For a long time, I have been a fan of the “ecosystem” thinking with regards to product concepts and business practices, and it will undoubtedly become a consistent theme in this blog. My affinity towards ecosystem thinking comes at least partially from the frustration of working quite a while in an industry (digital music) where a healthy ecosystem is both lacking and desperately needed. The core concept of the “Business Ecosystem” has been around for over a decade, and while the concept may be overused a bit, the logic behind it still rings especially true for media and the internet. Many of us in the digital media world have often found ourselves in a position of “explainer/evangelist” of the concept, due to the lack of a cohesive ecosystem – sometimes its hard for those at or near the top of the food chain to understand “balance” in a healthy ecosystem… but I digress – – different post.
4 Currency Explanation
Eric Ries’ well-crafted post, titled “Business ecology and the four customer currencies“, explains the “4 currencies” of money, time, skill, and passion and how they influence customers’ decisions. He does a fantastic job of illustrating the currency concepts and how important realistic customer segmentation is. Eric has lots of good posts on Freemium concepts, and the ecology discussion is closely related. He also pointed me to this DEEP article by Andrew Chen that goes into some interesting underlying economic concepts behind creating a successful freemium model – – definitely worth the read.
I have been thinking a lot about business ecosystems lately as I’ve been working through product concepts, and I think that as a “product people”, we ought to consider that our customers self-segment based on their mix of “customer currencies”. Ries provides currency definitions using gaming as an example, wherein the different user types achieve success using different currencies. The basic concept is simple to understand (I”ll paraphrase here): players with money can buy success, players with lots of time can slog out success, and players with skill are good enough to achieve success quickly and cheaply. The players with a lot of passion are put into a special category, and he argues that while it may not seem like they have “what it takes” to be successful, they are often the hidden reason for the success of the game (and thus the ecosystem) overall.
Each of these four currencies represents a way for a customer to “pay” for services from a company. And this is true outside of games. Constructing a working business model is a form of ecosystem design. A great product enables customers, developers, partners, and even competitors to exchange their unique currencies in combinations that lead to financial success for the company that organizes them.
Ye Olde MRD
Customer Currency and Engagement
Applied 4 currencies Process
- User A= Time – 20%: User A has lots of time to kill and can explore every nuance of the application. As a result, since setting up a play-list is fairly simple, these users will most likely create lots of play-lists and experiment with the utility of all of the surrounding features. They may not understand all of the advanced features, and may opt for volume of play-lists, or they may lean heavily towards social sharing of play-lists. Ultimately, we should expect mostly volume from these users, and we should encourage social integration as this volume, if shared with friends, will drive new users.
- User B = Skill – 10%: Skilled users will be looking for sophistication and shortcuts. They will certainly want to import existing play-lists, and if we can’t map the data correctly, or if we don’t import lots of different file-types, they may be frustrated and leave. IF they like the sophistication level, we can probably look to these users to not only create volume, but to drive new users through evangelism and sharing. We can also look to them to drive our product features, as they will undoubtedly start innovating within the parameters of what we give them (analogy: @replies on twitter wasn’t an official feature until very recently).
- User C = Money – 35%: Users with money (and by this, we mean more money than time… they may be skilled as well) might be candidates for an upgraded version. This could be, perhaps, a very fast desktop client that would auto-scan the user’s hard-drive for viable files to import. This might search for other play-lists and recommend other users’ play-lists (this is probably a feature we want anyway) to make their own. These users want a quality experience without spending time, and if we could do it, they might pay for it.
- User D = Passion – 35%: These are the users that will be the core of our testing and feedback. They will probably use every feature and help other users on the message boards. they may blog or tweet about our success for shortcomings, and we should engage with these users. We may want to ask for volunteers from this set, and we may want to give away our premium product to them for testing purposes. These users will be our biggest evangelists, and also our biggest critics if we stray. It will be good to view our ongoing competitive analysis through the eyes of these users, as they typically will be continually comparing our product against our competitors.