The High-Tech Business Model/Marketing Boot Camp

Silicon Valley is a place where there are hundreds of new technologies and acronyms introduced every year. We need to be able to keep up with them. As a trusted adviser, clients expect us to be on top of trends and understand what matters to them so that we can work with them to create new, winning strategies.

One thing I have noticed is that many of the things that are popular today will not matter in the future. There are always some things in the mix worth considering. It can be difficult to tell the difference, especially when there is so much noise in the coverage of the latest big thing.

The One That Counts

A single item will change the way products are brought to market. Mashups are the term that I want you to pay attention to.

Mashups occur when two technologies are easily combined to produce something new and valuable. It reminds me of Reese’s Peanut Butter Cups. Two great things combined to create something better. Mashups have their roots in mashups. When two interesting ideas or “solutions” are brought together, they become even better. and are two examples of how a public database of housing transactions can be combined with mapping technology to create a website that allows home value assessments on the fly. Google Maps and a Ford Mustang collector could be used to mash up their database of Mustang Clubs (by GPS coordinates). The visual result would be club locations interactively overlaid on top of the map in a web browser – a mashup.

Why is it important?

There are two possible answers.

The first answer is technology-focused. The product development cycle will have to be changed.

You’ll likely get five different answers if you ask five developers about the importance of mashups. Mashups are usually created by combining functionality or content from multiple sources. One of the sources must be a third party. The most common mashup type is a combination of various origins with which the mashup creator had no involvement. John Musser keeps an index of all kinds of mashups on Some website operators are looking to increase the usage of their content, functionality, and application programming interfaces for developers using Javascript and AJAX. Musser charts the popularity of these APIs based on how many mashups use them.

Engineers can now create software wherever they are (anywhere=cheaper) and integrate it quickly with other modular pieces of software. The ease of development has been greatly improved. Existing people are at risk. Smaller companies can build solutions quickly and with low overhead costs. They can then combine them with other parts to create new value. Fast. Did I already say that? It’s important to repeat this.

“Titanic engineering” models are used by companies that still use the “old” model of development (18-month release cycles) and are therefore vulnerable. They are dinosaurs to me, but I do it with affection. These are the giants who built up the packaged applications business.

The second answer is about the value chain of customers.

The other interesting element is the fact that the method of creating customer value has changed dramatically. Mashup models enable different technologies, some of which are disparate, to be quickly brought together. Socially, the value created by customers and how it is delivered can be more of a mix-and-match model.

Remember the 1980’s and 1990’s. Dell and Intel were examples of value chains used in those days. The value was created linearly. Initially, a product is designed, then the parts are purchased, then it’s manufactured, then marketed and sold. Whoever could control the entire design process from conception to delivery would be able to generate maximum customer value. Back then, the goal of optimization was to find ways to gain good insights from customers early on in the process because it took a long time to reach the market.

In the world of mashups, a company does not have to invent all the pieces. The idea is not to consider the value of a “thing” like a computer. Customer value is more about what people need.

In the new age, the different components of the value chain may operate in silos. Let’s look at a non-technology case. Safeway, an American grocery chain, may think that they’re in the business of providing groceries and meals. In reality, they are only a part of the larger project. Evite can be used to create a guest list and collect RSVPs. Microsoft Excel is then used to calculate recipe sizes and to compile the recipes. They would plan their meal offline. They would then use Safeway for the purchase of food. Cleaning the house is another part of the value chain. No one company is able to claim that it serves this unique value chain. The customers must create their value chain. Evite could link to recipes, recalculate supplies based on RSVPs, and generate a list of shopping items to complete the solution.

That is the idea. By using mashups, any company can easily link to other parts of a chain. Safeway may be able to avoid Evite if it ends up providing the “party creation value chain” in its entirety. The value chain is a whole that can be used to connect the dots and create value for the customer.

As disruptive as it may be to have your business displaced by an adjunct, you should know that certain parts of the value chain can be “free” and augmented by another’s economics. It’s effectively become a “mosquito world.” Mosquitoes can surround dinosaurs’ revenue streams, robbing them of their nutrients. It’s not necessary to travel far to see a dinosaur killed by mosquitoes that can thrive and survive on only 10% of its revenue.

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