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Lesson #4: “Every market has unique characteristics”

Article Overview: Hawkins works in one of the most fiercely competitive global industries. But what he has learned over the years is that what works well in one country, could blow up in his face in another. Knowing the unique characteristics of his markets is thus one of his most important tasks as an executive.

Lesson #4: “Every market has unique characteristics”

Hawkins works in one of the most fiercely competitive global industries. But what he has learned over the years is that what works well in one country, could blow up in his face in another. Knowing the unique characteristics of his markets is thus one of his most important tasks as an executive. "Every market has unique characteristics," he says. "What I find shocking, quite frankly, is that Western companies have consistently failed to learn from these obvious lessons."

The United States, he says, "has the biggest market from 3G so far, and is the most advanced in areas like subscription billing through the carriers, and advanced client-server applications. Europe, on the other hand, "is more advanced in consumer understanding of SMS short codes and off-portal consumption."

Asia has also proven to be a key market for Digital Chocolate. "Japan, of course, must be given credit for pioneering mobile data and has had the most innovative and successful business models," he says. "For example, in Japan the operators were very smart in giving 90 percent of the content fees back to the publishers in order to create a healthy supply chain. They were more than able to make up for this with increased ARPU from data traffic and billing fees. They also educated consumers about mobile data and made it easier to consume."

Western operators, says Hawkins, have fallen behind their counterparts. "They are abusive and neglectful of their supply chains, to their own detriment, and nobody in the West has really moved beyond voice marketing to educate the masses about mobile data. As a result, the data ARPU is understandably lower, and besides SMS and WAP browsing, we have zero ‘killer apps' in mobile so far."

Understanding these different development trajectories and characteristics is one of the key challenges that Hawkins navigates on a regular basis. And, he must do so with the rest of his team even where that means at times he could be wrong.

"This is one of the biggest challenges for an entrepreneur - to try and figure out when you are right and when you are wrong," says Hawkins. "And you better know that you're wrong some of the time so that you can do enough introspection and searching to occasionally be willing to back off."

This became an issue in the early years of Electronic Arts, when Hawkins decided to push for direct distribution of their products. "Nobody else was doing it and they all thought we were nuts, and it wasn't working. It was a real struggle for two years," he says. "There was this constant temptation to throw in the towel and forget the whole thing. But I stuck with it. It was very painful - I had to lay off friends, the company had a lot of financial problems, everybody was miserable. But it's just one of the things you have to deal with - making choices like that."

Understanding the unique characteristics of each market you are in, and being willing to make the hard choices that go along with making your product work given those characteristics, are two of the key lessons Hawkins has taken with him.

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Article Tags: 3g, arpu, asia, billing fees, business models, chocolate, client server applications, consumers, consumption, counterparts, data traffic, detriment, europe, global industries, japan, mobile data, publishers, successful business, supply chain, supply chains



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