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The Future of America
Today’s post has no direct tie to growth or business, except that those who are graduating from college today and in the future will determine what growth opportunities in the future. One of my favorite writers, Thomas Friedman of the New York Times, focuses on his thoughts as his daughter graduates from college. It is worth a read.
Dell’s Hail Mary
Wow! The king of direct selling, the company that once proudly rejected retail distribution, announced today that it will begin selling computers through Wal-Mart (Wal-Mart!) beginning June 10th. Is this the marriage of two powerhouses that will lead to success for both – or is it a sign of desperation?
Put me in the desperation camp.
Dell’s fall from its previous lofty heights – and it is a big fall – is a clear indication that if you do not listen to your customers, you will fail; no matter how superior your processes or business model are. If you fail to make a promise that your customers and potential customers care about, nothing else really matters.
In a previous post, I quoted Corning CEO, Wendell Weeks, as saying that the biggest lesson he learned was “it’s not enough just to be the best at what you do. You also have to understand your customers’ business model and your customers’ customers’ business model.”
Dell, still a manufacturing wonder, has clearly failed to do that. You can see this, first in decreased stock performance, then in Michael Dell’s return to the CEO post and now in the abandonment of its core principle – providing customized computers direct to consumers to provide value. Rather than finding new ways to create value, Dell has decided to give in and let their computers become just another commodity among all the others at Wal-Mart.
There was another company that faced challenges very similar to Dell’s. It was Apple. If you recall, its death was predicted several times. The difference between Apple and Dell was that when Steve Jobs returned, he stopped looking for the easy solution and got back to creating and innovating. Michael Dell has apparently decided to take the easy way out.
My prediction: Dell will see an increase in sales, a decrease in margins and – ultimately – a relative decrease in shareholder value. This volume obsession is a sign that Dell has not learned its lesson. Make sure that you do.
Mental Accounting
Sunday’s Washington Post had an excellent story that focused on how people account for the monetary impact of decisions. They talked about the concept of ‘mental accounting.’ “Here is the simplest definition of mental accounting: People carry around different running tabs in their heads. You have, for example, an “entertainment account.” Losing a movie ticket and having to buy a second one takes $20 out of your entertainment account when you planned to take only $10. Lost cash, on the other hand, is not charged to the entertainment account — which is why most people don’t hesitate to buy a movie ticket after they lose some cash.”
While the article focuses on consumer behavior, this issue is critically important when selling to businesses. After reading the article, I created a term called ‘Results Accounting.” Simply put, this just means that every business allocates a certain amount of resources (time, money and energy) to achieve certain results. If a result is of strategic importance, a company will allocate strategic resources – if not, they won’t. It is critical that an selling organization understand the results their desired buyer is seeking and ensure the accounting is in alignment.
I’ll talk about reframing results in a later post.
You Are More Than You Think You Are
Yesterday, I began working with a new client to map out their go-to-market strategy using what we call The INTELLIGENT GROWTH Blueprint™.
We started talking about their company’s value proposition and they started telling me about all the ‘stuff’ they do. They told me about “on-time delivery” and “defect-free products.” While I agreed that these were important attributes, they were clearly not compelling promises. The things they were focused on seemed more like simply requirements to compete. The owner even said to me later in the conversation, “You know you’re right. It’s not at all unusual for us to win a performance reward from a company and lose the next bid because someone else was a little less expensive. It seems that once you meet that minimum threshold, performance no longer matters.”
As the discussion progressed, I got the executive team to stop looking at the world from their own corporate point of view and begin considering what the world looked like to their customers. They started to realize that their value proposition dealt more than anything else with their ability to provide unique or customized solutions to complex design issues. They began to see what made them different was not their products, per se, but their ability to understand a customer’s total situation. But more than that, they realized that they were also very good at understanding their customer’s customer’s needs. Later in the Blueprint process, we reviewed their current website. As we did, they realized that all it talked about was their stuff. Suddenly, the disconnect between what they thought was important and what mattered to their customers became obvious.
