Wednesday, January 01, 2014

Focus on breakthrough products to heal Europe and US economies

In a memorable lucid and prophetic  blog, titled Entrepreneurs, not the government, will save Europe’s economy, Dries Buytaert the co-founder and CTO of Acquia, a Drupal shop in Europe writes:
If Steve Jobs was adopted by a Belgian family rather than an American family, it’s extremely possible he may have ended up working in a bank instead of co-founding Apple.
Why? Because starting a company and growing it is hard no matter where you are, but the difficulty is magnified in Europe, where people are divided by geography, regulation, language and cultural prejudice.
What Europe should do?

  1. Focus on creating large companies. Between 1975 to today, Europe which has double the population of US, produced 2 companies in the top 500 worldwide, while US has produced 26 such companies. This means creating EUR 25 billions companies, not only EUR 1 billion companies, the predominant maximum in Europe
  2. Level the playing field. Compared to US, the entire Europe is Balkanized
    "European work regulations can shackle the growth of startups. Taxes are high, it’s hard to acquire a European company, severance packages can be outrageous and it’s extremely difficult to fire someone... It only gets worse when you attempt to operate in multiple European countries
  3. Change our  (european) culture.
    "A small business can be started anywhere in the world, but it takes a different level of ambition to aspire to become the next Apple. The biggest thing entrepreneurs need is the belief that it can be done, that it’s worth taking the risk and putting in the hard work. Having the right culture unlocks the passion and dedication necessary to succeed."
What can an entrepreneur do to adress the challenges  for each bullet? I can see bullet #1 is something one can address. Bullet #2, the Balkanization, there is little to be done now.

Probably the bullet #3 can be adressed today. Making Europeans think big in terms of business, not only art. The solution is in my Product Management Manifesto,   See the long quote below


Go for breakthrough, high risk, highest possible reward products

The product portfolio definitions are

  • Breakthrough products. High risk extremely hard rewards. Think Google, Android, Windows
  • Platform products. Medium risk medium reward. Think me-too office apps
  • Derivative products. Low risk and low reward. New version releases of the same product 

Do NOT do this:
Fig, 1 What  most established organizations or aging startups do
This is what we shall do:

Fig 2: Portfolio for forward looking organization, ahead of the game


Or  even better:
Fig 3: Portfolio of the new startup with nothing to loose  and who plans to be a billion dollar company
The charts  above summarize what I learned in UC Berkeley seven years ago. Berkeley is always at least ten years ahead of other people time.  We have to liberate ourselves from the chains of numerical Return on Investment (ROI) and forecasts. Financial numerical decision makers do not work in Breakthroughs, Companies should change the culture and invest more in breakthroughs than in the past. Their reliance on what you see in Fig. 1 will not lead to real competitiveness, real differentiation, particularly when engineers are available not only in US  but in Lithuania, Czech Republic, and the entire Asia, just to pick some countries from hundreds who learned how to code impeccably

You may ask   how the hell to get approval without financial goals approved in large companies. My feeling is this: guys you do your beans accounting and get ideas, but do NOT become the slaves of those things. Make abstraction of their existence, think, and then later, when you know better do again for orientations some financial analysis.

Come to live in Silicon Valley at least for one year

If your company is from Skopje Illinois, or South Dakota, Romania etc.,  bring your executives and families to live in Silicon Valley vicinity for one year at least.
The message above is good not for Europe, but also for most parts of US. Silicon Valley is on the West Coast  and the same spirit is on the  East Coast. But in the mid-west America many engineering academics never read Steve Jobs biography  never went to see The Social Network movie about Facebook creation.

Why is important reading Steve Jobs life, because
Skeptic after skeptic made the mistake of underrating Steve Jobs, and Mr. Isaacson records the howlers who misjudged an unrivaled career. “Sorry Steve, Here’s Why Apple Stores Won’t Work,” Business Week wrote in a 2001 headline. “The iPod will likely become a niche product,” a Harvard Business School professor said. “High tech could not be designed and sold as a consumer product,” Mr. Sculley said in 1987.
Mr. Jobs got the last laugh every time.

The way to change Europe and the America midwest is to make breakthrough products. It starts witha new breed of Product Manager, who could be the CEO of the company, because we need a Product Manager with power to decide. She can go all way through with the idea, no matter what outrages uninformed bosses, the ones with the power to stop things, never to start things by themselves.

And this company to be great, must a new breed of company where the profit and hapiness of all employees are both goals. 

Dries Buytaert ideas are valid not only in Europe, but in US as well. 

Ahrono Associates is dedicated to help create this new breed of companies as described in How to create non cliché visionary businesses in 2014 . I keep knocking to people's doors, I know I am right, just looking for the right people with the right chemistry to make it all happen.

I feel like Colonel Sanders, the founder of KFC. He went door to door offering a secret recipee to make fried chicken. "He got 1009 no’s before he got his first yes. With that one success Colonel Hartland Sanders changed the eating habits of the whole world with Kentucky Fried Chicken."

miha dot ahronovitz at ahrono dot com
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