alan in vietnam

Pre-Mortem and Regret Minimization Framework

I’ve been thinking a lot about different start up ideas I want to do.  Whether or not it makes sense to take the deep dive into pursuing the idea is never easy; especially if you may or may not have income coming in for the next 6 months.  So I found 2 really useful frameworks for help making the big decisions.

1.  Jeff Bezo’s Regret Minimization Framework:

Where you look at all your options now and then imagine yourself at age 80 and ask what option would you regret least trying out of all of them.

2.  Gary Klein’s Pre-Mortem

Post-Mortem is when you look at patient that died and find out why.  Pre-Mortem is the idea of imagining the patient died and try to find out why, to prevent it from happening.  

Step 1: Preparation. Team members take out sheets of paper and get relaxed in their chairs. They should already be familiar with the plan, or else have the plan described to them so they can understand what is supposed to be happening.

Step 2: Imagine a fiasco. When I conduct the PreMortem, I say I am looking into a crystal ball and, oh no, I am seeing that the project has failed. It isn’t a simple failure either. It is a total, embarrassing, devastating failure. The people on the team are no longer talking to each other. Our company is not talking to the sponsors. Things have gone as wrong as they could. However, we could only afford an inexpensive model of the crystal ball so we cannot make out the reason for the failure. Then I ask, “What could have caused this?”

Step 3: Generate reasons for failure. The people on the team spend the next three minuted writing down all the reasons why they believe the failure occurred. Here is where intuitions of the team members come into play. Each person has a different set of experiences, a different set of scars, and a different mental model to bring to this task. You want to see what the collective knowledge in the room can produce.

Step 4: Consolidate the lists. When each member of the group is done writing, the facilitator goes around the room, asking each person to state one item from his or her list. Each item is recorded in a whiteboard. This process continues until every member of the group has revealed every item on their list. By the end of this step, you should have a comprehensive list of the group’s concerns with the plan as hand.

Step 5: Revisit the plan. The team can address the two or three items of greatest concern, and then schedule another meeting to discuss ideas for avoiding or minimising other problems.

Step 6: Periodically review the list. Some project leaders take out the list every the list every three to four months to keep the spectre of failure fresh, and re-sensitise the team to the problems that may be emerging. (pp 89–90)

Klein, G. (2003). Intuition at Work: Why Developing Your Gut Instincts Will Make You Better at What You Do.

Shanzhai, customizing knockoffs

Shanzhai, a chinese terms for high quality knock offs, or the general idea of taking what’s cool from big rich brands and making it available for the masses.  What’s interesting about these copy cat designs is how fast they can iterate the designs and how they localize it to their base consumers.  

One example are the dual sim card iPhone knock offs and the sub $100 iPad knock offs running windows.  Nobody really relies on land phones and travel around a lot; so having two sim cards is sweet.  One for work, one for personal.  As much as I hate Windows, but for the local people in Asia, it’s more familiar to them and the applications they need are in Win machines.

There’s a number of us who look at different web models and try to replicate it in Asia.  For instance with Twitter, we see people using micro-blogging differently from US counter-parts.  Users are more likely to use it from mobile and as an alternative to SMS-ing and MMS-ing people to a lot of people.  Even with Foursquare, it will more likely be use as a form of customer validation then the novelty of broadcasting your check ins.

At the Patterns Ideo site they mention the 4 areas to push innovation and leverage the Shanzhai is:

1. Leverage the wisdom of common folks
Organize a Chinese version of Dragons Den, or innovation competition, to help grassroots innovation blossom.
2. Use tools for expression
Provide customizing tools that enable people to mark a bit of themselves on their products. Consider the gamut, from stickers of Swarovski crystal on mobile phones to prestige logos.
3. Go for liangdian, or ‘shiny points’
Be bold and explicit about the value proposition of a product. It has to make a clear statement of what consumers have paid money for.
4. Exploit grassroots sentiments
Harness grassroots humor to get closer to Chinese consumers in diverse regions. Such playful sentiments help build relationships with mass consumers.

I see it as crowd source to find what’s hot and what works.  Embrace that ‘Pimp My Ride’ personalize/customization.  Don’t be afraid to be loud or even cheesy on designs.  And leverage word of mouth communities.  

Localize the experience.  Finding relevance.  This where ‘copy-catting’ can be innovative and how these companies can beat the big brand names in these emerging markets in terms of monetization.

Trusting Your Gut + OODA Loop

I always have these conversations with my friend who likes to make gut decisions while I like to apply game theory, use analytics and make graphs & diagrams.  Emotion vs. Logic based.  I use my gut instincts more for spotting raised flags than making final call decisions.
McKinsey Quarterly a few months back wrote an interesting article on using a decision tool on whether you should follow your gut instinct or not.

