can you innovate a commodity?

June 24, 2008 at 9:05 am | Posted in Business, Technology Trends | 4 Comments
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Yesterday I talked about Seth Godin’s comments regarding that you are only a commodity by choice.

Tony then had a nice comment, where he ended with this question:

Can you have a successful product strategy in which you don’t innovate but instead just force the commoditization of your competitor’s products? Probably, but who wants to be there?

I think the answer is that a lot of companies want to be there. In fact, I think MySQL has exactly one billion reasons to be happy about being there! 😉 Which brings me to this post.

If you talked to MySQL, they would argue that they are, in fact, an innovation company. They would say that their pluggable table engines and their MySQL cluster are just a few of the ways they have innovated the RDBMS landscape. But, I don’t agree. Would they be where they are if they charged for their database from the outset? Doubtful.

So the question is…. was the fact that they carved out a commodity niche in the ancient (by technology standards) RBDMS market, in and of itself, an “innovative” approach? Did they engineer things differently to allow that model to work? Why didn’t PostgreSQL (who was there first, and was free, and was open source, and had more features) win that battle? Did MySQL do some “innovation” of the entire process (not just the technology) that allowed them to succeed after coming a bit late to the game with less features?

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just block that guy and the play will work

June 23, 2008 at 4:56 pm | Posted in Business | 2 Comments
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Sounds simple enough. Just block him and the play will work. Problem is, the guy is a 6’6″ 340 pound beast who happens to be pretty dang good. So “just block him and the play will work” is certainly a valid theory, but getting there is a bit more challenging than the “simple” statement implies. That’s how I feel about a recent post from Seth Godwin on commoditized pricing.

Basically he says that you don’t need to lower your price, just increase your value. Here’s a quote:

You need to increase your value. If people don’t want to pay, it’s because you’re not delivering enough value for the money you’re charging. You’re not selling a commodity unless you want to.

Talk about your platitudes. Of course, he’s right. Value and pricing are typically inextricably linked. The real question is: Does a market ever reach a point where there is no more value to be added that would allow you to move the pricing needle? A friend of mine says, “No.” I brought up the example of nails, and he has set out to prove me wrong there. He also muttered something about $100 toilet bowl brushes (not sold to the government, he claims!), but if he wishes to expand on that one, I’ll let him do so in the comments section.

I tend to think that in theory Seth may be right; but in practice, it seems loaded with some really major challenges that can be dangerous. How long do you pursue that fleeting “value” with more and more resources before calling the market a commodity and reacting accordingly?

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