The value of “Free”

My son would most likely be an engineer.  He’s already shown a number of traits that leads me to that conclusion:  For his age, he’s very advanced in math and science; He loves building things; He loves being recognized for his work; etc.  And yes, there’s another trait: He loves things that are “free”.  He would spend $10 to get a $5 thing for free!!

To a lot of people, acquiring something for free is in itself a reward worth more than the thing itself.  People most often associate a higher value for something that’s “free”.  But this it true as long as it’s tangible - i.e. it’s a “thing”.

On the other hand, if you offer your opinion for free, it is taken as just that ….  Many years ago, I learned that doing pro-bono consulting as way to get engaged with a client and then grow it into a consulting contract later just doesn’t work.  A consulting contract would only happen if the client sees value in your services.  Once you’ve offered it for free, the value perception of the service is almost entirely washed out and hence it’s almost impossible to recreate it to a point that it’s worth paying for.

Lesson learned: Always combine your pro-bono consulting with a free “thing”!  Make sure there is a deliverable at the end where your value is captured.  If it’s a report or presentation, deliver it in a nicely bound printed on good quality paper.  If it’s something that required a lot of time and heavy thinking, make it large and heavy.  In either case, present it with a big final bang (invite board members, make several copies, etc.).

Once your have the free “thing” delivered, it’s much easier to move to the contract negotiation.

 

Original post in 1@Market

Posted under business, career, industry, marketing

This post was written by Michael Sanie on April 13, 2009

Tags: , , , ,


 

“Confidentiality is Overrated!”

OK.  This one’s a bit controversial, and I don’t necessarily subscribe to it. But…. someone whom I respect greatly as a high tech executive made that statement in a coffee conversation last week, and I thought I’d be interesting to share his point of view.

His point was simply that engineering mentality in any high tech industry has such a strong sense of NIH (Not Invented Here) that even if you present them your IP (patent), they won’t use the IP since they believe can do it better themselves and that the IP is “of no real value”.
I know from personal experience (having worked in an IP company once) that an engineer’s first reaction to an IP is that “it’s no good” and her IP is just much more relevant.  In fact in one case, I remember the engineering team I was dealing with didn’t want to sign the Non-Disclosure Agreement (NDA) since they didn’t want to even see the IP to avoid contamination as they were sure they were going to invent something “better”.
As it turns out, the value of IP, just like anything else, is in the eye of the beholder.  So if the engineer might think the IP is irrelevant, his management might think otherwise and see it as extremely relevant since it could provide them a economic advantage or at least a leveled playing field.
Confidentiality might be overrated (in a hyper-practical view) but also in the same hyper-practical view, it never hurts to have one (e.g. NDA) in place to remove all possible future issues.

Posted under business, career, industry, marketing

EDA & Semi: Time for Marketing 2.0!

The internet used to thought of as “cyberspace”.  Being online simply meant being an anonymous consumer of information.  But that was then!  The internet of today is identity-centric and social.  Internet users create blogs, upload their information to social networking sites, share ideas and contents, and they do it from their computers, iPhones, cellphones, etc.  This is what I refer to as “worldwide web” moving to “social web”.

There is a generational element to this as well: Web 2.0 (i.e. social web) is still hard to fathom for some baby boomers, but at the same time, there are larger and larger groups of baby boomers starting to post photos, opinions, etc. on the Facebook, for example.  They’re beginning to see how social the internet can be.

People in (or using) Web 2.0 have already internalized what doesn’t yet seem as a business practice by others.  Unfortunately maturing industries like EDA and semiconductor look at Web 2.0 as “social”, and hence constantly raise the question “why do we want to socialize with our customers” or “why would our customers socialize amongst themselves?” — They take the word “social” quite literally.

It’s not necessarily common business wisdom to bring customer experience into aggregators (such as DiggYelpNingXuropa, evenFacebook, etc.).  With these aggregators, even though things happen far away from a company’s destination site, it’s the engine of social discovery that generates astronomically more awareness than the destination site would ever create, and yes, it also generates huge volumes of traffic to the company’s destination site.

A simple example: Netflix opened up their database through an API last October.  Through this API other companies (e.g. aggregators) can access titles, ratings, queues, etc. information from Netflix. By “socializing” the Netflix experience, Netflix now gets 20+M film ratings every single day.  Does it really doesn’t matter where (which website) these titles are rated?!  It all benefits Netflix.

It’s time for EDA and semiconductor companies to see how they can benefit from Business 2.0.  EDA and semiconductor technology is the most advanced ones and those industries solve the most difficult challenges on the technical side.  Yet, they have totally missed the boat on what other industries have already accepted as common business wisdom.  They need to “socialize” their user-experience, create awareness, and turn that into revenue.

Posted under Xuropa, business, career, industry, marketing