Making a Revolutionary company Look Evolutionary

This past weekend, I read Om Malik's wonderful guidance about which seven stories to read this weekend. As always, this weekly list was provocative. One article that particularly caught my eye was "Why are we so Afraid of Creativity?". In short, creativity leads to uncertainty and "As a general rule, we dislike uncertainty. It makes us uneasy. A certain world is a much friendlier place."

This is a topic about which I am passionate because we live in an age of evolutionary innovation, to a large degree and those who are willing to think orthogonally are often accused of being dreamers. But that orthogonal thinking is what makes real movement in the market.

So what's a company to do when it has an (often technical) innovation that looks like an evolutionary innovation, but really has the potential to lead to an orthogonal market shift? Since we at Roeder-Johnson often work with companies that fit this description, it's a topic about which I think often.

Going back to the story about why we are afraid of creativity, the answer is:

-Understand what you really have (the "high concept").
-Build a communication and market strategy that first makes your breakthrough look and feel evolutionary.
-Then, when you have credibility, build the new, orthogonal trajectory on the foundation of the first stage success.

In some ways, you are building in your own "innovators' dilemma." That is, you know eventually, you will have to obsolete the perceptions you may have started out building. So why not just start with the big idea? Because in many more traditional markets with established perceptions (enterprise technology, vertical markets, etc.), the revolutionary idea can scare people and you won't build your base business before you move into the new realm.

Yes. We are back to the fact that creativity scares people.

Flight of the Dove: The Story of a Great, Consistent Communications Program

For some reason, I have been thinking a lot recently about Dove . For those of you who might not know (might be nearly all of you), Dove launched a fascinating marketing campaign a few years ago: "the campaign for real beauty."

I have probably been thinking about Dove because over a period of several years, with many brand extensions and new communications tools, they have been able to build a tremendously consistent positioning, branding, marketing, and communications effort. That's really hard to do. They continue to introduce products that are focused on "real beauty"; they have launched multiple programs focused on self-esteem; and have all sorts of social media activities focused on real beauty/self esteem.

Dove shows us that as communications become both more universally accessible through social media, it has also become more complex. That is, having a very clear and consistent message is all the more important when there are so many ways that the customer and influencer are touched.

Of course, at Roeder-Johnson we work technology start ups, most of whom are business-to-business companies rather than being consumer-oriented. But the same perspective is important with these companies. And, in fact, it probably is more manageable. Though unfortunately in this era of constrained resources, companies often forget that they can get MORE leverage by being thoughtful and consistent about their marketing and communications.

But imagine if a company had a clear "high concept" (like "the campaign for real beauty"), was able to develop products that reinforced this, AND developed marketing programs and communications through traditional and new tools that reinforced and built understanding of that core high concept? One theme, lots of leverage, and ultimately a lot of efficiency in building a unified brand.

What exactly is a "seedling"?

A lot of the VC's I have spoken with recently are increasingly interested in funding "seed" stage companies. Of course, that has to do with the seemingly attractive economics of these companies. Valuations are quite low now so a large piece of the company can be acquired for less.

That is, of course, what venture capital is all about: funding companies (that often might not get off the ground without them) and having everyone end up ahead of where they would be alone. I am a huge believer in venture capital and its role in promoting innovation. It is (or should be) one of the great sources of long term growth we have.

But there's a problem with what I am also hearing from some of these same VCs: they give their seedlings a few months and then they have to have a clear path to "monetizing" (I use that word because it is such an important piece of the industry jargon).

That's what worries me: We have a seedling lemon tree in our front yard. According to all the experts, each time you see a bit of new growth in this seedling, you are supposed to pinch it off; this is so that growing the new shoot doesn't completely sap the whole tree. And you are supposed to do this for a few years.

The approach to the lemon tree is the way I have traditionally thought about seed funding: plant a seed and then nurture it till it realizes its potential (within reason). We have a few clients that are great examples of this: Canesta, today the leader in 3-D vision sensors, has been nurtured and is today hitting the ball out of the park. And cPacket, with a revolutionary approach to chip design has the most efficient approach to "complete packet inspection" (a networking and IT concept that is just coming into its own) is in just the right position today to be capturing that market. And I just learned about a friend's company, ZettaCore, that is doing some really important stuff in materials science and has investors who believe in this nurturing approach to building winners in the long term.