1. The familiarity test: Have we frequently experienced identical or similar situations?
2. The feedback test: Did we get reliable feedback in past situations?
3. The measured-emotions test: Are the emotions we have experienced in similar or related situations measured?
4. The independence test: Are we likely to be influenced by any inappropriate personal interests or attachments?

I think these are good way to test your gut feelings; though my friend thinks it defeats the purpose with going with your gut.
I don’t know, I think if you couple this with the OODA loop process; then it can be a solid way to make decisions if you don’t have analytics.  OODA Loop is Observe (the situation), Orient (your position), Decide (your hypothesis), Act and then it loops back to O to make adaptable change in uncertain environments.

Business Model Generation

“Designing Business Models” has to be one of the coolest business book I’ve came across in a long time (and I read ALOT of ‘em).  If you need to write up a business plan, I would look at this book first.  Previously, I’ve always used a template that I found from Ernst & Young… which was really great at making you think of every little detail investors may ask… especially the financial side of things.  But it would fall short in terms of web based businesses… and reads a bit boring.  ’Designing Business Models’ was evolving book co-created by 470 contributers from around the world… with a lot of focus on design and finding value (some web based business are valuated are user acquisition not necessary on profits).

From my past entries, I’m heavy on visual models…  P.O.I.N.T method, the DSchool bootcamp, Mind Mapping, etc.  This book has a visual Business Model Canvas method:

Business Model Canvas Poster V.1.0 View more presentations from Alexander Osterwalder.

Pitching with this is probably more valuable than handing somebody a 20+ page business plan if it’s your first meeting with a potential investor/partner.  Or if you’re like me, you have too many ideas at one time… and you need a format to map out the opportunities that make the most sense first or at all, before going on to write that 20 page plan.

Design With Intent

In previous blog entry, I mentioned how useful the P.O.I.N.T. method from IDEO has been for me.  D.School at Stanford University, whose program was helped founded by David Kelley, the founder of IDEO, released a boot camp bootleg of their creative method teachings.  Just thought it was pure gold for anybody interested doing any type of design work work or just coming up with creative new ideas.  Here’s the link to the document.

d.school 

Another document that I just found that’s pretty useful is the Design With Intent tool kit.  It shows you 101 patterns in design that helps influences behavior of users and improve the users’ experience.  It’s amazingly well thought out.  

I’ve been trying to decide whether some of my ideas for possible iPhone Apps makes sense or not to do.  I’ve been using Adobe Flash to prototype… by doing so, I can really see that some ideas are just crap… lol.  Others, I’m trying to work out further to see if it’s something I can bootstrap on mine, or look for some seed money to help push it further.

Maximin & Poker

One of the eggberts,  working on the 40’s Manhattan project by the name of Von Neumann came up one the most useful game theory… Maximin.  It’s a strategy where you maximize your minimum payout.  

Chris Ferguson, a pro poker player applies the theory and has literally won millions.  Here’s an great article from the New Yorker about his story.  Ferguson’s dad happens to be a game theory professor at UCLA.  Here is a link to his UCLA page with all the .pdf papers on the game theory applied to poker.  Just to warn you though… all the math formulas can make you go dizzy.  But interesting to skim through if you want to become a nerd-core poker player.

Maximin is also very useful in doing pricing strategies or in negotiations (departmental budgets, divorce, lawsuit settlements, salary/benefits, equity stakes, etc.), where you dealing with multiple parties and you have to assume a pessimistic view of everybody is out to screw you.  If you can maximize your minimum payout, you know you did the best you could when you don’t have leverage.  And if the other negotiating parties do not end up screwing you… then you gained more than you originally had pessimistically planned. Basically, you plan for the worst and hope for the best.

Be, Do, Have The 4 hour Workweek

Started reading Timothy Ferriss’s The 4 Hour Workweek since it was highly recommended to me ironically by my 2 friends are probably the most workaholics and anti-4 hour work week guys I know.  When I first came to Vietnam 2 and half years ago… than taking VC funding it changed to 40 years worth of work into 4 years time. What a difference.

I also believe in the Be, Do, Have philosophy that he also uses as the basis in his ‘Dreamline’ concept.  Being, Doing, Having is this:

If you want to “be”  x (we’ll use ‘web savvy’ as an example), then you start ‘doing’ all the things that ‘web savvy’ people do… go to web industry mixers, read all the industry blogs, etc.- soon, you’ll start ‘having’ the things that all the ‘web savvy’ people have.

