We all heard the line that “a product manager has all of the responsibilities but none of the authority”. True. Now get over it. That goes with the territory and is no excuse for not being a great product manager. So what makes a successful product manager? Let's look at the critical responsibilities and what you need...
The product manager must pull all the required functions together to make a product succeed:
A good product manager basically possesses 2 types of knowledge:
A good product manager masters the art of influence without authority:
A Product Manager’s greatest input is in:
Cajole, Persuade. Repeat.
You must have high Emotional Intelligence. Every department and person has their own agenda which may not match your agenda (sometimes for good reasons and sometimes not). You must cajole, persuade, and sometimes get forceful without burning your bridges. Think of Product Managers as the grease that keeps the machine going. You practice what I call “Shuttle Diplomacy” to gain consensus. (Remember the rule: Consensus is 70 percent agreement, 100 percent buy-in. You cannot look for 100 percent agreement; otherwise you will have paralysis.)
Spend Time in the Front-Lines. Don’t be a REMF.
People keep talking about innovation and the need to think outside the box. Well, first learn what’s in the box!
I’ve heard too many Sales and Service people disparagingly refer to product management and marketing people as the "Ivory Tower". Many times, they do this for good reason.
A product manager should be spending 20 - 25 percent of his or her time with the customer and Sales. There is no other way to get real front-line feedback and the benefits of learning user-innovation. In addition, I think that a good Product Manager should go train a customer at installation to see firsthand how a user actually uses the product. There is no better UX experience than this.
A very under-appreciated resource is the Service group. Service people see how users actually use the product. They see what puts a smile or frown on the users’ faces when they train them. Customers also tend to see your Service group more as their friends compared to the Sales group (rightly or wrongly) since they are typically not in a selling mode. Thus, Service people can provide different insights with some more open feedback.
Have a limited travel budget and time? Pick up the phone and call people up. Plan this into your work schedule. I used to “spin the Rolodex”(sometimes randomly selecting a contact name from the customer list) and call the customer s a courtesy call to see how they were doing. These calls from the ‘home office” were always were a pleasant surprise to customers. You learn how satisfied they are with the product and company, how they use the product, and get feedback on how the product could be improved. Additional benefits: a chance to rectify any dissatisfaction, insights into future purchases, a personal connection, and an addition to the customer reference list. Most calls were a quick 5 - 10 minutes and well worth it.
The Product is Your Baby. Protect Your Baby.
Be a product evangelist. This is an over-used term but the concept still rings true. Believe in your product. Know your product and customers inside out, and the unique values over the competition.
I used to audit training classes for my products. Why? I wanted to see how the instructors were presenting the products and how attendees’ impressions during the training. More than once, I found that the instructors didn’t know the products well enough to my liking and made them more difficult than they were. Poor training leads to poor impressions which can last forever. I made sure that the training improved even though the instructors did not report to me directly. Why? That was MY product that they were representing. Remember, you own the product which includes all aspects including training.
Questions that Good Product Managers Should Ask Themselves:
There are nos script or shortcuts for product management. All successful product managers possess keen product and customer knowledge, know how to navigate among people in the organization, and fully own their products.
Finally, do try to keep quiet when you do listen to your Sales, Service people, Customers, and others. As a rule, you don't learn much when you are doing the talking.
Product Managers and developers (and everyone in general) should observe two laws: 1) Law of the Vital Few and 2) Parkinson’s Law of Triviality.
Law of the Vital Few
The Law of the Vital Few is better known as the 80/20 rule or Pareto’s Principle. Basically, approximately 80 percent of an input affects 20% of the output while 20% of any input will affect 80% of the outcome. That means 20% of your time, resources, efforts, or customers is responsible for 80% of all of your results. This is one of the key concepts that I learned from ITW and we employ the rule daily.
Think about it and see if this is true (I bet that it will be close):
So what do you do with this knowledge?
Do more with less. Focus on what matters most. You stop treating everything as equal and start paying attention to the 20 percent. Give VIP treatment to your 20% of customers and keep them happy – give them special status, i.e. Financial institutions have “premier” status for some clientele and airlines have special rewards and privileges for frequent fliers. Fix the 20% of the software code that will affect product quality and perception.
Also consider whether to treat differently or even cut out of some of the remaining "80%". You might be losing money or devoting scant resources on a customer who buys once in a blue moon, e.g. maintain a legacy product feature or give them deep discounts - it may be worthwhile to cut your losses and invest elsewhere for better results.
Parkinson's Law of Triviality
Parkinson's Law of Triviality is also known as the “bike shed effect”. It refers to the tendency of people in organizations to give disproportionate attention to trivial issues and details.
Ever been in a product development or release meeting where attendees spend hours debating seemingly trivial items such as lettering, signage, color while comparatively bigger and more technical issues are seemingly discounted? The reason is that issues such as lettering, signage and color are easier to grasp by all (suddenly, everyone becomes self-appointed experts) while other issues are more difficult to understand and critique (no one dares speak on such matters to expose how little they know). The result can be that precious resources and time will be spent on these items instead of the much more essential and critical concerns. For example, you can end up having to devote development time to create multiple artistic concepts and designs for a committee approval.
C. Northcote Parkinson observed that an approval committee for a nuclear power plant spent the majority of its time on issues such as the materials for the staff bike-shed, while neglecting the less-trivial proposed design of the nuclear power plant itself – because everyone is an “expert” on making a bike shed versus the plant design. (In fact, they could not even come to a consensus on the bike shed and had to schedule a follow up meeting!)
What can you do? Like it or not, you cannot fight human nature. One proactive move is to meet individually with the “players” who will be in the meeting beforehand to discuss what the meeting expectations are and to get their buy-in and approvals beforehand. Practice what I referred to as “Shuttle Diplomacy” so that there are no surprises and that your goals are shared goals.
Be aware of these laws in your work and life.
There’s a story about the actions of a Korean Airlines executive making the news:
Excerpted from Bloomberg:
"The daughter of Korean Air Lines Co. Chairman Cho Yang Ho ordered a plane back to the gate so she could remove a crew member who gave an incorrect answer to a question on how to serve macadamia nuts, the airline said.
Heather Cho, 40, a vice president of the airline, ordered the head of the service crew on Flight 86 from New York to Seoul to deplane after an attendant earlier had served Cho macadamia nuts without asking, the carrier said. Cho then summoned the purser to ask a question about the airline’s policy on serving nuts. Cho ordered the man to leave the plane when he couldn’t answer. Under the carrier’s rules, passengers must be asked first before serving."
Sadly, this violates one of the tenets of leadership and management. As Vince Lombardi said: “Praise in public. Correct in private.” The purser may have been negligent in not knowing policy and the executive may have had the company’s best interests in mind, but this was not the way to correct the problem.
