]

Wait, but what about the book­stores’ own­ers and employees—aren’t they bene­fit­ting from your decision to buy loc­al? Sure, but inso­far as they’re doing it inef­fi­ciently (and their prices sug­gest they are), you could argue that they’re bene­fit­ing at the expense of someone else in the eco­nomy. After all, if you’re spend­ing extra on books at your loc­al indie, you’ve got less money to spend on everything else—including on authen­tic­ally loc­al cul­tur­al exper­i­ences. With the money you saved by buy­ing books at Amazon, you could have gone to see a few pro­duc­tions at your loc­al theat­er com­pany, vis­ited your city’s museum, pur­chased some loc­ally craf­ted fur­niture, or spent more money at your farm­ers’ mar­ket. Each of these is a cul­tur­al exper­i­ence that’s cre­ated in your com­munity.

That said, occa­sion­ally I like to pay a ‘premi­um’ and buy books from loc­al stores, but not for any of the reas­ons men­tioned above. Rather, I hope for that bit of lit­er­ary serendip­ity and haphaz­ard dis­cov­ery that only seems to hap­pen in loc­al inde­pend­ents.

Why Software Development Estimation is Hard: Sea Lions, and Coastal Paths

Among the many val­id responses to the Quora ques­tion of why soft­ware devel­op­ment task estim­a­tions are often off by a factor of 2–3, Michael Wolfe, CEO of Pipe­wise, describes exactly why this is without once men­tion­ing ‘soft­ware’ or ‘pro­ject’.

Instead, Wolfe elo­quently provides undoubtedly the best ana­logy I’ve ever heard for explain­ing the dif­fi­culty in provid­ing estim­ates for soft­ware pro­jects: a couple of friends plan­ning a coastal hike from San Fran­cisco to Los Angeles and start­ing their jour­ney.

Their friends are wait­ing in LA, phone calls have already been made push­ing the date back…

Man, this is slow going! Sand, water, stairs, creeks, angry sea lions! We are walk­ing at most 2 miles per hour, half as fast as we wanted. We can either start walk­ing 20 hours per day, or we can push our friends out anoth­er week. OK, let’s split the dif­fer­ence: we’ll walk 12 hours per day and push our friends out til the fol­low­ing week­end. We call them and delay din­ner until the fol­low­ing Sunday. They are a little peeved but say OK, we’ll see you then. […]

We get up the next morn­ing, band­age up our feet and get going. We turn a corner. Shit! What’s this?

God­damn map does­n’t show this shit!. We have to walk 3 miles inland, around some fenced-off, fed­er­ally-pro­tec­ted land, get lost twice, then make it back to the coast around noon. Most of the day gone for one mile of pro­gress. OK, we are *not* call­ing our friends to push back again. We walk until mid­night to try to catch up and get back on sched­ule.

Of course, this isn’t exactly a new ana­logy: it’s apply­ing the ideas behind Benoît Man­del­brot’s paper, How Long Is the Coast of Bri­tain?, pub­lished back in 1967, to soft­ware estim­a­tion. Still, it works per­fectly.

If you like Wolfe’s writ­ing style and want to read more, he runs a blog called Dear Founder.

Update: And of course, there’s always O.P.C.

Record Label Demands on Music Streaming Services

New and poten­tially dis­rupt­ive music stream­ing ser­vices are hav­ing a hard time break­ing into the mar­ket, with many ana­lysts blam­ing their busi­ness mod­els and oth­ers blam­ing the con­trac­tu­al demands from labels for the troubles encountered. There are also com­plaints about the roy­al­ties paid to artists and poor rev­en­ues of exist­ing ser­vices.

Michael Robertson–founder of MP3Tunes and MP3.com–attempts to lift the veil on the industry by look­ing at some of the (you could safely say “unreas­on­able”) con­trac­tu­al demands placed on music stream­ing ser­vices by record labels:

Gen­er­al deal struc­ture: Pay the largest of A) Pro-rata share of min­im­um of $X per sub­scriber, B) Per-play costs at $Y per play, C) Z per­cent of total com­pany rev­en­ue, regard­less of oth­er busi­ness areas.

Labels receive equity stake: Not only do labels get to set the price on the ser­vice, they also get par­tial own­er­ship of the com­pany.