It's not clear, however, the most investors have that "lemon tree" approach to investing. They give lip service to seedlings and then are apparently willing to only give them a little time to turn their big idea into big business.

Sure. Everyone is under a lot of pressure today and needs to see "positive momentum" to keep funding companies. But, has the definition of "positive momentum" become too limited among most VCs? And does this mean that many of the seeds that have the potential to grow into important trees may be killed before they have a chance to blossom?

"When all else fails, try the Truth"

I saw a wonderful film the other day called "The Audition" . It was about contestants in the Metropolitan Opera National Council Auditions. At the end of the film, when asked for the most important advice for young opera singers, one veteran star said "Say what you mean and mean what you say".

I thought it was ironic that an opera singer would provide the same coaching advice as we do in the communications realm. Our version is a little more tongue-in-cheek: "When all else fails, try the truth."

Of course, what we really mean is "start with the truth". But that's not as provocative. Either way, its an important perspective. We are in the business of managing perceptions and have always believed that the market always figures out the truth. This is ever more the case today, when all communications are "transparent" and the data is available easily.

This, of course, does not mean that you just spit stuff out. As we have said many times, start with a clear idea of your goals and messages and provide information both within this context and clearly explained.

But, at the end of the day, the truth wins out. So, start there!

Welcome to the Time of Opportunity

It may not feel like it, but we are living in an era of tremendous opportunity. While this blog made this point before, I was reminded of it in reading a very interesting article called "Coke? Oreos? That's so last year" on MSN Money. The message of the article is that in these lean economic times, consumers are rethinking their values and often choose generic brands over "name-brands". The article gives examples of how this has been an opportunity for small, lesser known consumer-products companies that provide value rather than fancy packaging.

The consumer-products opportunity here is along one primary axis: cost. We believe that while the cost axis presents an opportunity for technology companies, there may also be other axes along which new opportunity can be seized in more sophisticated markets.

Simply put, we are living through a time of great market disruption. In the case of consumer markets, this means that brand names no longer necessarily mean success. For technology start-ups, we believe that within this great disruption, target markets may be willing to challenge their traditional ways of doing things along several axes: not only will they be looking for cost savings; but they may, in fact, be willing to change the way they do things more fundamentally to achieve even broader benefits.

Let me give you a few examples:

-We have all read about the success of SalesForce.com. This is not just because of lower costs. Today's market is leading customers to need to try new ways to doing things in order to make their businesses work.

Moreover, we are working with a few companies that are finding tremendous momentum in today's market:

-One of our clients is providing an entirely new way to deploy web applications in the cloud. While there are some cost benefits to its approach, the savings enabled by this company are as importantly in time and complexity as well. They have acquired 25,000 new applications in a matter of a few months.

-Another of our clients has a very low cost 3-D sensor. This means that computers and entertainment devices are able to do much more than make existing capabilities faster or cheaper. They can actually create new user experiences that will bring in entirely new markets and revenue streams.

We can all think of more examples of how companies are able to capture significant new opportunity in this market. We believe it's important to keep your eyes open for these and seize the moment.

What's good for GM. . .

Let me just be clear. As a former owner of an EV1 electric car that GM subsequently took back and destroyed, I am not a fan of GM. They have made their bed.

That said, GM (along with the other US auto companies) is currently doing some PR that we can all take a lesson from. In short, because they are trying to convince Congress that their futures are worth betting on, the auto companies are currently very proactively showcasing their advanced technology. For the first time, reporters are seeing a lot of auto advancements that are upcoming in ways they have never been allowed to before.

Obviously, these are emergency measures and who knows if these guys will be proactive technology leaders when their lives don't depend on it. But, here's the lesson:

Don't wait till you are fighting for your survival to showcase your breakthroughs and leadership. It should be an integral part of your ongoing positioning strategy and will have broad benefits in the near, medium and long term.

Those of us with a heritage of working with technology start up companies know that technology is often one of the great differentiators for a young company with very tight resources. This means that initially it captures attention of customers, partners, and influencers, over the mid- and long-term it helps you move forward with customers and partners who need to look to tomorrow, and in all cases, when used right, has the potential to lower the cost of capital.

Of course, technology won't get you all the way over the line. You have to show that the technology leads to advantages that customers want. But it's a really powerful tool.