1. "Focus on the problem, not the people or person". The actions did nothing to correct the problem. The root problems were that nuts were given without asking and also served in a bag instead of a bowl. Yes, we all tend to get frustrated with people when they do not come through and meet our expectations. Yet, how did literally throwing an employee off the “bus” ("Airbus" in this case) solve the problem? Did the VP know whether there is a generic training issue that needs to be addressed? Is the solution to toss people off a plane,train, or building whenever there is a transgression?
2. "Beatings will continue until morale improves" does not work. The actions instead humiliated the purser and drove fear into the rest of the crew. You want your people to go the extra mile, to be motivated, not demotivated.
3. "Face" is a real concern for many Asians. The purser lost "face". Some people jump off buildings because of "face". Many Asian organizations have a hierarchy that do not treat employees as equals. That doesn't mean that it's right. People all have the same feelings.
4. The executive's actions led to unintended negative repercussions, e.g. the plane was delayed and the news accounts were entirely negative. The paying passengers who witnessed the event probably had their flight experience ruined.
5. It reflects poorly on the executive and the organization. I remember an innkeeper in the UK dressing down a young employee for forgetting to arrange a taxi for a guest. The boss angrily chastised him, repeatedly asking him if he was a twit, while the poor lad could only stand there and takes the abuse. A few of us watched in absolute horror and pitied the employee. I will never forget that. While I understood the predicament for the inn keeper, I never regarded his friendliness and hospitality as genuine since that incident (he was a two-faced bully).
6. “If you’re not part of the solution, then you are part of the problem.” A simple conversation with the offending crew member and purser and words such as: “You do know that nuts should be served in a bowl?” would have been a step toward resolving the problem, with a guarantee that it would never occur again for this particular flight crew.
7. It violates “Practice What You Preach”. You can’t expect your employees to have a smile on their face and be courteous to guests if you are discourteous and intimidating to them. Be an example, not “Do as I say, not as I do”.
Nothing good really came out of this event except perhaps another teachable moment. The executive publicly apologized and resigned her post. Korean Airlines got quite a bit of PR but probably not in the form that they wanted. Employees were humiliated and who knows what will happen to them.
So always gather your emotions, your facts, focus on the solution and future performance, and have your conversation in private. If the problem serious, e.g. starting a fire, then you put it out immediately. It’s okay to mention that an action is incorrect but it is not good to criticize anyone in public. (I always ask my wife to do this…it works better on me.) Otherwise, you undermine your relationship with the employee, the team, and lose the respect of others.
Note: There is an opposing view of this published in HBR.
I was far away from home, training a customer in Kaiping, China into the late hours on a Friday night. It was at the new Chinese operation of an American company. I was giving the lab manager, Mr. Li, extra training on our installed system. Although I spoke Chinese during much of the week’s training, Mr. Li asked that we only converse in English so that he could practice and improve his language skills.
“How are you Mr. Li?”
“I am fine, Mr. Lio.”
“That’s good. How many children do you have?
“I have one daughter.”
We continued this banter back and forth for a few minutes until…
“Yes?” I replied.
“Mr. Lio…What does ‘F--- You!‘ mean?”
I froze for a few seconds. I was very tired after training two shifts for a week coupled with the time zone change. Did I hear correctly?
“Um…Mr. Li, can you repeat your question?”
“Mr. Lio…What does ‘F--- You!’ mean?”
“Mr. Li, those are very bad words! Can you tell me where you heard that?”
It turned out that an Italian company sent an engineer to install some equipment. One of the local employees picked up one of the engineer's tools and dropped it. The engineer must have been in a bad mood since he proceeded to say “F--- You!” to everyone he came across there. (In hindsight, I could have had fun by telling Mr. Li that those were nice words which he should immediately use to greet his American managers the next morning.)
This brings up the question of profanity, particularly in business. Is it ever proper? Over the years, I have often wondered about the use of profanity and four letter words in business.
My first job was working in a company where the founders were still actively managing the business. It was a quintessential family run business where everyone was collegial. As times changed, as the owners got older, the board hired an external candidate as the new CEO. Was everyone in for a surprise when the new guy showed up! A man raised in Texas and a former CEO in New Jersey (perhaps a bad combination). He cussed up a storm. The “F---” and “S---” words flew out of almost every sentence uttered. Meetings with him were like Eddie Murphy concerts. He seemed to get a rise out of people’s reactions. I don’t think that it made employees work any harder than they did or lead to better results. In fact, it made me think less of him as a person and leader.
Chicago mayor Rahm Emanuel is known for his propensity for “salty language”. During a disagreement over lengthening the school day, Emanuel reportedly said, “F--- you, Lewis.” to Karen Lewis, the president of the Chicago Teachers Union. I don’t think that Dale Carnegie taught that in “How to Win Friends and Influence People”. (Does he kiss his mother with that mouth?)
As a native New Yorker, I know my fair share of swear words - in four different languages. I do hear some profanity from some colleagues, very rarely, as some of the “cussing” has become colloquial. I would make the case that purposeful directing of profanity at others and using crude language has no place in business. For me, quite simply, I said the “F” word once in front of my father and never again. He slapped me. That was the only time when my father ever slapped me. His look of disappointment was far worse than the actual slap itself. I don’t say those words in front of my family and I don’t want my children to use such terms (although they probably learned them after finishing first grade). Since I don’t really know how another person feels about such language, it is best to be respectful and find an alternate way to phrase things. If it has no place in my home, it has no place in my business dealings.
Note – when certain words do fit the situation:
There was one memorable Saturday morning at 1:30 AM in Japan. I was setting up a high speed impact test instrument for a very important customer demonstration happening in a few hours - I had flown to Japan specifically to meet the prospect in our Tokyo demonstration center. I did one last check before my local colleagues and I could leave for a few hours of precious sleep. Everyone gathered around as I pressed the “Start” button to run a high speed 22 meters per second impact simulation. The machine fired and broke the test specimen…and tore through the test fixture. I remember a moment of complete silence and then a collective “Oh s---". (I didn’t even know that they could all say that in English). Perhaps there was no better phrase to describe that moment but this was an exception to the rule.
One of the most difficult tasks for product development is prioritizing features. It can turn into a contentious task with disagreement from different stakeholders. Features are usually drawn from a wish list based on customer feedback, sales and service feedback, management, etc. Unfortunately, some of this is biased. Management may not understand the market but insist on features discussed during their last customer visit or what they just read in the morning newspaper. Sales wants features based on their lost orders. Engineering wants to use this as an opportunity to fix the aging platform. In many instances, the squeakiest wheel, biggest mouth, or most persuasive people can get an unfair say. It a “darned if you do or darned if you don’t” scenario for Product Managers. Someone is going to be unhappy because you can’t do everything.
So that’s where Pugh’s Charts can help make the ranking and decision making easier and clearer.
