• Ferhan Bulca

    Executive leader and intrapreneur with track record in innovative business models. Builder of disruptive, agile teams.

    Creator and Lead Instructor of Business Innovation Certificate program at University of Toronto School of Continuing Studies.

    I offer consulting services and I am available as a speaker for private and public events.

    Watch my recent talk at Ashoka Canada's Changemakers event at University of Toronto on YouTube.

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Establishing Business Partnerships

Posted on July 17, 2012 by Ferhan Bulca, Ph.D., P.Eng.

A recent discussion with a venture investor triggered some thoughts about a skill I took for granted until recently: establishing business partnerships.

I was explaining some of my previous work, my skills and my aspirations. One area we discussed in relative detail was partnership negotiations and agreements. So far in my career, I have negotiated and established over 30  partnerships with outside companies and organizations. Almost every time I was in a negotiation situation, we ended up creating trusting partnerships with common goals and close personal connections. In my opinion, creating a strong business and personal connection is important because my line of work (business innovation) deals with ambiguous and risky prospects.

After my conversation with the investor, I thought about what fundamental values I take to the negotiation table and came up with the following list:

Transparency

I believe in transparency and honesty. While many think that one should keep their cards close to their chest in a business negotiation, I believe in laying objectives clearly on the table. Hidden agendas and trump cards destroy trust and I certainly want the partnership to be based on trust.

In my dealings, the reasons why we wanted a partner varied from access to intellectual property to access to geographic presence to risk sharing. In all cases, we were entering into a pact to help each other progress and prosper by developing a product or service. When both parties are facing many unknowns and dangers on the road to success, the last thing an organization wants to learn is a hidden agenda at the peak of heat.

Business innovation is like starting a journey to slay the dragon. One needs someone who will watch their back when facing the dragon, not someone who wanted to steal the princess from you while you are busy with the dragon. The best way to find that partner is through transparency.

Opponents of my argument may suggest that being transparent makes one vulnerable and reduces negotiation power. My experience after tens of negotiations is the opposite. In most, if not all, cases we ended up with agreements that served both parties well.

Alignment

The secret to the success of a partnership is alignment of goals. To use a cliché, one has to look for win-win-win scenario among three players: you, the partner and customers. Typically, the win-win among the partners is financial. This is not surprising as companies enter development initiatives to capitalize on an opportunity and expect to make a profit. The end-result (product or service) has to deliver a real value to customers and fulfil an unmet need.

In my dealings with partners, I have to be convinced that the partnership will deliver an offering that will be better than sum of its parts in the customers’ view.

Culture

If I cannot shake hands with the partner and feel comfortable about doing business together, I’d rather not enter into a business dealing with that company. One may consider this “old school” and outdated but, I believe people are the most important part of a partnership. Corporate cultures rub on people and mostly shape the way they operate. Ethics, responsiveness, risk tolerance, accountability are few cultural components that make or break a partnership.

This is my secret sauce to partnerships.

I welcome your comments on my blog. If you have specific questions, please feel free to contact me at ferhan@ferhanbulca.com.

Filed under: business, Innovation, leadership, management, outsourcing, Partnership | Tagged: | Leave a Comment »

Your Organizational Culture Determines How You Innovate on Mature Products/Markets

Posted on July 13, 2012 by Ferhan Bulca, Ph.D., P.Eng.

Everybody can visualize the organizational culture of a start-up company. A small group of dedicated, motivated people working shoulder-to-shoulder with visionary founder(s). Things are humming and dynamic. How about the organizational culture when the product matures and is adopted by a larger market segment? How does that culture contribute to further innovation?

Let me first frame the conversation using Geoffrey Moore’s four innovation zones, introduced in his book Dealing With Darwin. Moore maps these four zones to his famous market adoption curve.

Geoffrey Moore's Four Innovation Zones

Geoffrey Moore’s Four Innovation Zones

At the leading edge of the curve is Product Leadership, which corresponds to disruptive innovation. At the tail end, there is Category Renewal. In this post, I will focus on the middle section and discuss the role of organizational culture in the company’s ability to innovate in that area.

Geoffrey Moore identified two main innovation categories for mature products/services:

  • Customer Intimacy refers to improving the value of the product/service to customers,
  • Operational Excellence is about improving operational efficiency to gain cost advantage over competitors.