His Dreamline method is very cool in that it provides you method to figure our how you’re going to get to your dream and how much per month will it cost you to do so.  Here’s mine:

I only need to make $4,835 a month to live my ‘ideal’ living of having better model agency than I have now, a Vespa, cool threads, custom furniture, $1 million nest egg at retirement.  I train jiu jitsu for free, I just need to show up.  To get better at Game Theory and Negotiation, I’ve been learning and going over open courses from Yale, Harvard, Standford and MIT (which is all free and online).  To improve my writing; I try blogging once a week and my lazy sticking point has been the Vietnamese part; which I just need to ask for help.  Last year, I was pretty consistent on being able to fly out of country every other month.  This year, I want to travel around inside Vietnam more.  At $4,835 burn rate; my lifestyle would continue to be better than my contemporaries living in the States making twice or even triple as much as me.

But the tricky part is making the $4,835 without working more than 4 hours in a week while at the beach…

2x2 Framework Tool For Negotiation and Politics

“Those who are too smart to engage in politics are condemned to being governed by those who are dumber” - Plato

Awhile back I found a really great article from McKinsey describing a framework tool for negotiators planning strategy for dealing with multiple parties regarding biz dev, sales, or simply internal company politics.  

Basically, you list out all stakeholders that are involved or affected by deal or issue.  Then on that particular issue (there can be multiple issues to a situation), you decide whether you label them as ally, neutral, or opponent.  Then you can score them from 1-100 on two other characteristics: Power and Importance (how big of a deal is it to them).  From there you can plot them out on a two by two matrix like above. 

This way you can better visualize on how you should approach each stakeholder regarding to each issue to the situation you have to deal with.  You’ll better realize how the relationships are between each stakeholder, what the general landscape looks like, and what are the possible outcomes for each will be.

I found this particularly useful if you’re stuck in the middle of multiple conflicting parties and have to find solution for everyone to be okay with.

Monetization, Sales Complexity and Finding a Business Model

The most challenging part of doing a web start up in Vietnam has to be monetization and sales.  The problem is very few people here have credit cards.  Mobile payments is very accessible, but the rev share with telcos and how much you can charge makes things tough.  The CPM rates that advertisers are willing to pay;  is probably barely enough to cover your monthly burn rate… if even that.

With those conditions in place… in order to make money, you really need to make brand advertisers see your unique value.  How we differentiate from the competitors or our unique selling proposition, is that we tie in all 3 tv/web/mobile platforms together and influence our huge web community to like the advertising brand.  This increases the sales cycle complexity in a big way.  This increases our barrier where it would be very difficult for a particular individual web-only community or traditional TV production house/channel to compete against us (they might be good in one area, but have no experience in the other).

The problem with having big sales complexity, is that the costs of customer acquisition shoots up through the roof compared to a self serve PPC ad words model.  The other problem is the lumpy deal flow which makes revenue forecast very difficult to do.  Where as SaaS and self-serve ad platforms, is easier to predict with it’s linear growth.

But until the payment solutions develop further and the market matures some more; I think the key is to run to a combination of monetization models; pushing mass number of micro-transactions on from the audience side (hopefully the life time value of each user increases as time goes on), and doing complex sponsorship sales deal with big brand clients.  And then gradually, shift the outbound sales to less complex inside sales deal as more clients are more familiar on what we do.  Or allow the Ad Agencies to do all the pitches, and we just up sell to the clients later.

Finding that balance is the business model that is hopefully can be scaled up well and easily repeatable.

Embedding Brand Promotions in TV/Web Content

Producing TV commercials and buying airtime can be so expensive, Branded content and program sponsorship of non-traditional advertisement is the way to go for more cost effective advertisement.  

What’s nice about product placement is it’s non-interupting to viewers and provides a captive audience for advertisers (they can’t change the channel on remote or click ‘x’ to close box online).  It’s also very complimentary and pairs very well with traditional TV commercials… since it is a way of ‘priming’ and make audience more receptive to messages of traditional commercials.

Product placement can be done in a few ways… the brand is visually present (explicit) or it can be mentioned but not present (implicit) and it can have a brief appearance (implicit) or it can be integral to the story (explicit).

Implicit  techniques includes subliminal messaging and generally works better with ‘impulsive buy’ products.  Whereas, ‘explicit’ techniques works better on products people have to ‘consider.’

Some of the measurements metrics for effectiveness that should be taken are:

• recall of placement context
• top of mind awareness
• brand recognition
• brand recall
• brand familiarity
• brand evaluation
• brand choice
• brand attitude

Explicit techniques can be measured by surveys.  While Implicit techniques is more difficult because the consumer may or may not be conscious of their decision; has to be measured by observing behavior.

Using the 3 screen rule, and tying in TV branded content, sponsoring social web  communities (social web or social games) and repeated visual cues and reminders on Mobile gives consumers more touch points to engage with brands.