Suppose that we have five possible new features to be considered, A, B, C, D. We already have an existing product and want to know if any of these possible five features would improve it.
We first must decide on the criteria used to judge the features against. In this case, we pick just five. The criteria should be based on your company goals, e.g. a specific market penetration, increased OTC sales, gaining a top 10 account, etc. and they should have upper management buy-in before you start.
Now we draw our Pugh matrix (chart). The possible features are drawn across the top, which will be judged against the selection criteria, which is shown on the left column. Notice the column named “Base Line”. This is our reference point which is the existing product that we are either improving upon or replacing. (It can also a competitor’s product or substitute.) We place a “0” for each criteria for the baseline as a start.
The next step is for the product manager or team to place a 0, +1, or -1 in each cell for "Considered New Feature" versus "Selection Criteria":
0 = no gain or loss
+1 = gain, improvement for the selected criteria
-1 = loss, detriment to the selected criteria
We then sum the values in each column for considered feature. The completed chart gives us an overall view what the rankings for each considered feature based on the sum. However, not all selection criteria are equal in importance to company goals so this particular chart should be considered unfinished and used only for “go” or “no-go” at most. In our example, "Flashing LED" and "Windows 8 Support" both appear to have the same importance because all selection criteria is treated as equal.
We now add a weight factor against each selection criteria. For example, if our first criteria of safety is a 2, and the second criteria (to meet a certain industry standard) is twice as important, we give that a weight value of four. The company edict is to grow the China market so that criterion gets a weight value of five.
If we now apply our weight factors per selection criteria against the initial assessment per desired feature, we get a much clearer and refined picture of the feature rankings.
However, we now have another missing factor: how much effort, e.g. resources and time, is needed to get each desired feature. A feature that takes 2 years to develop and release may not be as desirable as an equally normalized feature that takes 1 year, e.g. Flashing LED or Voice Recognition in this example. So we now add a row showing the relative effort required to get each feature. The value can be 1, 2, 3 or 1 and 2 in this case to represent a 1 year or 2 year effort (units for effort need to be decided). We now create a final decision factor based on the ratio of the Sum for each Possible Feature versus Effort needed – we call this the Value for each possible feature. The Value may be considered “the Bang for the Buck” very similar to the Marketing definition of product value as the ratio of benefits to cost. In our example, Chinese language becomes our top priority, followed by Windows 8 Support, Flashing LED, and Voice Recognition.
This modified Pugh Chart takes away some of the guesswork and emotions in selecting and prioritizing features. It still does not take into account those features that you always get on the wish list but miss the cut-off (they also tend to be the planned features that get chopped out when projects run out of time). In those cases, you have to either accept this as reality or twiddle with the pertinent weight value. Same principle applies to those favorite pet features of upper management. Either face up to the CEO and GM with the Pugh chart results or add another selection criteria named “The big Kahuna wants it ” aka “Keeping my job”.
The weights assigned for selection criteria and effort are not going to be 100% accurate but everything is relative so the scoring should still work out. These charts are by no means perfect so feedback is most welcome!
Much thanks to Martin Wright at Instron ITW (who studied under Stuart Pugh himself) for educating me about Pugh Charts and Bruce McCarthy for introducing me to decision matrix concepts. Bruce is a master at marketing and has a similar version (ref: http://www.slideshare.net/ProductCampBoston/prioritization-301-advanced-roadmapping-class-bruce-mccarthy).
This was recently posted on LinkedIn and people were "liking" it and making supportive comments. I suppose that the moral is that tenaciousness and continual follow-up are keys to winning the sale. No doubt, many sales managers and executives are citing this to beat up their staff.
My Spiderman senses start tingling whenever I see such statistics. For one, the attributed source, "National Sales Executive Association" does not seem to exist. Interestingly, a number of blogs have been posted in the past citing this list of statistics with only one person questioning the source. There are no dates indicating when these statistics were compiled. No doubt some sharing this list today are treating this list as the latest news. On top of all this, there are no definitions of what a "Prospect" or "Contact" means or the context (is this B2B, the type of sale, etc.).
I find it very common for people to jump to conclusions, perpetuate urban legends, or cite statistics blindly. No doubt, we come across Sales people who claim that we can get a huge amount of incremental business if we just had a particular feature, etc. For years, I had a senior sales manager tout that a missing certification was killing his sales and that it was soon to be a standard requirement across the industry. Part of the problem was that no one really understood the requirements. So I took on the task of polling every sales engineer, researching the number of past sales requests, interviewing internal "experts" and engineers who dealt with the standards...and lo and behold...there were less than 10 requests in 12 years and we found a process to deal with new requests in a less costly manner. Summary report and white paper written. End of issue.
A former CEO once berated a sales manager after visiting another company. The prospect there told the CEO that we turned down a Purchase Order for over $100,000. Our CEO was very angry at the sales manager and made the comment to the effect of "We'll find someone else if you have a problem taking a $100,000 order." What the prospect neglected to tell the CEO was that he wanted multiple systems for that amount of money and it would not be a profitable order.
Remember the quote: "There are three kinds of lies: lies, damned lies and statistics". Sales people are a key resource but many re-live their most recent or lost accounts when you look for data. So always question your sources and information, and dig deeper to get the details instead of blindly accepting everything as facts.
Question everything. Assume nothing.
I'm back! Apologies for lack of recent posts due to work and travel (thank you for your emails and concern).
I am back from a long but very successful trip to Asia, working with our local staff, meeting customers, and presenting at two seminars in Guangzhou and Ningbo. It's good to be home with family but I do miss the daily breakfast buffet at the hotels (my wife said that I can make my own if I wanted it).
One of the nice things about travel is really getting to know your colleagues on a personal level. You build up camaraderie as you all travel by planes, trains, public transport, walking/running, skipping lunch, and working into the night. However, you need to be careful about getting too personal and inquisitive, e.g. a Western colleague asked a Japanese colleague about the value of his home and got an evasive reply.
Here are a few tips when working with colleagues and customers in Asia (especially China):
1. “When in Rome or China, do what the Romans or Chinese do.” Don’t try to stick out like a sore thumb. One of my colleagues was upset about his hotel, found the food to be inedible, was indignant about having to take public transport versus having taxi service when visiting customers, and took his complaint to the country manager. This did not leave a good impression with the country staff since they stayed in the same hotel, ate the same food and also had to take the same public transport since it is faster and easier. Use this as an opportunity to soak in the local culture if you are in such a situation. Generally, you’ll find something edible. There are plenty of McDonald’s and KFCs in Asia so you can usually run out from your hotel on your own. Oh, and stop making faces and screaming when you see a cooked chicken or duck with the head intact or chicken feet as a dish. Just suck it up.