While many organizations claim or want to do both, typically their culture is geared towards one or the other, not both. Improving customer intimacy requires an outward looking culture whereas the attention is inside when it comes to operational excellence. In today’s bottom-line driven approach, operational excellence is where most organizations focus because:

  • One can readily quantify goals: Cost of materials, taking waste out of operations, automating processes are all quantifiable and easily understandable. Leaders can set goals (eg. “reduce warehouse floor usage by 50%”) and monitor progress.
  • Improvements are internal: Improvements are done in operations behind closed doors. They are under the control of leaders of the organization.
  • There is little risk of public failure: What happens in the company stays in the company. Naturally, operational changes may impact customer experience but, for the most part, the outside world has limited visibility to how operations are run.

Customer intimacy, on the other hand, requires a different culture, which emphasizes continuous effort to better understand customers and respond to their evolving needs. True customer insight comes through walking a mile in the customers’ shoes, understanding their pain points and improving the product/service to eliminate these pain points. This approach conflicts with operational excellence as it is outward looking, ambiguous, risky and potentially costly.

In summary, customer intimacy and operational excellence require two very different organizational cultures to do well. These cultures are inherently in conflict with each other and should be managed well to be successful. Otherwise, typically operational excellence camp wins at the expense of better customer experience.

I welcome your comments on my blog. If you have specific questions, please feel free to contact me at ferhan@ferhanbulca.com.

Filed under: business, Consulting, Culture, Innovation, leadership, management, market, NPD, product, product development, strategy | Tagged: , , | Leave a Comment »

How To Gain Customer Insight?

Posted on July 4, 2012 by Ferhan Bulca, Ph.D., P.Eng.

Recently, I was working with a client when he told me that he was mandated to develop customer insight so that their products attract better adoption. Being in business for over 20 years, he had good ideas about what customers cared for. He also recognized that there was probably a lot more he could learn about his customers but he did not know where to start. So, we put our thinking hats on and started brainstorming.

First, we needed a framework to work on. Inspired by Using Customer Insight to Build Competitive Advantage (2003) by Carlson Marketing Group, we created this:

Customer insight cycle

Customer Insight Cycle

Let me explain this framework a bit: We all have assumptions and convictions about what customers value in our offerings (products/services). We have an idea about the tough problems we solve for our customers. This knowledge is customer insight. We take actions based on our insight but, most of the time, we do not fully validate our understanding of the customer. Our actions are, most of the time, not purely based on our understanding of the customer, either. Many internal (organizational) factors contribute to the decisions we make and the actions we take. These multiple factors add complexity to the next two steps, Assessment and Data, making it difficult to make a direct cause and effect relationship.

Second, we discussed applying this framework to his problem to see if it fit. The first question was where to start. It is a cycle and it is hard to identify where one steps in. We decided that Insight box was the place to start. This may come across surprising because customer insight is our end-goal. If we knew it already, why would we need all this exercise? In fact, we knew that we did not know everything but we had theories. In fact, the person I was working with and his peers all had theories (my word, not theirs) about their customers. The problem is that those theories were not always consistent with each other. But, who was right? That is why we start with the “Customer Insight Theories” and validate them by going through the above cycle a few times.

Third, we developed a plan for my client to work with his peers using the framework. He left the conversation energized and motivated to take the steps that will give him the insight he is looking for. Equally importantly, now he has a framework to institutionalize how the company gains and retains customer insight.

I welcome your comments on my blog. If you have specific questions, please feel free to contact me at ferhan.bulca@intrascope.ca.

Filed under: business, Consulting, leadership, management, market, NPD, product, product development, strategy, Validation, Voice of Customer | Tagged: , | Leave a Comment »

Eliminate Your Innovation Pains, Part 2

Posted on June 28, 2012 by Ferhan Bulca, Ph.D., P.Eng.

My previous post was about a couple of tools to address the top three pain points in the management of product portfolio according to the Third Product Portfolio Management Benchmark Study by Planview (http://www.planview.com/m1/pd/3rd-product-portfolio-management-benchmark-study-hph).

  1. Too many projects for available resources,
  2. Not being able to drive innovation fast enough,
  3. Decisions that go back and forth, get made late or ineffectively.

In this post, I will address the second pain: Not being able to drive innovation fast enough.

