Simon Sinek On Diffusion Of Innovation Summary

This post summarizes some of Simon Sinek's ideas about the diffusion of innovation, from a TED presentation.

Summary

• Simon Sinek: People don't buy what you do, they buy why you do it
• The goal is not to do business with everybody who needs what you have
• The goal is to do business with people who believe what you believe
• The part of the brain that controls decision does not control language
• If people know why you do what you do, they can become loyal

Diffusion of Innovation

• Simon Sinek: You cannot reach mass market acceptance of an idea if you do not reach 15-18% of the market first, then the system tips
• Early majority won't try something new before someone else tried it
• The right people, right money and right market conditions do not guarantee success
• Tivo told us what they had without you even ask it
• Tivo could have said, if you want control on your TV (why), we have a product for you
• People do not buy what you do, but why you do it
• What you do only serves the proof of what customers believe in
• Martin Luther King - 'I have a dream' speech, not 'I have a plan' speech
• Leaders hold a position of power or authority, those who lead inspire us
• We follow those who lead, not because we have to, but because we want to
• We follow those who lead, not for them, but for ourselves
• And it is those who start with why that have the ability to inspire those around them or find others who inspire them

P.S.: The reason I did not include Simon Sinek's golden circle is because I believe the why he created this circle is just an attempt to mystify people unnecessarily. He properly fails to apply his theory about selling his simplest idea. I don't buy it, which confirms his theory too...

Seth Godin - Spreading Ideas Summary

Here is a quick summary of Seth Godin's great TED video about spreading ideas.

Summary

• For 15 years, people ignored sliced bread until someone found out how to spread the idea
• Idea diffusion is a central concept in this century
• Television advertising was been the main way to diffuse ideas and products
• But, too much choice + not enough time → led people to ignore stuff
• Hence, a product has to be remarkable for people to talk about it
• Marketers make average products for average people ("The center is the big market")
• They ignore early adopters and innovators on the left of the bell curve
• Seth Godin: average people ignore your average product, innovators and early adopters care
• Innovators and early adopters are obsessed about something (otaku)
• If you don't have an otaku constituency for a product, it won't work
• Hot Sauce is otaku, Mustard is not otaku
• Sell to people who are listening, and may be they'll tell their friends
• Does your customer have otaku? Is your product remarkable?
• Design is key and critical to make remarkable products
• Being very good is ≠ remarkable, people will not notice it
• Figure out who does care and sell to them

Marketing: Explain TAM, SAM, and SOM?

When considering a market in marketing strategy, the TAM, SAM and SOM acronyms are often used.

TAM - Total Addressable Market

The total addressable market (often called total available market too) is an estimation of the total revenues which could realistically be served for a given product or service, regardless of competition or customer reachability. It is the maximum amount of revenues one can expect from a market if one had a monopolistic control over it.

For example, the ice-cream market in the U.S.: 10 billions per year.

This number can be computed from real numbers when these are publicly available. If you know the total number of units produced per year for a given item, and if you know its average price, you can compute a good estimation of the TAM.

If such information is not available, one can use a bottom-up estimation, by estimating the size of the population eating ice-cream, using demographic data, and compute the average price per item by combining the different brands' prices.

SAM - Serviceable Available Market

The serviceable available market is the part of the total addressable market a company can reasonably expect to reach considering its business model.

For example, an ice-cream company selling only in New-York City: 2,64% of TAM = 264 million per year, based on New York City versus U.S. population.

We can also think about the different flavors an ice-cream company can offer. Since such a company usually cannot offer all the flavors all the other ice-cream companies offer, this explains why the SAM is (almost always) smaller than the TAM.

SOM - Serviceable Obtainable Market

The serviceable obtainable market, also called share of market, is the part of the SAM revenues a competitor expects to grab from the market, considering the practical limitation of the implementation of their business model. It often is a projection of expectations.

For example, a New York City ice-cream company selling only in New York City cannot expect to sell all the ice-cream sold in New York City. Assuming they can sell from supermarkets and to restaurants, and that these channels represent 55% of all sales, and assuming they expect their brand to represent 40% of these sales, their SOM is 264 million * 55% * 40% = 58 millions.