2. Don’t try to be or act special. I get rather uncomfortable when a colleague tries to carry my bags. This is the Asian way of being gracious and hospitable to guests, especially those they consider to be senior. I just don’t like to insinuate that I am any different than they are and insist on carrying my own bags. Your hosts will also try to take care of your evenings and weekends. I again respectfully decline since they all have families and work to attend to. (The only caveat is that dinners can be a good way to bond and know each other personally.)
3. Avoid political discussion with both colleagues and customers. This can be a rather touchy area especially with current events. Remember the quote: “My country…right or wrong, but MY country.” So I generally side-step politics.
4. Business Cards. Use both hands to accept and pass out business cards. Take a brief moment to look at the business card as a sign of courtesy. Applies in many Asian countries.
5. Speak slo-oo-wly and with less jargon. We are already imposing on the local staff and customers to interpret our English (unless you can speak the local language) so help them by slowing down your speech.
6. Carry a bottle of water (especially in China). Customers usually give you a bottle as a courtesy but you can gulp it down quickly when you travel, especially in the hotter regions. You can skip lunch but you can’t skip water. While you are at, don't forget to bring antidiarrheal, antacids, and other preventive medicines etc.
7. “_ _it” Happens (just like travel anywhere else). My flight in Guangzhou to Shanghai was delayed for over four hours due to weather. (it was amazing watching a number of fights break out at the Guangzhou airport). Customer service is still lacking for many Chinese domestic airlines. The airport hotel was overbooked on the night before my flight home. You grin, smile, and work through it.
8. Skype, FaceTime, Tango are amazing, economical ways to call home. Hotel and mobile calls are expensive and phone cards don’t always work (some hotels make it difficult to reach the local access number). I found Skype PC calls to phones to be a very inexpensive and convenient option with very good audio quality.
9. Many internet sites such as Facebook, Twitter, YouTube, and blogs, are blocked in China so you should figure out how to bypass that before you go on a trip there. However, you may find it actually refreshing not having to read about what a Facebook or Twitter friend just had for breakfast or felt that morning.
10. Make a promise, keep a promise. Remember that you are representing the “home office” which at times makes you the expert and sounding board. I always make sure that I follow up on everything that I promised when I meet local staff and customers. Otherwise, you will be one of the countless people who visit, pretend to listen, and never hear back from. Do not be one of them.
Sales and product people try to be affirmative with every question that a customer asks. They sometimes get nervous if they don’t know the answer or have to say “no”. Sometimes, it is actually good to say “no” or “we do not have that “, some customers get very suspicious if you just answer “yes” to every question.
In some cases, a better approach would be to start answering the question with a question: “Why do you ask?” or "Why are you asking that question?" (This may be a bit too blunt or direct and make the customer defensive, so a better statement may be along the lines of “Hmm….that’s an interesting question. Why are you asking that?”. Understanding the reasons that the customer is asking their question helps you formulate a more appropriate reply.
For example, customers often ask whether a product has a particular capability or feature. By asking why they were asking, they might reply that they were just curious or that a competitor did or did not have that capability. Often, the customer will provide you background information on their problem(s) that this perceived capability may solve. In this case, you may not have the particular feature that they were inquiring about but, by understanding the problem, you can offer a better or alternate solution.
Let’s use a non-business (and extreme) scenario. Suppose that a married man had a girlfriend on the side and his wife suddenly asked him the question, “Who is Angela?” By first asking “Hmm. Why are you asking that question?”, the man can better assess the situation and formulate his response based on the reply.
If his wife said:
1) “Some lady named “Angela” called and asked to speak with you. She hung up when I said that you were not home.”
His reply may then be “I don’t know anyone named Angela. It must be a telemarketing call with my name on the list.”
However, if his wife said:
2) “You were asleep kissing your pillow and mumbling the name “Angela” last night.”
His reply might change to “Oh! Angela was the name of my pet turtle when I was a kid.”…or he may realize the gig is up and start packing!
Hopefully, one will always be faithful and truthful in life. It was just a good example showing the power of “Why are you asking that?”
(I haven't thought out what would happen if someone replied "Why are YOU asking ME why I am asking that?")
We seem to be inundated with leadership and management books and articles with attention grabbing headlines such as “Management Tips from Genghis Khan” or “The Five Things Leaders Do Every Morning” (oddly, the list does not include oral hygiene or taking a “constitutional”). Most have some worthwhile tidbits but some are downright Machiavellian with focus on persuasion and influencing others to the point of playing psychological mind games.
Without over-analyzing or engaging in the latest psycho-babble, management and leadership in work and life comes down to a few simple questions:
1. How would I want to be treated in this situation? (Put yourself in the other person’s shoes.)
2. Is this in line with my values, principles (e.g. what my parents taught me), or mission statement in life?
3. What if this (act, decision, etc.) was printed on the front page of the New York Times?
The old golden rule applies: “Do unto others as you would have them do unto you.” Jesus in the Sermon on the Mount said: “All things whatsoever ye would that men should do to you, do ye even so to them.” The Mosaic law contains a parallel commandment: “Whatever is hurtful to you, do not do to any other person.” Treat others as you want to be treated (unless you are into S&M). Lead others as you want to be led. Manage others as you would want to be managed.
If something does not pass your “sniff test” and you wouldn’t be proud to see it plastered on the front page of the New York Times, then don’t do it. Deep down, you always know what is right or wrong.
Pinocchio has his pal, "Jiminy Cricket", acting as his conscience and guide. These three simple questions constantly act as my "Jiminy Cricket".
What questions provides the answers in your life?
"Accept me or kill me MacKayla. But choose. F--k--g Choose.”
― Karen Marie Moning, Shadowfever
One of the worst attributes of many managers is their inability or reluctance to make a decision. In other words: they “sit on it”. The person’s belief is that by not making a decision, he or she cannot make the wrong decision and, hopefully, the problem will go away. Perhaps, he is waiting for more data, a sign from heaven, a higher level manager to make the decision for him, or for the tea leaves to become more readable, etc. In many instances, the manager is afraid to say “no” or turn down a request.
Working for such a manager is extremely frustrating and demoralizing. It conveys indecisiveness, lack of ownership, no confidence, inability to lead, and dishonesty. Most people would rather have a leader give them an answer that they may not want rather than wait and never get an answer. It allows them to move on. Things don’t tend to get better by dragging it out. We all know of the girl who leads the boyfriend on, only to dump him in the end. Short term pain is better than long term pain and time wasted.
"Indecision and delays are the parents of failure"
-- George Canning
If you are such a manager, then make up your mind. You have a 50% chance of making a correct decision and sometimes, there are no 100% correct decisions. If you are a product manager, after getting all the data and necessary polling, you must clearly and definitively set your priorities and feature set. If you work for such a person, give them a date and spell out the consequences after that date, e.g. increased costs, missed deadlines, etc.
Being indecisive means not creating waves and things cannot survive in stagnant water.