Eric Ries introduces two concepts in The Lean Startup (http://theleanstartup.com):

  • Minimum Viable Product (MVP) – a product that is aimed to test fundamental business hypotheses and learn from. It is not (necessarily) a prototype or a beta version of the product.
  • Pivoting – making changes to product concept based on results from success or failures of MVPs.

Most organizations go through a linear development cycle, which goes something like:

  • Define business model, business goals, requirements, target market, product/service to be offered and its value proposition
  • De-risk technology, develop conceptual design, gather market intelligence
  • Develop product/service
  • Prototype/beta testing
  • Transfer to production, crank-up marketing engine, operationalize
  • Focus on sales

The problem with this approach is two-fold:

  1. The product/service is market-ready only after a lengthy cycle. Depending on the complexity of the product/service, the cycle may take anywhere from a few months to a few years.
  2. There are few opportunities to experiment with market acceptance and change direction (if necessary)

The importance of multiple cycles to reach the final product is not a new concept. Before Ries, many others made the same argument and gained considerable traction (eg. W. Edwards Deming). However, this appears to be a difficult concept to put into practice. We tend to get lost in the race to the finish line and forget that sometimes a detour is the smarter path to the end-result.

My experience, which is learned the hard way, shows that these MVP-pivot cycles need to be explicitly introduced into development process. Each cycle needs to include a decision point where the hypothesis of the MVP is tested, results analysed and one of the following decisions are made:

  • Go – all is well, hypothesis is validated.
  • Pivot – hypothesis is not validated but lessons-learned indicate new opportunities.
  • No-Go – hypothesis is not validated and we don’t know what else to do.

I welcome your comments on my blog. If you have specific questions, please feel free to contact me at ferhan.bulca@intrascope.ca.

Filed under: business, Consulting, effective, Innovation, leadership, management, market, NPD, product, product development, strategy, Validation | Tagged: | Leave a Comment »

Eliminate Your Innovation Pains

Posted on June 27, 2012 by Ferhan Bulca, Ph.D., P.Eng.

Top three pain points in the management of product portfolio are:

  1. Too many projects for available resources,
  2. Not being able to drive innovation fast enough,
  3. Decisions that go back and forth, get made late or ineffectively.

according to the Third Product Portfolio Management Benchmark Study by Planview (http://www.planview.com/m1/pd/3rd-product-portfolio-management-benchmark-study-hph).

These top three pain points have been the same since 2009, when the survey first started, and the pain levels have consistently increased year over year. The study report adds that “too many companies are making critical project and pipeline decisions based on limited and/or inaccurate data; this is in large part thanks to the inadequate tools at their disposal.”

What adds to these pain points is companies’ inability to kill underperforming projects. In 2011, only 7% of the respondents stated that their companies stop underperforming projects immediately. The remaining 93% allow such projects to linger and consume scarce resources.

Here, I will describe a simple and effective tool to deal with the first pain point; too many projects for available resources. The tool is a combination of Boston Consulting Group’s Product Portfolio Matrix (http://en.wikipedia.org/wiki/Growth-share_matrix) and Geoffrey Moore’s Cycle of Innovation (Dealing With Darwin, p. 211, Penguin Group).

The original BCG matrix advocates dumping dogs (low market share and low growth potential) and moving resources in the direction of the arrows in the following chart.

Original BCG matrix

The original BCG matrix

However, this is not always feasible for a variety of reasons. Therefore, I incorporated Geoffrey Moore’s Cycle of Innovation concept and added Mission-Critical and Non-Mission-Critical to the mix. Mission-critical projects are those that directly affect how you do your business and in your core competence area. Non-mission-critical ones are those you need but they are not unique to your company (eg. an in-house ERP system versus a commercially available one). The size of the circle indicate the amount of resources a project consumes.

BCG matrix with mission-criticality superimposed

Modified matrix with mission-critical projects identified

The above matrix paints a different picture than the original BCG. While discontinuing mission-critical projects may not be an option, portfolio managers now see clearly that the way to utilize their resources most effectively is through focusing on mission-critical projects and stop those that are not mission-critical.

I welcome your comments on my blog. If you have specific questions, please feel free to contact me at ferhan.bulca@intrascope.ca.

Filed under: business, Consulting, Innovation, leadership, management, product development, strategy | Tagged: , , | Leave a Comment »

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