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Summary:

Alcatel-Lucent CEO Ben Verwaayen gave a keynote speech this morning at the EmTech conference, running today and tomorrow at MIT. He spoke of tech innovations and — perhaps most importantly — the need to turn them into sustainable, profitable businesses. During the question-and-answer session, which always […]

verwaayen_152x200Alcatel-Lucent CEO Ben Verwaayen gave a keynote speech this morning at the EmTech conference, running today and tomorrow at MIT. He spoke of tech innovations and — perhaps most importantly — the need to turn them into sustainable, profitable businesses. During the question-and-answer session, which always manages to be more interesting than the actual talk, Verwaayen shared his three requirements for a product to be successful:

  • Speed – From idea to execution, you must move quickly. “If it takes too long to get your product to market, it doesn’t matter if it is great.”
  • Relevance to customers – “You say: It’s great!’ But why is it great? ‘Because it’s great!’” That’s not enough. “The customer will ask, ‘What can I do with it?’” He noted that a product might seem great to its inventor, but if it doesn’t create value for the customer, it’s useless. Verwaayen quoted Apple’s Steve Jobs saying, “The most expensive phrase in Silicon Valley is ‘It will work, because it’s really, really cool.’”
  • Business model – Every product must have a viable business model. Lots of customers have a mindset of “great product! Thank you, but I’ll take it for free.” He asks, “Why is everything free on the web, but people are willing to pay for a ringtone?” It doesn’t make any sense. We’ve missed that boat as an industry, totally.”

Another questioner asked what was the “most surprising and unanticipated consumer demand” in telecom. Verwaayen said that the industry “missed everything.” “We missed email. We missed SMS. Some people have made a lot of money with ringtones…[Telecom companies] think technology; we don’t think end users.”

Afterwards, I asked him where he looks to see what the next trends in telecom are — to try to discover them before it’s too late. His answer? Whatever 15-year-olds are using.

By Jordan Golson

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  1. Ben is a smart guy. His speeches usually end up as townhall discussions.
    He was Vice-Chariman of Lucent back in 2000 time.
    I hope Alcatel Lucent will get back to their glory days.

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  2. Sorry, cannot agree with this.

    The ONE quality that makes a successful product is “relevance to customers”; a successful product solves a problem/need/pain for the customer (including the need to have fun with a “fart” application or silly ringtone)

    – Speed: How many years did MS use to remove Wordperfect from the market ? How many years did Google take to become no. 1 ?

    – Business model: What business model did Google have in mind ? Adwords came much later..If you have a product that will solve a problem for the customer, you’ll be able to find a viable business model.

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  3. Why is speed so important? Often time the successful products are not the first ones to market, but those that have been executed well. Or am I missing the point?

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    1. The hare is fast to the tortoise, and standing still to the cheetah.
      Speed isn’t everything.
      I see Mr. Verwaayen’s point as, “you need your skates on fast enough make it to the race.”
      Once in the race, there are other factors than sheer speed that make up the winners’ circle”

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  4. MOTHERHOOD & APPLE PIE!

    This is basic stuff (speed, relevance to customer and business model) … absolute motherhood and apple pie that we all know and understand. The one nugget is that “telecom” missed everything.

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  5. Where is the competition (perhaps in that comment about speed)? When customers have lots of choice, there is lots of competition, and products are perceived as largely undifferentiated, then profits are hard to deliver (content on the Web). When customers have little choice, there is virtually no competition, and products are highly differentiated, then profits are substantial (Microsoft Windows).

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  6. Its like the story about the engineer (this is as closely as I can recall it) who was called in to trouble-shoot a problematic circuit. He studies the problem for 5 minutes, grabs a pen and adds one line to the design of the circuit, then says, "That will be $1005 please." The boss says, "Thats outrageous, what for?" The engineer says, "Its $5 for the line and $1000 for knowing where to put it." People who dont know how to get a ringtone from their computer onto their phone, pay for ringtones.

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  7. Ringtone revenue peaked in 2007 http://bit.ly/11M9JV and has been in decline since then. Mobile application prices have declined, too.

    The business model problem is not confined to users of Web browsers. And, anyway, the smartphone breakout into consumer markets is driven by Web browsers.

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