Be bold or step out of the way.
In Star Trek, the Kobayashi Maru is a Starfleet Academy training exercise designed as a no-win scenario. The cadet crew receives a distress call from the civilian freighter, Kobayashu Maru, disabled in the Klingon Neutral Zone, and any Starfleet ship entering the zone would be in violation of the Organian Peace Treaty. The approaching crew must decide whether to attempt rescue of the Kobayashi Maru – violating the treaty and endangering their own ship and lives – or leave the Kobayashi Maru to certain destruction by the Klingtons.
Students inevitably try to save the freighter and end up not only failing to save the doomed ship, but also sacrificing themselves to no avail. In the Start Trek series, Captain T. Kirk was the first cadet to win (on his 3rd try) – by reprogramming the computer so that it was possible to rescue the ship. In effect, he changed the conditions of the test and rules of the game. (This is very much in line with Stephen Covey's first rule in the "Seven Habits of Highly Effective People": Recognize that you are the Programmer in life.)
So how many “Kobayashi Maru”s are you presented with every day when you’re told this or that cannot be done for set reasons, e.g. “It’s not part of our process”, “...outside of our Standard Operating Procedures (SOP)”, or that “You cannot fight City Hall”? One of the biggest problems with SOPs and procedures are that people treat them as something that Moses brought down from the mountain, written in stone, and unchangeable over time. Processes, rules, and procedures can and should be changed with the times. However, in many other cases, you cannot be a James T. Kirk and rewrite the rules, e.g. you cannot create a “win-win” when it is definitely a “no-win” situation, e.g. the market requirements cannot be fully met by the engineering team due to resources and time or a customer just hates your company without a clear reason.
So What Do You Do with a Kobayashi Maru?
1. Always think like James T. Kirk: “I don't believe in the no-win scenario.” When there’s a will, there’s a way. Rewrite the rules. Change the game. There was an evangelist named “Reverend Ike” who preached prosperity theology. Supposedly, when questioned about the biblical verse: “It is easier for a camel to pass through the eye of a needle, than for a rich man to enter into the kingdom of heaven.” Rev. Ike replied “A rich man can buy a bigger needle.” Leonardo da Vinci and the Wright Brothers challenged the law of gravity with flight. We talk about shifts in paradigms, thinking outside the box (apologies since I hate such clichés).
2. Destroy the Kobayashi Maru yourself - In “Stone and Anvil”, Mackenzie Calhoun realizes that it is impossible to rescue the Kobayashi Maru so he destroys it himself! He also reasons that it is more merciful to kill the civilians outright rather than let them be captured and tortured; and he assumes that the ship itself was a trap. In real life, your Kobasyashi Maru’s only suck up time and energy to your eventual demise. If your product does not meet the market requirements and you cannot get it completed, then be honest and sink it rather than waste additional release resources. If you are in a bad relationship, get out before it gets worse! (In this case, get out, don't literally destroy your boyfriend or girlfriend. It's illegal.) Too many people are afraid to tell the Emperor that he is not wearing any clothes. Emotions and people are involved so It’s a very difficult but necessary decision. Sometimes, you have to move on. In a Machiavellian world, mercifully ending the Kobayashi Maru’s will allow you to focus on better and more profitable efforts, e.g. investigating how the Kobayashi Maru got stranded to prevent future recurrences, aiding others, etc.
So don't be afraid to face and deal your Kobayashi Maru's in life.
Live long and prosper.
Do you wonder why a seemingly happy customer ends up considering or buying from a competitor? The sales engineer tells you that he never heard of recent dissatisfaction. In fact, he gave them two free software upgrades a few years ago when they changed operating systems. Where was their loyalty?
Customers buy from a company that delivers a solution for their problems and offer the best value. Customers leave or quit a company because it failed to deliver on expectations or customer service.
Matthew Dixon, Nick Toman, and Rick DeLisi in their new book, The Effortless Experience: Conquering the New Battleground for Customer Loyalty offers some fascinating facts about customer service and loyalty:
Companies fail to understand the customer journey – what the customer experiences and cares about after installation until the next purchase. Customers care primarily about two things: 1) getting things done efficiently and effectively and 2) getting their problems resolved quickly and efficiently. It means having a product or service that delivers on expectations and, in times when it does not - being able to reach someone quickly and conveniently, customer representatives who can make real-time decisions, resolving issues during the first company contact without being passed around or starting the conversation all over again, to have a company contact take ownership of the customer problem and resolution, and lastly, to keep a promise of when the customer will get a reply or resolution. Dixon, Toman, and Freeman called it "making it easy for the customer", creating loyal customers primarily by resolving their problems easily and quickly (ref. 1).
I can think of 3 companies who excel at developing customer loyalty:
I was impressed when I watched JetBlue deal with a cancelled flight in Baltimore. They offered a stranded customer the next scheduled flight out of Baltimore or another earlier flight out of Ronald Reagan Airport in Washington, DC – with JetBlue paying for the taxi ride there. The JetBlue representatives were engaged and empowered. I saw complimentary snacks and drinks on carts out at the gate for stranded passengers waiting for the next flight out. So not only was JetBlue addressing issues no. 1 (getting stranded customers onto an alternative flight), it was proactive to address corollary issues – crowded gates with stranded, hungry, and thirsty passengers.
Amazon just does it right. Most frequent requests, e.g. product returns, order tracking, cancellations, can be done online and almost instantaneously without human interaction and they reply to online inquiries within 24 hours, if not much faster. Should you have to call, there is the option to have them call you back and they will know exactly which order or situation you were calling about. In many cases, people will prefer one channel to interact, either online or telephone. People do not like to switch “channels” unless they have to and even then, do not want to repeat their needs from scratch.
The representative always seem to know your last conversation with them so you don’t have to start from the beginning…and they take care of you in one interaction.
What’s Killing Most Companies in Loyalty
1. Pushing Customer Service Efficiency. Customers can feel the pressure when a customer support representative is trying to rush and end a call at the expense of listening, understanding, diagnosing and solving the customer problem. Customers don’t get angry, they get even,
2. Compartmentalizing groups and bureaucracy – No one likes to be passed around and having to start the conversation over. The worst is being transferred and lost, then having to start over. (At the very least, companies should take down the contact information so that they can call the customer back if lost.)
3. Untrained or outsourced customer service – customers get frustrated dealing with off-shore or contract staff clearly reading from or consulting scripts with programmed replies.
4. Incomplete Product Releases – incomplete/poor documentation, incomplete help in products, un-intuitive user interfaces or operation, not fixing known bugs lead customers to initiate contact, yet these are things that could be could have been foreseen and corrected prior to product introduction. A company skimping on user training leads to more calls to customer support. Remember the saying: “A stitch in time saves nine”.
