FIND InnoNuggets


Tuesday, May 29, 2012

Word of Mouth Marketing - A Better Model Than Net Promoter Score

The Word of Mouth Marketing Index – Embedding Tipping Point factors into NPS
Taking the Tipping Point factors into consideration, we refine NPS to include the identification of Mavens, Connectors and Salespersons. Besides including a factor to include stickiness and the context in which the respondent was at the time of answering. This comes out to be a set of four questions instead of one as required by NPS.

The four questions are

(A) Would you recommend The Company to your friends and relatives?
(B) Your Profession/Job? (An Evaluation of Maven/Connector/Salesperson)
(C) What are you doing now? (Context)
(D) Compared to other products/services how do you compare our product/services? (Stickiness)
As is evident, the first question is exactly the one which is asked in NPS. Answers to the three questions are mapped to the NPS through a mathematical model developed in-house based on the well-known method of Analytic Hierarchy Process (AHP). The details of mathematical model are beyond the scope of this article. Suffice it to say that our initial results in small in-house surveys and many online ventures created and tested in MBA student projects are very encouraging.
The WOMM Index Model for word of mouth marketing measurement can be a good and simple metric for online customer facing systems or even Small and Medium Enterprises (SME).

Monday, May 28, 2012

600th Post - Crafitti's Innovation Tips Workbook ebook

CRAFITTI INNOVATION TIPS are our ( learning from multiple "innovation adventures" in applying structured and natural ways of solving problems. We don’t PREACH innovation - we actually do it with all the minds working with us. With a key motto of empowering ideas together, these INNOTIPS may look strange from specific viewpoints - but believe us - each InnoTIP has germinated in our sweat and hard work in creating successful change that we wanted to see in the world around us.
 Crafitti INNOVATIONTIPS book may 2012

Thursday, May 24, 2012

Customer Value Proposition - Crafitti's 5 Stage Model

How You Sell? - What Stage of Customer Value Proposition is your Company!

Every company wants to sell its products, services or whatever it wants to sell to the customer in the best possible way. Where is your sales messages - where is your customer value proposition - is a big question that is not easy to answer. 

In fact, companies do not have a way of saying - how we sell and how we can move ahead on the sales and marketing messages. The Following Model gives five stages of Customer Value Proposition and also what it takes to really create the Technology Epiphany.

Stage 1:     All Benefits Described with All services

Description:  The suppliers list every perceived benefit delivered by their product or service. This method requires a standardized list to be prepared for all customers in all scenarios;

Problem/Effort/Constraints: This leads to  benefits assertion without any actual benefit to the target customers, and hence an issue as customer has to think about how all these benefits asserted actually will help him meet his need.

Stage 2:   Favorable Points of Difference 

Description:  Based on the customer's awareness of alternatives, this requires the supplier to have knowledge of alternatives to his own offerings. The proposition is for the supplier to articulate the ways in which his offering is different (and better) to the alternatives.  

Problem/Effort/Constraints:This leads to what is called the value presumption – an assumption that points of difference articulated by the supplier are beneficial to the customers. 

Stage 3: Resonating Focus

Description:  The suppliers need to make their offerings superior on key elements of value that are most relevant to the customers. The supplier's offerings must demonstrate and document their superior performance. In addition, the offerings must clearly display the supplier's sophisticated understanding of their customers' business problems.

Problem/Effort/Constraints: This requires a deep effort to understand the customer need - through an effort intensive often opaque process of developing customer Insight.

Stage 4: Proposal of New Meaning

Description: Meanings result from interaction between user and product/service. This is a Proposal to your clients (who are people) about new ways in which the work/product/solution/service need to be defined/viewed/used/crafted. This requires creating altered propositions to the client and has three stages of Listening, Interpreting and Addressing 

Problem/Effort/Constraints: Lot of effort and knowledge from variety of sources - Listening is not what every company does - however companies that create Listening systems perform much better. The Inventive Thinking/Design Thinking is needed to be enmeshed inside the supplier DNA - it is long term assimilation and requires extreme effort. 

Stage 5: Technology Epiphany - The Creation of WOW!

Description: When radical innovation of technology synergizes with radical innovation in Meaning - WOW gets created. When companies create Novel technologies and combine with "new often hidden meaning of new technology" - WOW or technology Epiphany (a usually sudden realization of essential nature or meaning of something) emerges and sweeps the markets.

Problem/Effort/Constraints: Requires very deep technology development capability along with ability to create new proposals of meaning. However, it can also be crafted by companies that interpret new technology in new ways to create WOW.

SO IF YOU REALLY WANT TO  CREATE WOW pursue Technology Epiphany else be in the continuous struggle of All Benefits assertion!!!

Wednesday, May 23, 2012

Crafitti's Patent Valuation Approach - The MDMP Valuation Methodology

Crafitti’s Multi-Dimensional Multi-Perspective (MDMP) Valuation Methodology

Valuation of assets has been a well-established field. There are established methodologies for valuation of assets which are being used globally, backed by comprehensively developed theories. With the advent of global innovation economy, the assets have become more and more cerebral, conceptual and contextual. This has created a mismatch between methodologies developed for physical assets valuation and the need of the information, knowledge, innovation and intellectual assets.