On top of that, it dawned on them that their innovation opportunities could be significantly greater than they originally thought. Working from their customers’ perspective, they were no longer ‘limited’ by the products they sold. Their playing field now was actually all of the problems their Best Few Clients™ have.
Let me leave you one piece of advice — If I could boil everything I’ve written in The Fast Growth Blog™ into just one idea, it would be this: manage your company from your Best Few Clients’ perspective and your potential for growth and profitability is unlimited.
Outside-In Equals Success
The new book Hidden In Plain Sight: How To Find And Execute Your Company’s Next Big Growth Strategy provides some useful insights. The book take an interesting look at the ways companies successfully innovate as well as the ways they fail. I’ve just started the book, so I can’t speak to it completely – it’s off to a great start. I’d like to share a couple of points that deserve an ‘amen’:
- If a company is to truly hit the spot with innovation time and again with any consistency, it must:
- Understand the people it is trying to serve as the individuals they are – apart from any connection or interaction with the company.
- It must know how to go beyond its own perimeters of products,markets and competencies; let go of and challenge the assumptions, common practices and golden rules of doing business still held today; and go beyond what it has learned from consumers.
- See itself “from the outside in” and formulate strategies around people’s behaviors, not just seek to satisfy consumer needs and wants or customer requirements.
- This is not easy. But it need not be terribly difficult.
- As Henry Ford once acidly noted, “If I had asked customers what they wanted, they would have told me they wanted a faster horse.
While these two points focus on successfully innovating, anyone who doesn’t think they are pertinent to their business needs to understand that the failure to successfully innovate condemns one to commoditization status – and that is not good for profitability or growth.
Katie Couric, Brand Extensions, And Value Proposition Mistakes
While I admit that it is probably too early to determine whether the decision to hire Katie Couric as the anchor the CBS Evening News was a good idea or not, it is certainly heading in the direction of a failure. Katie is struggling. I’m not surprised by the struggles, however. CBS appears to have fallen victim to the same mistake as many growth-oriented executives.
It seems that network executives thought that because Katie Couric was #1 in one market, her success (and the formula that led to that success) would apply equally in another market. In branding terms, it’s called a ‘line extension.’ She’s a great host on morning TV,” they reasoned, “Let’s make her the anchor of evening news.”
The problem was that Katie Couric does not control the ‘Katie Couric brand’. The people do. The people view her as a personable, fun-loving morning personality. Sure, maybe she does the news sometime, but she is not a newsperson. I hope that, should the Couric experiment fail, it doesn’t get chalked up to the idea that the public will not accept a woman as a news anchor.
CBS made other mistakes as well. If we were to look at Katie Couric as a business offering, we’d see that her value proposition foundation is customer intimacy, while the evening news requires operational excellence or superiority. When you are great at one, you cannot be (and I mean cannot) be great at another.
Businesses make this mistake all of the time. They think that success in one market, or with one offering, means they will be successful at another. They fall into a formula and stop listening to the market. Remember, it is the market, and the market alone, that decides what succeeds and what does not. It is far better to listen to the market than it is to try to prove that the market is wrong. David Aakes, author of several books on brands, observed that nearly three-fourths of all new products introduced have been brand extensions (usually incremental extensions). Most of these products fail to meet expectations.
I wish Katie overwhelming success, but I don’t believe she will find it where she is currently.
Tipping Points
Recently, I sat down with a prospect who shared his growth plans with me. He laid out a couple of action steps, a little bit of a timeline and then said, “I figure we should ‘tip’ in about nine months.”
For those that haven’t read Malcolm Gladwell’s first book The Tipping Point, the ‘tip’ my prospect was referring to is that point where some phenomena (in this case, my prospect’s offering) goes from being a small presence to becoming an overwhelming one. What Gladwell referred to as an epidemic.