And by the way, I would contend that in this current economic environment it is MORE important today than in the past few years when "the rising tide lifted (almost) all boats".

Sequoia’s Right: Just Make Sure You Know All of what they Said about Communications

There is much being made these days about Sequoia Capital’s meeting with portfolio companies where they said “RIP: Good Times.” In short, they have told portfolio companies to tighten their belts, be realistic about their businesses, and hunker down for the long term. Turns out, Sequoia hasn’t been alone in these warnings. We are hearing that most investors are giving their portfolio companies similar messages.

But Sequoia also said some very interesting things about communications. According to GigaOm, Doug Leone made a number of key points:

• Go on the offensive and pound on your competitors’ shortcomings.
• Be aggressive with your messaging and be out there. In a downturn, aggressive PR and communications strategy is key.

This is certainly a version of the old adage: “He who wins in a down market wins.” Therefore, our advice is:

• Take the advice of your investors – most of whom are going to tell you to lengthen your runway as much as possible; and
• Seize the moment by capturing undefended ground during this downturn.

So how does a company use communications to do this?

• Be clear, articulate, and consistent about your differentiation;
• Be clear, articulate, and consistent about your benefits – near term and long term;
• Speak often to your key markets and influencers;
• Be specific and real. Help your customers and their influencers understand how you are better and the benefits you bring;
• Use the transparency of communications today to make sure this communications gets to all of your audiences.
• Don’t stop talking!

We know that you may be wondering how you can both extend your runway and increase your communications.

We intend to create a series of blog posts to address the issues enumerated above. But, if you want to discuss these, call us.

Welcome, PR 2.0! But Where Is “Leadership” in the Formula?

Welcome, PR 2.0! But Where Is “Leadership” in the Formula?

We are so pleased that a “high concept” called “PR 2.0” is attracting so much attention of late. After the hysteria of the last decade or so about “ink” and “publicity”, it’s excellent that young entrepreneurs are being educated about the real facts of life in effective public relations. We have always tried to practice this on a one on one basis and are glad for the help reminding people of some important fundamentals about public relations, including the benefits of:

• Having a clear vision
• Articulating it clearly as a “high concept”
• Understanding how your market is shaped and influencing the influencers through the appropriate media
• Relationship-building; and
• Leadership


Leadership is the thing that we believe is missing from the broadly articulated version of PR 2.0. It’s good to have the tactical execution in hand as being explained by PR 2.0. But we think the broad explanation forgets to remind entrepreneurs that they need to define the market – not follow it (you can read about this a lot in this blog (http://thehighconcept.blogspot.com/2008/05/walk-before-you-run-to-win-leadership.html).

We hope that with the increased attention to professional PR execution the quality of services provided will go up. Moreover, we hope even more fervently that a few of the entrepreneurs will go the extra mile and really work to lead and challenge the market with provocative and interesting perspectives.

Walk before you Run to Win the Leadership Race

For some reason, the last few weeks have been very exciting for me. I'm not sure why, but it has felt like a particularly rich time to add value to companies by combining experience with new ways of looking at the world and communications.

As I have said before, one of the most energizing things going on today is that with the Internet, you can try lots of new things: the rules are different today. Yes. It's important to remember that human behavior is still the same. But you can reach people so much more easily and in so many different ways.

Our whole goal for clients is helping them achieve leadership. But leadership does not have a hard and fast definition. It means that a company is shaping its market, rather than having the market shaped for it. Beyond that general guidepost, achieving leadership can differ dramatically from company to company.

But, at its core, leadership comes from systematically thinking about how the market will be influenced and then helping each of those influencer groups to move forward. So often, we see that while having high profile attention can have lots of benefits to companies; focusing exclusively on that kind of attention can be very damaging to a company truly looking to achieve leadership. Sometimes, the core constituency that is going to lay the foundation for leadership, will actually be offended by too much high level attention too soon.

That's where experience comes in. It's important to figure out the "layers" of the market and build credibility. And, by the way, no two companies or markets are the same: A company in the "material science" business needs adoption by scientists if they are are doing provocative and transformative things; a company in the software business needs to be adopted by developers before the big business impact can happen; a company in the communications chip business needs to be accepted by systems designers before changing things; a company in the advertising business needs to influences both the infrastructure developers and the "clients" to get their idea accepted. And so on.