Companies are focused on innovation which, in most of cases, refers to product innovation. Product innovation is only part of the customer experience, the majority of the experience will be customer and company interactions, and those interactions will determine how the customer thinks about doing business with the company in the future.
Steps to "Make It Easy"
Companies try to profile, map the process for customers, and understand the problem(s) prior to the initial sale. The next steps (which are rarely taken) is to do similar exercises to be in the customer’s shoes when they need to solve problems after the initial sale:
1. What are the most common reasons or problems that a customer may need to contact you for assistance, e.g. product return, product assistance, down machine during warranty period?
2. How many of these reasons or problems could be proactively resolved so the issues go away, e.g. better documentation, product enhancements, including extra pieces for assembly?
3. What channels, e.g. online FAQ, online chat, telephone, are available for the customer to contact your company for assistance?
4. Flow chart the steps with company contact name and time required in each channel to get a problem resolved, e.g. steps to return an item with full refund.
5. Identify the obstacles in each flowchart (step 4) that prevent resolution with the first company contact.
So understand how a customer interacts with your company after the sale. Eliminate the obstacles. Empower your staff to solve problems instead of hiding behind policy statements. Ensure that they find it easy to get the resolution and answers they want and through the first contact.
Ref 1: Stop Trying to Delight Your Customers by Matthew Dixon Karen Freeman Nicholas Toman - Harvard Busoness Review July - August 2010
Many companies do two types of surveys:
1) Customer surveys to learn about a customer's profile or
2) Post-sales or post-installation surveys to gauge the buying and product installation experience as a means to measure the customer’s overall initial satisfaction.
The problem with surveys are that they don't necessarily provide accurate data and can be intrusive:
1. They interview the wrong people. In B2B, the buyer (decision maker) and end user is usually not the same person. I once received a very unhappy post-installation survey where the respondent complained that the system was too complex so I called the user immediately to get details and resolve any issues. The user received my message and passed it to his manager (the buyer). His manager was kind enough to reply and told me to take the comment with a grain of salt, sheepishly saying that the user was an older gentlemen who found technology, including his cell phone, challenging. In fact, they were waiting for him to retire so they could get someone else on the system.
2. People are too new or intimidated to answer truthfully. Some people just don’t know or haven’t had time to get familiar with the product.
3. There is a “Honeymoon” period where everything might be wonderful when a new, pretty looking product shows up. Asking 10, 30, 60, or 90 days after the initial installation will likely give you different results.
4. Personnel changes during the life of a product. The initially trained users who understood what they purchased may leave and new, less or untrained users take over blaming the product for any shortfalls – and their views will be considered during the next purchase.
5. You’re more forgiving when things are under warranty and you don’t have to pay to get it fixed.
6. On a scale of 1 to 5, some people never give 5's even if they experienced a "5". A "5" may equate in their minds to be the ultimate orgasmic experience which is hard to benchmark without more experience.
7. You don’t want to upset or offend the sales or service staff since you may have to work with them for the near future.
8. There are plenty of ways to skew the data. I once watched a Sales representative complete the survey form in the shipment with the customer – which made the customer very uncomfortable (the company moved to a third party survey service to avoid this from recurring).
9. People get tired and start making things up to finish surveys, especially long surveys. I was constantly pushed by a bank to complete a survey each time I did business with them. I didn't have the time nor wanted to share personal information. Yet, I felt bad for the bank customer representative because she admitted that no one liked it but that she had no choice because her manager mandated that she do this. So I answered the questions but just to appease them, e.g. Q: What are you saving your money for? A: To build a rocket ship to the moon. Q: How do you invest your money? A: Contraband. So how useful was that survey for anyone involved?
Surveys do have their place but you have to know when and how to use them, as well as be very careful with the results.
Age old question: Do you give your best discounts to new prospects or existing customers?
Every argument is legitimate. Couple them with these other arguable "axioms":
So what is the answer? Do you give your best offers and discounts to new prospects or existing customers?
Answer: It depends. You need to determine; 1) how valuable the customer is to you and 2) how flexibility the market and shopping around is for the buyer.
Customer Value means profit. Pareto’s Principle (80/20 rule) applies: Approximately 80 percent of your profit will come from ~20 percent of your customers. These are the customers who buy your higher end products and services, subscribes to updates, routine services, etc. There are other customers who do cost you more than they are worth through buying low volume/low margin products, requiring extra support, are remote, never being happy, bad mouthing you, etc. Focus on the customers who bring in the money and keep them happy. Learn to treat the others differently so that they don’t drag you down, e.g. charge zone fees for services, give priority support to your premium customers,even raise prices or minimum order levels for the less profitable customers.
Flexibility refers to how easy is it for the buyer to shop around and switch. In the home improvement business, Home Depot and Lowes are almost always near each other so the buyer can easily go the store he likes. People can now go online to make most purchases. Flexibility may be based on personal factors and the particular situation. For example, many at work buy auto insurance from an affinity company that offers direct payroll deduction. They might like another insurance company but the direct payroll deduction makes the auto insurance easier to buy and renew.
Yale University Professors Jiwonong Shin and K. Sudhir studied the idea of "punishing or rewarding current customers" in their 2008 paper "A Customer Management Dilemma: When Is It Profitable to Reward One's Own Customers?"
Their general rule is:
In only one situation do they suggest going after the existing customer base: customers with high value and high flexibility. Going after new prospects should take precedent in all other scenarios.
The "rewarding" of customers does not necessarily have to be straight forward offers or discounts during the next purchase request. In the Business-to-Consumer world, many businesses use frequent user clubs where purchases become member award points that can be redeemed in some future form. Free hotel, airline seat, or car model upgrades are reserved for high value customers.
It's a good general rule although human emotions tend to turn most situations into individual exceptions, especially when a customer threatens to go take his business elsewhere. Do try to understand whether you have a "good" or "bad" customer, cater to the 20% of your customers who make the most contributions to your purchase volume and profit, and learn how to treat your less profitable customers differently.
“I will call you back when I have an answer.”
“I’ll let you know…”
“You should hear back from us in 3 days.”
Just how many of us have heard that and we wait…and wait…and wait.
What do you think of a person or business that does that? Not much, eh?
I received my mini 360 degree feedback results* and one of the top positive characteristics that my peers and manager listed was “dependability”, “to do what I say and say what I do”. I think that has much to do with one very important habit – I always reply to people as promised.
Getting back to people when you promise is one of the most positive traits there is. If you made a promise to reply by a certain time or day – do so even if you don’t have the answer or deliverables. Just telling others the status and that you are still working on it is important and appreciated. No excuses. Unfortunately, very few people do this!
Replying to people as promised tells others that:
1. You keep your word.
2. You care about and value them or their situation. They are important to you.
3. You are transparent.
4. You are dependable and trustworthy.
Not getting back to people insinuates that:
1. You are not trustworthy and undependable.
2. The other person is not that important to you. You don’t care about them.
3. You are a liar. ("I told you that I will reply to get rid of you!")
4. You are disorganized and unable to remember/track commitments.
A person is only as good as his or her word. It defines you and the organization that you represent.