Although the existing valuation methods have been adapted and adopted for the valuation of “soft economic assets”, their success has been limited to say the least. The very nature of ideas, inventions, intellectual property, products/brands, ventures, etc., calls for a different approach than adapting the existing methods for valuation. CRAFITTI consulting has established a unique methodology to value intellectual assets based on sound scientific principles on the value of the soft assets. The result is the multi-dimensional valuation methodology that takes care of, past, present and future possibilities. The multi-dimensional valuation methodology combines multiple perspectives from financial, legal, utility or functional, complexity and collaboration viewpoints. This results in a more robust and comprehensive valuation methodology for well-informed consensus decisions.
Crafitti Consulting’s MDMPTM valuation methodology has developed on a series of methods starting from financial valuation approaches (capitalization approach, cost-based approach, income approach, and market approach), enhancing with a Balanced Score Card perspective, and including a multi-criteria decision-making process such as Analytic Hierarchy Process (AHP). However, we realized the perception of future, although being captured in these enhanced methodologies, don’t take care of multiple futures that may unfold. For example, the drawback of commonly used Discounted Cash Flow model under income approach is that it does not capture the unique independent risks associated with patents. All risks are lumped together and are assumed to be appropriately adjusted for in the discount rate. In nutshell, the models used for valuing patents are general not specific. They cannot be used to value each and every patent.  Sometimes a single method cannot value patent so more than two methods are also used. Although these methodologies are widely used to value patents, they don’t provide accurate results.

With these experiences, we enhanced the valuation methodology with Theory of Inventive Problem Solving (TRIZ) and Scenario Planning techniques and Citation Analysis of an existing patent or a similar patent if we want valuation of a patent application.  The result is a Multi-Dimensional Multi-Perspective (MDMPTM) Valuation methodology. This is a comprehensive methodology grounded in scientific principles.
The MDMPTM is based on following high level dimensions and perspectives
·         Current State
o   Evaluating the current state of an asset – Idea, Invention, Patent, Other IP, Product, Product families, venture, etc. What is the protection level, if any?
o   Evaluating utility, main useful function performed, customer value provided – Functional, Financial, Brand, etc.
o   Assessment of Complexity, Stability, Risk of design around, and, Competitive market position – How close to ideal is the asset?
o   Height of the Inventive Step (HIS) is a metric developed by Crafitti to quantify one of the most controversial and least understood condition of patentability called non-obviousness or the inventive step over prior art. An invention besides being novel has to be inventive over prior art. TRIZ proposes a 5 level qualitative scale to measure the strength of an inventive solution. Crafitti has combined the level of invention over prior art with lines of system evolution in a relative index of Height of the Inventive Step over prior art. The HIS not only gives a relative measure of non-obviousness or inventive step over prior art but also gives a measure of strength of the invention over prior art. The strength parameters of an invention are – level of difficulty to invent around, level of ease with which the infringement is verified and height of inventive strength. The HIS metric leads to first such metric and can also be used to draft stronger claims which are likely to be granted as their non-obviousness will be quantified.

·         Past
o   Cost already spent
o   Cost of Sale
o   Cost of Maintaining, Enhancing and Adapting to the foreseeable immediate future changes
o   Capital Borrowed to develop and status of all such pending financial debts
o   Partners with existing stakes


·         Future
o   Technological Evolutionary Paths of the Asset based on TRIZ Evolution Laws
o   Possible ways – and probable timeline when asset will be designed around
o   Estimated remaining life of the asset
o   Possible scenarios which may emerge in the markets the asset is operating in.
o   High level view of freedom of operation in the markets/jurisdiction the asset will be operating in. Caveat: This is not the freedom to operate (FTO) opinion, but an overall assessment of high level view of barriers to operation which may impact the valuation of the invention. 

·         In each of scenarios (i)  that emerge during the valuation study what are the potential benefits that can accrue from the patent (bi) and the risks (ri)
o   Incorporating the Invention in the existing products
o   Potential Market Share enhancement
o   Using the invention to Invent more adjacent areas
o   Does it denies a space to competitor
o   Does it enhances the portfolio of the inventor – the synergistic effect
o   How easy it is to design around the patent?
o   How easy it is to verify the infringement?
·         In each of scenarios Value (vi) of Patent will vary within a range based on benefits and risks of the patent losing its relevance (bi) and (ri)
·         Each Scenario also comes with an estimation of likelihood or a probability estimation (pi)
·         Overall value V = ∑ pi x vi  = ∑ pi x f(bi , ri)
Crafitti Consulting’s MDMPTM valuation methodology is multi-dimensional and takes into account multiple perspectives to produce a robust valuation considering multiple futures, current state and past trends

We have combined multiple science based methodologies to come up with the valuation framework
o   TRIZ Based Patent Analysis
o   Value Network Analysis (
o   Analytic Hierarchy Process
o   Scenario Writing
o   Standard Patent Landscaping and Analysis
o   Systems Analysis

Multi-Dimensional Multi-Perspective (MDMPTM) Valuation does not produce a single $ number. The methodology gives a sum total of past, current and potential future value that the asset may create in a range of possibilities. Typical output will be

Value of the potential invention is 2 Million USD with a range of plus-minus 15%. Given the potential of entering a new market using this product the ability to create new, enhanced and/or cutting-edge products will increase by 50% which has an estimated value of 1 Million USD. If the product is not enhanced with sustained customer feedback and/or an effort is made to completely revamp the product, it is estimated that product life will not be more than 3 years. This requires the need to generate the next version or a new version of the product within 18 months. Further, given the very high design and architectural complexity of the product which is currently estimated to be 10 times higher than the ideal design possible – that is the least complex design, the next version should not be more than 5 times the ideal design in terms of complexity. We propose if the next version is not released in 30 months with cleaner, less complex design, the value of the product will be reduced by 25%. Hence in the worst case scenario, the value of the product is equal to 0.75 x (1.7+0.7) = 1.8 M USD. In the best case, the value of the product is estimated to be 3 M USD. In the most likely scenario, this comes out to be 2.4 M USD ±15%.

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