Microcredit & connectivity

About technology, business & management issues..

      It was in the early 70's when Muhammad Yunus started the project of granting small loans to lower-class in impoverished Bangladesh. This exercise regimen introduced in late 70' & early 80's consolidated Grameen Bank in Bangladesh. Thereafter and in many developing economies Grameed Bank has given billions of dollars in microcredit.

 The objective of the Grameen Bank is lending to people who do not have assets that serve as collateral or have previous credit history. Obviously these people do not have stable jobs.
Microcredit does not establish formal contracts so that only the borrower is expected to honor his word to restore his credit and interest which, in comparison with commercial banks, are insignificant.

One could argue whether microcredit is a panacea or not  to all  problems of the disadvantaged economies or if the credit actually encourages the creation of more SMEs and generating jobs. Certainly it is an instrument that helps a lot but that alone will not solve all the problems in poor countries.

Recently Yunus has emphasized, together with other experts in the field, the need for affordable sources of credit for people and with favorable conditions for subsequent payment. Just spoke about the need for emerging countries to ensure coverage of Internet and mobile telephony.
It is easy to understand that a facilitator in the creation and maintenance in SMEs is communications. The clearest example is not far from Bangladesh:  in India there are over 900 million mobile phone users and just over 100 million Internet users. This has caused the average growth of the domestic economy of India in the last 15 years to be greater than 5%.

It is strange to see how some analysts decry the fact of cheap credit and access to telecommunications as a growth factor and job-generation in a developing economy.

No doubt the fact that there is a capitalism with a social objective which cannot harm the economic interests previously established and whether it offers a window of opportunity to many people trying to improve its economic environment.

www.clarensyst.com.mx

A cash flow problem in the cloud..

About technology, business & management issues..

Following the  very first companies offering services such as web apps or e-business through the cloud, the first problems of the business model began to emerge to the surface.

As a fact the American market has a strong stock market and vast amounts of venture capital. Many investors eager to invest in technology companies began to dictate the rules of business model: the first rule was to have money hand over fist.

With the promise of capturing major market segments, venture capitalists gave large amounts of money to companies for marketing spending and its market positioning. In many cases the product or service was not yet finished, much less proven. The latter caused a significant resource investment in the first months of lifeblood of the business thereby sought to profit long term.

Many argue that this only caused a distortion in the market that eventually provoked the downfall of many companies that had no solid foundation to succeed in the market.
In either case, these guidelines prompted one of the very first premises in technology industries which has cast strong roots in the subconscious of the leaders of the tech industry: give away the product or service initially and then cash for it.

The latter created the concept of the free trials and freemium services within any tech company, mainly driven by Web 2.0. current trend. While the main idea was to get a significant number of users and then make them fall in love with your product and keep them indefinitely and then convince them they now had to pay for what they had been receiving it for free. Now it was a financial problem.

While it makes sense that many companies invest massive amounts of money on advertising and then offer their services free for a while in fact this model does not make sense for other companies.

Like any other business, the business should focus primarily on generating revenue and become profitable in the shortest time possible. Any other statement would only be playing a fools´game and basically only cause a distortion of the market that does not help the industry or  customers who expect a solid product and a sustained customer service.

Is taken into account to understand the concepts and develop business models that other companies in other cultures and contexts have previously incurred. However, should always be a framework to adjust in order to suit the reality in which one develops.

Regardless of this globalized world, it is difficult to get by the dogmas created in another situation, in another context.

www.clarensyst.com.mx

Facing the Status Quo

About technology, business & management issues..

        Any company or business should be concerned about the place that its business should occupy within  a market, many times, fragmented and highly competitive.

In traditional industries (trade, construction, industrial, financial services) positioning is closely related to focusing on niche markets. That is, big players dominate the bulk of the market so you can only steal a little slice of the pie.

Al Ries & Jack Trout mentioned in his still-relevant classic book Positioning the beauty of entering new markets that allowed you to fill this gap in the consciousness of public opinion. Be the first one, no matter whether you were the best or the most capable, it will mean everything if you are concerned to position yourself in the market.

Other strategies used by many technology companies and other businesses, is to enter into direct conflict with market leaders. In doing so, as marketers preach, you would play  yourself as underdog, a David against Goliath. In a globalized world it rather seems than victimize your company is  the best  market strategy that any business could ever make.

But on the other side,  What do  you do in a fragmented market where there is no clear market leader who dominates the scene? What if you decide not to go against this leader?

Only in that case the battle gets harder and, clearly, an ideological one . You  will have to face the status quo. The business will have to be portrayed  as an innovative one, focused on customer service and maximizing the value added to them.

Sounds like a piece of cake, but then who or defines the status quo of a particular market?

www.clarensyst.com.mx

Family, Friends & Fools

About technology, business & management issues..

  In the world of personal finance there is the concept of  FFF (Family, Friends &Fools) as initial funding source for anyone wishing to start a business or develop a project that will generate some wealth in a given time.

Interestingly, both in consolidated markets, such as the American or European who have developed  powerful stock markets and where, until recently,  had more than enough capital to risk. However, borrowing  money or finance your ideas with your parents, friends or any known, without fear of taking risks, remained the first choice of financing.