Remember that people tend to do business with those whom they like and trust.
*Alas, it also showed some "imperfections" which I will diligently work on.
Edward Koch was a beloved mayor of New York City, the quintessential New Yorker. One of his most enduring questions when encountering citizens in the public was “How’m I doing?” He’d pause to listen to the replies and then start talking. I used to see him in retirement sitting at a street cafe in Little Italy chatting and taking pictures with passers-by.
Product and Market Managers should learn to be like Ed Koch and reach out to customers to find out “how am I doing?”* You can’t just rely on sales and service for third party feedback about your products and the user experience. I followed the “Ed Koch” school of thinking to the extreme by regularly calling strategic and random customers from our installed base. (You can always take a break during each week to do this. No excuses.) Users were pleasantly surprised when someone from “Corporate” was willing to take time to call, thank them for their business, and just making sure that they were happy – without any hidden pretenses. Many times, I learned that they were happy but might have a question or was unaware of certain product functions which would have made their life easier – these were easily resolved with some instructions or a few product tips. There were some rare occasions where they were quietly unsatisfied but gave me the opportunity to make things right – I might create some software templates for free or give some training via a web meeting, They ended up as very happy customers who otherwise would have walked away in the future. Other times, they may have an issue with another business group and I would relay that information to the appropriate managers for corrective action.
What did I get in return? A personal connection and opportunity to learn directly from users about what they liked, had difficulty with, how they used the products in real life, feedback on what they would like to see in future revisions, a pulse on their business and market, as well as business referrals and customer references. I would connect with over 100 customers in this very efficient and non-obtrusive manner each year. I call that a win-win!
* I feel that every manager and every person can do a reality check with this method. It may not be with customers but with your staff, Sometimes, the "Emperor has no clothes" but those closest to him won't tell the truth.
To quote David Allen:
"Want to know one of the easiest ways to act on your creative ideas? Stop trying to hold them in your mind. Your mind is a great place to have ideas, but a terrible place to manage them."
As many of you know, I am a practitioner of David Allen's GTD system and I've used the following to illustrate life for most of us (I've always seen smiles and nods when I show this):
Here, we have Bill interrupt our thoughts at least 4 times... without a productive end result. It's natural and it's real.
So remember, your mind is for creating ideas, not to hold them. Get a system to organize your tasks and day - and stick to it...so you don't wake up and think about Bill at 2 AM in the morning.
The website 43Folders.com is a great introduction to GTD (Getting Things Done) or search this blog for earlier GTD articles.
"There's a lot of beauty in ordinary things. Isn't that kind of the point?"
- Pam's final line in “The Office”
How many of us half-jokingly feel that we are in the movie “Groundhog Day”, repeating the same day over and over? Do you sometimes just “go through the motions”? How often do you treat a person coming into your office, a phone conversation, or an email, as an interruption or just something to take care of? Have you ever been treated like an interruption?
I learned about awareness, being fully present and mindfulness from my dad - but not in the way most would think. Life changed when my father was diagnosed with Parkinson’s Disease. He knew that he had arthritis but we never told him about the Parkinson’s. I could see that his steps were getting slower and smaller, getting up from the couch was increasingly more difficult, his speech more slurred, yet he always had his smile and laugh. Each visit home was a chance to see and be with him one more time. Dad tended to repeat his stories about his past. He would regale about “the good old days”, being in the Merchant Marine, on British convoys being attacked by German subs, recalling the speed of the destroyers, working in Russia (“it was so cold that you can see your urine freeze as you pee'd”). I would always laugh and ask questions so that he could talk more. Someone suggested that I record the conversations for posterity but I just could not. A part of me felt that listening to them later in life would be too painful; I also felt that no recording would ever be able to capture how special those moments were to me. It was important for me to be fully present, to live the father-and-son moments. I made an extra effort to imprint those conversations and our connection into my brain and my heart. Perhaps that is why I can picture him on his couch right now looking at me, smiling and happily recounting his adventures.
Awareness, being present, mindfulness is the practice of paying attention to what is happening to you from moment to moment. It’s the old phrase: “Stop and smell the roses”. A manager at a major internet company sadly told me about her international travels – she hated it because all she ever saw were airports, hotels, and offices.
It’s also about respect and honor – for others and one’s self. I learned the importance of seeing each person as worthy of my undivided time and attention. I refuse to gaze over to a ringing phone or flashing PC calendar – the individual talking to me is the most important person to me at that moment. It is a privilege not an interruption. Managers (especially technical people) tend to try to solve the problem in mid-conversation, to interrupt and be impatient. I learned not to be judgmental, to do what Stephen Covey calls “Seek first to understand, then to be understood”. The same applies at home. No matter how tired I am, I try to live the moment with my family trying to imprint the time reading with my boys or just going to the playground.
It also means transparency and honesty, to only make those commitments that I can keep and to push back when I know that I cannot deliver.
“I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” ― Maya Angelou
Being present and mindfulness means taking the time to acknowledge, connect with others, to thank them, to touch base, to genuinely care about someone's family or something of importance to them, to show them that you value and appreciate them. It's about thanking the cleaning lady and returning the shopping cart at the parking lot - all people at all levels. These personal connections and conversations have led to better understanding and more productive and fulfilling relationships. Colleagues and customers have become friends and people whom I truly care about.
Finally, awareness, being present, and mindfulness means to be grateful for all you have received and to repay those who helped you in your journey. Pay it forward by helping others through acts of kindness, good deeds and charity.
The character, Jim, in the final episode of "The Office" said: "I wish there was some way to know that you're in the good old days before you leave them." Try to be fully present, aware, and mindful. What you are looking for is often already around you - you were too busy looking to see it.
Instead of a typical brainstorming meeting where either everyone sits in silence waiting for ideas to come up or Type A personalities take over and effectively shut off participation, try a “Gamestorming” session.
I used Gamestorming to:
The core game that we “played” was “Post-Up” where players generated ideas on sticky notes (3M Post-It Notes™) and shared them later by sticking them on the wall or flip charts.
How to Play:
“Fire Starting” is the 1st step in Gamestorming – create a spark or light a fire to get the ideas flowing and spreading.
Fire starting can be an open question: “How would you make Product X easier to use?”, “What would you change in Product Y?”
I went with fill-in the blank sentences since I wanted to focus on specific topics, e.g., “For Reports…I want ____.”, “For Indicators…I want______.”
Each fill-in sentence was projected on a screen (you can also write them on a board) one at a time. Each team of 2 people brainstormed together, writing each idea or thought onto a separate sticky note. Each team had their own colored sticky notes. Everyone was given a set amount of time before I moved onto the next topic via the related fill-in sentence.