The real message here is that understanding how to achieve that lofty leadership goal takes some thought based on a combination of instinct, execution, experience, and new thinking. It's valuable energy to invest for a young company to have a chance to define its own destiny.

Don't Look in a Cookbook to Launch a Start-Up

A friend asked me recently to help him think through the positioning and launch of his alternative energy-related company. He specifically asked how such a launch would be different from a launch of a company in the "IT" space.

I had an immediate reaction to this question: the launch of every company must be based on the specific assets of the company -- not the rules in a cookbook for launches. What does this mean for such a company in the alternative energy space? Like any other significant start up, the ultimate questions that need to be answered for the launch are:

• What are the key sustaining (unique) assets of the company?
  
• What is the long term communications goal of the company?
• What is the right communications architecture for the company to achieve this goal?
• How should the company be positioned?
  
• What is the right starting point, based on today's perceptual environment?

There is an inherent perspective that underlies this view of communications: think about communications as a long-term tool.

What might this mean for my friend's company?

• There's a lot of hype around alternative energy today. While this could be a near-term tactical asset, being engulfed by this hype is not the end in itself (as a matter of fact, we would contend that it's critical not to be too tightly coupled to it: "what goes up must come down").
• A lot of companies in this sector are based on significant scientific breakthroughs. Most likely, a long-term sustainable position will be based on fundamental acceptance by the scientists who may often be called upon (at least in the early days) to vet the breakthrough.
• As in any new market, the odds are good that the company's business model will evolve over time. This means that the long-term communications architecture should be based on a foundation which will survive changes in the business model. That is, why is this company significant, regardless of its current revenue sources.
• We believe that communications is best used to create leadership in the market. What are the activities that will enable this company to lead and define its market -- rather than to follow it?
• All of the tactics of communications should be used to reinforce this leadership. If any "events" go by and they are not leveraged, that's ashame.
• This way of looking at communications can sometimes demand forward-thinking on the part of the management of the company. For example, eschewing short-term hype in favor of long-term leadership can be a hard choice to make.
• The company management needs to commit to helping the entire company and its stakeholders to understand the communications goals and how to support them best.

We are sure there will be lots of customized activities for the launch my friend's alternative energy company; its success will be based on clearly understanding its uniqueness and importance and launching a program that helps the market understand this over time.

The Snack Algorithm and Leadership

Recently, I was sharing with a group of entrepreneurs that we at Roeder-Johnson have a rough internal algorithm for snacks in start-ups. We have learned through working with more than 80 start-ups over the years that you can learn a lot about the mood of the company by going into the kitchen and seeing the state of snacks. The algorithm roughly goes like this:

• Phase I: Garage or the equivalent. Very particular to the founders.
• Phase II: Early development (some seed money). A rough assortment of "developers' snacks"
• Phase III: First institutional investment (still on the honeymoon). The piles of developers' snacks grow. Software needs to be programmed; products need to be developed. It's critical to keep those key developers fueled.
• Phase IV: First product launched. Hope runs eternal. Developers snacks have bloomed to more exotic fare. A variety of sodas, some special juices and coffee drinks (and back in the Netscape days, fancy espresso machines in every kitchen);
• Phase V: Reality sets in. People need food, but the company should be helped in paying for the more exotic fare. There should probably machines that require some subsidy to dispense the snack.
• Phase VI: (Hopefully not every company gets here.) Coffee and tea bags only. The rest is on the employees.

Note: These phases can differ by the industry segment, investors involved, temperament of the management, and other factors. But anecdotal evidence supports this general scheme. (Also note that you can learn a lot about the cleanliness and other conditions of the kitchen, but I won't dwell on this.)

It's in phases V and VI where you actually see the mettle of the CEO and other senior management. As reality sets in and everyone starts to find out that the grand vision is still grand but a lot harder to accomplish than originally thought that you see the leaders come out.

I have observed CEO's of all sorts of young companies over the years. And it's pretty spectacular to watch the great ones lead their teams through the ebbs and flows of company challenges. The great ones are really heroes in my book. To keep the team going through development and customer challenges, and through the vicissitudes of the snack algorithm is terrific to see.

It's easy to think that being the CEO of one of these great technology start-ups is very glamorous. It might be. But it's also hard, sometimes lonely, and rarely is there a cookbook for the snacks or any of the other challenges the company may face.