I happen to think that The Tipping Point is a book that everyone should read, certainly anyone interested in growing their business. I think the book provides terrific insights to how and why certain things happen, and it even gives clues to what someone can do to increase the chances that something will ‘tip.’ However, anyone who reads The Tipping Point, and comes away thinking that they can in any way predict what will or won’t tip (let alone when it will tip – “I figure we should ‘tip’ in a bout nine months.”) has certainly missed the point of the book, and probably doesn’t have a solid idea about growth in general either.
Look, there are certainly things a business can do that will lead to short-term and even predictable results – but that by no means ensures success. Do you want to increase the number of qualified leads in your pipeline dramatically over the next 30 – 60 days? Well, implement a coordinated, comprehensive telemarketing effort. Sure, it will cost money (probably quite a bit), but it will provide to more leads. But it doesn’t mean that you will ‘tip’. It doesn’t even increase the likelihood that you will tip.
You see, you don’t control whether or not you tip – the market does. The best you can do is to create something worthy of tipping and pay attention to the actions you are taking. In my opinion, an attempt to manipulate a tip contributes to the environment that prevents a tip. So, stop focusing on tipping or not tipping. We can’t all be Hush Puppies (read the book if you don’t know what I mean). What we can be is the best to the people we are dedicated to. After that, it’s not really up to us.
Introducing Davidoff’s Law – The “Moore’s Law” of Marketing
In 1965, Gordon Moore, co-founder of Intel, made an observation that has driven the growth of the technology sector since that time. Moore’s Law states that capacity per chip will double every 24 months while the cost of the chip will be reduced by one-half during that same two-year period. Moore’s Law was later amended from 24 months to 18.
When I was interviewed by The Baltimore Sun recently, I was asked what the future held for marketing and communication. That discussion led me to create what I am now calling Davidoff’s Law of Marketing. This new law states that the total amount of information available to people will double approximately every two years. At the same time, the difficulty of getting someone’s attention will double as well.
This means that the challenge of lead generation and starting productive customer conversations will only get more and more difficult as time goes by. So how can you escape the consequences of Davidoff’s Law? Here’s how: THE ONLY WAY TO BREAK THROUGH THE NOISE is to look at everything your company does through the eyes of your ideal customer.
This means you must:
- Clearly understand who your ideal customer is
- Learn everything you can about your ideal customer
- Understand how your ideal customer looks at the world
- Understand how your ideal customer views your company
- Understand, better than your ideal customer, exactly what they worry about
When your message is focused through that lens, you can stand out, break through the growing avalanche of information and begin a conversation that your prospect will actually find compelling.
Introducing Davidoff’s Law – The “Moore’s Law” of Marketing
In 1965, Gordon Moore, co-founder of Intel, made an observation that has driven the growth of the technology sector since that time. Moore’s Law states that capacity per chip will double every 24 months while the cost of the chip will be reduced by one-half during that same two-year period. Moore’s Law was later amended from 24 months to 18.
When I was interviewed by The Baltimore Sun recently, I was asked what the future held for marketing and communication. That discussion led me to create what I am now calling Davidoff’s Law of Marketing. This new law states that the total amount of information available to people will double approximately every two years. At the same time, the difficulty of getting someone’s attention will double as well.
This means that the challenge of lead generation and starting productive customer conversations will only get more and more difficult as time goes by. So how can you escape the consequences of Davidoff’s Law? Here’s how: THE ONLY WAY TO BREAK THROUGH THE NOISE is to look at everything your company does through the eyes of your ideal customer.
This means you must:
- Clearly understand who your ideal customer is
- Learn everything you can about your ideal customer
- Understand how your ideal customer looks at the world
- Understand how your ideal customer views your company
- Understand, better than your ideal customer, exactly what they worry about
When your message is focused through that lens, you can stand out, break through the growing avalanche of information and begin a conversation that your prospect will actually find compelling.
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Resources
Doug's Washington Business Journal Columns- Intelligent Growth Articles
Third Wave Selling Blog
Products to Grow