Up front (and/or min­im­um) pay­ments: Means large amounts of cash are neces­sary to even get into the game. […] This fur­ther stifles innov­a­tion in ser­vices and busi­ness mod­els.

Detailed report­ing, includ­ing monthly play counts: Provid­ing addi­tion­al reports unre­lated to pay­ment, includ­ing over­all mar­ket share of sales in vari­ous cat­egor­ies. […] The labels effect­ively off­load their busi­ness ana­lys­is (and the cost of such ana­lys­is) onto the music ser­vices.

Data nor­mal­iz­a­tion: Without stand­ard nam­ing con­ven­tions and canon­ic­al meth­ods for ref­er­en­cing artist, tracks and albums, the ser­vices are left to try and match artist, track, album names provided by one label with those of anoth­er. It’s incred­ibly inef­fi­cient, as each ser­vice must under­go this pro­cess sep­ar­ately.

Pub­lish­ing deals: Once you’ve signed deals with the labels, you then need to cut deals with the pub­lish­ers. […] Although you may have the rights to stream from labels, you some­time can­’t get the rights to stream from the pub­lish­er, or worse, even find the pub­lish­er.

Most favored nation: This is a deal term deman­ded by every major label that ensures the best terms provided to anoth­er label are avail­able to it as well. This greatly con­stricts the abil­ity to work out unique con­trac­tu­al terms and fur­ther lim­its busi­ness mod­els.

Non-dis­clos­ure: This is the main reas­on music ser­vices, not the labels, have been get­ting heat from the artist com­munity. Music ser­vices can­’t defend against accus­a­tions about low artist pay­ments because they pay the labels who don’t dis­close what they’re pay­ing to the artists.

It’s worth not­ing that while Michael Robertson is a trust­worthy writer and likely to have access to people who know this inform­a­tion (if this isn’t first-hand inform­a­tion any­way), he’s also likely to har­bour some resent­ment toward record labels from his busi­ness ven­tures. Still, even without a sol­id ref­er­ence I felt that this was too inter­est­ing to just pass up.

The Demand for Product Obsolescence

Years ago (and still, for cer­tain products) con­sumers decried the idea of planned product obsol­es­cence in indus­tri­al design: the inten­tion­al engin­eer­ing of products to have a lim­ited use­ful life, such as with products pro­duced with sealed-in bat­ter­ies or fridges that will only func­tion for sev­en years.

In recent years, how­ever, the need for planned obsol­es­cence has moved from the sup­ply side to the demand side, with con­sumers them­selves requir­ing that their gad­gets don’t last so long that they become a bur­den: it’s desired func­tion­al obsol­es­cence. Writ­ing about the influ­ence this has on our con­sump­tion habits, Rob Walk­er takes an inter­est­ing look at trends in product obsol­es­cence and the rise of func­tion­al obsol­es­cence as a demand-side phe­nom­ena rather than a sup­ply-side one.

Con­sider that most ubi­quit­ous gad­get, the mobile phone. […] The typ­ic­al Amer­ic­an gets a new one every 18 months. […] The prob­lem, if that’s the right word for it, is that new devices per­form more func­tions, faster—and people, as a res­ult, want them. […] The light-speed innov­a­tions in con­sumer elec­tron­ics have turned many of us into seri­al repla­cers. A deal­er in vin­tage home-enter­tain­ment equip­ment recently con­vinced me that it used to be pos­sible to buy a top-notch ste­reo sys­tem that really would func­tion admir­ably for dec­ades. Ima­gine, by con­trast, that tomor­row some com­pany unveiled a cell phone guar­an­teed to last for 20 years. Who would genu­inely want it? It’s not our devices that wear thin, it’s our patience with them.

The very real prob­lem of elec­tron­ic waste makes people like me hes­it­ate to replace good-work­ing-order pos­ses­sions. Yet at the same time, we like to stay cur­rent with new tech­no­lo­gic­al innov­a­tions. So rather than provide evid­ence of some cyn­ic­al cor­por­ate strategy, our gad­gets’ minor mal­func­tions or dis­ap­point­ing fea­tures or unac­cept­ably slow speeds largely provide an excuse to replace them—with a light­er laptop, a slim­mer tab­let, a clear­er e‑book read­er. Obsol­es­cence isn’t some­thing com­pan­ies are for­cing on us. It’s pro­gress, and it’s some­thing we pretty much demand. As usu­al, the mar­ket gives us exactly what we want.