The reasons? Just the emotional factor plays a crucial role here. Family and friends are people who might be interested in developing your personal aspirations(especially your family) while friends see an opportunity to solidify your relationship as they could, tentatively, to have some sort of benefit. In either case a third party (fool) would be more interested in the factor of the potential financial rewards that helping you develop your personal desires.

However, it is the easiest way, without bureaucracy, without many formalities to access a modest amount of capital to start your business.

As with any risky investment, the latter could jeopardize your relationship with your family and friends in case things do not go well. You have to remember more than 80% of businesses do not survive beyond 4 or 5 years. Over 50% you will not have a higher life beyond 12 months.

In any case, any relationship will invariably be modified by entering the factor of money into the equaton.

Have to think twice if the journey is the reward after all.

www.clarensyst.com.mx

Feedback.

About technology, business & management issues..

      Last week  we started with the final testing in our web application named Carleon  which has been developed and will be part  of Clarensyst´s core Every.Cloud portal that will include some tools designed especially for the SME market in Mexico.

Consciously the web app was sent to multiple end users whose status ranged from friends, work colleagues, IT industry professionals, lawyers, vendors and ending with CEOs of construction and real estate companies.

As expected feedback has been mostly valuable because it allows us to understand how an end user can prejudice a tool based on their professional background and the objective that the user thinks that the tool should pursue.

We could classify the feedback in several categories, but the simplest is to group it like this:

a) Feedback  based on functionality.

Users who have previous experience on web apps relatively easily found the tool simple & intuitive to use. Although they suggested improvements they also had no trouble understanding its functionality. By contrast, users who are not related to this market found it hard to manage it

This is a clear example that you cannot design tools to serve "all the people all the time."

b) Users who are related to the industry quickly suggested improvements as to the information captured by the tool as it is  better deployed.

In this case the feedback is not based on the tool´s functionality but rather on the added value  perceived by users based on the  quality of the information managed by it.

As an example one could say that a salesman only needs to "monitor" the process of selling as systematic and simple as it should be but a lawyer would be more satisfied if the tool allows him to check out all the paperwork included in a closing sale.

In the end, as the old saying goes “one cannot meet the needs of everyone on the first try”. As a new-born baby, the tool provides an approach, a philosophy, an idea of ​​how to do things.

The problem is that whether or not this idea seems good enough for many people.

www.clarensyst.com.mx

Freemium.

About technology, business & management issues..

     Since the early eighties software developers began to look for ways to efficiently cover marketing and production costs for products and services delivered.

In those years it was easy to obtain “free” copies of computer games or basic-purposed enterprise software. The same companies "gave away" these copies as a way to advertise their products to their customers in hopes of them for eventually buying the "official" versions and thus generate relevant income for the company.

With the advent of the internet and specifically with the Web 2.0, this particular business model has started to rise again through the suppliers of products and technology services. Since the cost of generating these technology products is considered negligible compared to manufactured goods, technology gurus like Chris Anderson and Tom Evslin argued the benefits of it.

Specifically targeted for technology products, the model proposes, for example,  to develop business software deployed through a platform that could be used by hundreds of thousands of users (economies of scale), this software will have basic functionality that users can used without any problem.

In theory this approach will allow the adoption of the service / product by thousands of users without need to invest in expensive marketing campaigns and relying heavily on word of mouth advertising.

Eventually, as the user adoption was complete, it could offer an improvement (upgrade) in the service or functionality of the platform. The difference is that now, this upgrade would cost for the user. This service would be able to generate income.

It is easy to imagine and understand this model if you think of LinkedIn, the social network that brings together the professional profiles of millions of users around the world.

However, the model has its critics who emphasize the feasibility of opting for this type of model, in which high costs are incurred early in hopes of generating income in the long term. There are many venture capitalists who prefer a model scheme that focuses on generating revenue as quickly as possible.

Whatever the case, the model is here to stay. At least until the cycle of Web 2.0 comes to an end and the model has to reinvent itself.

Crossing the Chasm.

About technology, business & management issues..

    A few years ago Everett Rogers coined  the term "diffusion of innovations" which  has been much studied and debated over time to determine the stages of adoption of new technology, whether it is a business model, a gadget or  enterprise software.

In his book "Crossing the Chasm", George Moore discussed more in detail the ideas originally proposed by Rogers. Moore in this analysis focuses particularly in the point between the early adopters (enthusiasts) and the early Majority (pragmatists).According to Moore there is a space (gap) that most of the products or services does not seem to overcome frequently. Moore calls this gap as a chasm which is needed to successfully cross the product is adopted by a majority of potential users.

Unlike Everett, Moore proposes techniques and strategies to try to cross this threshold successfully. In fact the techniques are more focused on proper marketing, in this sense the theoretical framework of the 4 P `s (Price, Product, Positioning and Promotion) is totally admissible to achieve what you want to try to get an adoption of the public mainstream.

However, where  Moore´s suggestions to focus is on selecting a specific niche in which to apply these strategies. As Jason Fried of 37signals say people cannot develop products "to meet all possible needs" and ending with "not a product at all".

It is curious that this point is ignored all the time. No successful business or technology guru has ever first recommended not to launch the product / service aimed at a particular  niche market. This will allow you valuable feedback, so you can correct errors and provide better service to your customers in a particular market.

Time will tell whether the product will go to a more horizontal market and can be adopted by thousands of people. What is a fact that it is better to cross a relatively small gap to try to cross many chasms at the same time.

www.clarensyst.com.mx