While reading the book, I'm coming across stuff has particular bearing to my experience with the Response Point team. Response Point was an IP-PBX system built by a small team in Microsoft. (What Bill Gates once called "a small but elite team"). This team operated very much like a startup, built and shipped V1 from scratch in 2 years, and then 2 Service Packs within 6 months of each other. Then on May 5th, 2009, the entire team was eliminated as part of Layoffs 2.0 at Microsoft. The reason cited was that there wasn't a chance for business success "in the forseeable future".
Here are a few of my interpretations based off my learnings from the Response Point experience, and what Moore postulates in his book:
- There are basically 2 business architectures: complex systems and volume systems. Complex systems are low volume high touch transactions but economically expensive. Volume systems are high volume low touch, low complexity but economically inexpensive systems. Complex systems tend to be customized around a target customer. Volume systems on the other hand are targeted for the masses, optimized to meet the 3 basic values of retail markets: price, availability and selection.
IMO, Response Point was designed to be a volume system but was marketed as a complex system.
- Volume systems require strong branding with a distribution channel that does not sell to customers, but rather allows them to buy.
Response Point had a mixed branding issue. The units were sold under an OEM brand, with Microsoft (the stronger brand name) as a secondary brand. Also, a VAR model was used to sell the units to customers. In hindsight, one wonders if branding the units as Microsoft, and selling via channels such as Best Buy would have had a more positive impact.
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