Rules of Making Money Building and Selling Systems

The topic of the relationship of marketing to R&D is worth a distinct thread of its own. That’s the street I live on.

No Product. No Market. No Sale. No Pay.

I was of one opinion about this when I was an R&D set of hands. Another when I was the liaison to Marketing and Proposals (failing to understand that last term is where many CMOs screw the pooch). Yet another as chief cat herder for an R&D group. It’s a complex relationship.

Rule 1 (never fails): The surest predictor of the outcome of the implementation of a sale is WHO analyzes the RFP before the bid process begins

What is the world buying?

RFP = What They Are Buying

2 Models for Making Money Building Systems: Innovate or Build to Spec

Innovation is R&D costly. You lose if they are not buying.

Spec is contract costly. You lose if spec and contract process are not tightly coupled.

R&D is to technology what hits are to records: gambled development costs on high potentials in the initial release. The customer set self-selects by the product.

Spec is a process where the initial requests mapped to the deliverable form very long chains of negotiations to make decisions about code to be built. The payoff is selling into a sustainable product market because a spec market is also self-selected by common need in common form.

The gamble here is can you get the product to match the rate of change in the specification over the development time to initial release or does the final implementation cost spike the punch.

In both cases, marketing is caught trying to insist on new development to meet competitive perceptions and spec is trying to match the gap in the time from discovery to implementation.

So you get the unholy union of the spec building process and the marketing department.

Rule 2: Do not bid what you cannot demo.

One reason for the high cost of systems is enablers in procurement for technology to needs list instead of specification. Ask any agency for needs and you will get a large garbage bag of informative but very local requests. On the other hand, well-conceived specifications center the product in the product market just as that market will buy it.

Rule 3: Don’t procure what you don’t do.