After all topics were revealed, each team went up to stick their notes to individual walls for each topic and also quickly present their ideas to the entire group.
Teams often had new ideas based on what they were hearing from other presenters and were encouraged to post up new sticky notes.
At the end of the exercise, you can see patterns: sticky notes with the same or similar idea, categories and subcategories. The next step may be to create an affinity map which is to sort topics and categories (I did not since I already started with topics), prioritization of ideas, further discussion of value/effort for each idea, etc.
The Post-Up game generated literally walls of ideas, sparked some real creativity, and participants had a fun time. So try injecting play into your ideas exploration and gathering – a colleague coined my ideas on games at work as “funication” (catchy but possibly career limiting name)!
"Post-Up" is one of the core games described in the book “Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers" – by Gray, Brown, Macanufo.
Have you ever looked at a company’s activities and wonder “What does any of this have to do with getting and making a customer happy?” Show me a company that bases their strategy on internal operations, activities, and metrics and I will show you a company that will fail.
"Who Are You Competing Against?"
Improving productivity, inventory turnover and other internally focused activities alone means making investors happy, but has nothing to do with getting business. In this case, who are you really competing against? Your own old “self”! Such improvement is good, but only in the context of having a goal to gain an advantage against competitors with a set of customers - so that these customers say, "I want to do business with this company!" You need to know how to make customers happy in a way that brings about competitive advantage. Strategy is having a "where to play" and "how to win" against competitors.
You can always have a strategy to win in a certain way in a certain place. The US military changes its organization and equipment based on who and where they are going to fight. They recognized a new world order where Russia is no longer the main enemy and large armored divisions are not going to work. They changed their strategy to emphasize fast, mobile strike specialized units. JC Penny totally sunk itself (and got the CEO fired) by working on mini-boutiques, improving sales per square feet which had, arguably, nothing to do with winning customers from Macys, Target, or other department stores.
Operational Effectiveness vs. Strategic Positioning
1. Operational Effectiveness is creating, making, and selling a product or service faster, cheaper, and with less defects. You do not win on this alone in the long run nor is it sustainable since competitors can eventually emulate this.
2. Strategy or rather, strategic positioning, is about doing things that differentiate you from others for a sustainable competitive advantage. It's about doing similar activities differently or different activities from similar competitors. Great example of this: Starbucks offers high quality coffee in a bistro-like ambiance.
Remember Michael Porter’s “What is Strategy”:
1. Strategy is the creation of a unique and valuable position, involving a different set of activities.
Strategic position emerges from three distinct sources: 1) serving few needs of many customers, 2) serving broad needs of few customers, 3) serving broad needs of many customers. In other words, find niches.
2. Strategy requires you to make trade-offs in competing—to choose what not to do. You cannot be all things to all people. As one of my programming colleagues said when I pushed him too hard, “We can do anything. We just can’t do everything!”
3. Strategy involves creating “fit” among a company’s activities. McDonald’s tested McPizza and customers just were not willing to wait (it’s supposed to be “Fast” food!). Pepsico owned KFC, Pizza Hut, Taco Bell but spun them off to create YUM! - just did not allow them to focus their activities.
So always know who you're really competing against, know your strengths and weaknesses, look for niches, and be disciplined not to bite off too much when formulating your strategy.
In life and Sales, there exists the Zone of Possible Agreement. The Zone of Possible Agreement is considered an area where negotiating parties may find common ground - where parties will often compromise and strike a deal. In a traditional sales negotiation, it is defined by the highest possible price that the buyer is willing to offer, and the lowest possible price that the seller is willing to accept. (Remember that ZOPA is not necessarily just about price in terms of money. It can include other terms and conditions.)
Suppose that you want to sell a product that costs you $18,000. You calculate that you can reluctantly let it go at the break-even sell price of $20,000 but would like to sell it for $30,000 to meet target margins. A buyer wants to buy it for $15,000 but is willing to pay up to a maximum of $25,000. The ZOPA where both buyer and seller can negotiate within would be between $20,000 to $25,000. You (the Seller) would not entertain a bid at $15,000 because you would lose money and the Buyer would not consider your asking price of $30,000.
Beware the dangers of not understanding the ZOPA. If you, the seller, start your offer at $40,000, so far outside the buyer’s ZOPA, the buyer will walk away since he or she may think that any discounting will never reach their buying range. The Seller had demanded too much and shut down negotiations. Likewise, the Buyer may make such a starting bid so low that the Seller might not think that he/she is serious and decides to walk away.
In Sales, a negative ZOPA exists when the walkway points of both parties are too far apart with no common area of overlap – a negative ZOPA. With a negative bargaining zone both parties may (and should) walk away.
If we study the current North Korea standoff, we see this negative bargaining zone. North Korea’s current walkaway point is that the US and world must drop sanctions before talks. The US walkaway point is that N. Korea must abandon pursuit of nuclear weapons.
Moving a ZOPA
Can you move the ZOPA? Yes, but it requires combining common interests to create a “win/win” for all. I, as the Seller, might be able to offer a demo or refurbished version of my product at a slightly reduced price which reduces my break-even sell price. The Buyer may be willing to offer me a testimonial for my promotional material or offer to buy in volume to reduce the Seller’s transportation and installation costs.
Likewise, a Seller or Buyer can shrink a ZOPA by adding terms and conditions during negotiations. True Story: A couple was getting very serious about marriage. The woman kept mentioning “little” things which got the man’s spiderman senses tingling (their ZOPA was shrinking). Finally, she mentioned that she would be in charge of their future finances and ration him $50 per week – their ZOPA went completely negative and he ran for the hills...and is still running.
One of my most enlightening, bitter, and humbling career lessons was from the release a new product line. I had joined a project where the specifications were already defined with my predecessor. Just before the end of the project, the concurrent development team arranged a showing of one of the prototypes to some visiting and internal staff. This was done partly out of courtesy and also because of our confidence and pride in what we developed. The team was shocked when one of guests reacted very negatively to the aesthetics, specifically the placement of a module, despite our technical, cost, and time explanations and our belief that customers did not care (no particular customer benefit could be perceived). In fact, our previous generation products and those of our competitors had the same placement. Yet, the objector was influential enough to sway the rest of the reviewers to take his side and force a design change. I was livid and felt that, as the product manager, I had let the team down. Relocation meant more costs and delays. The team also felt that they were not empowered to make what they considered a relatively minor design decision.
What were the lessons? You have to know who your stakeholders are and you have to communicate with them as much as and as early as possible. And don’t rely on emails or written project minutes for this purpose. I was unaware that the objector had such influence and sway to sidetrack our project. It did not matter if the team decision was 100% right. It did not matter if it was rather petty (at least to me). It did not matter that there were objections from others later about the new module location when we did another preview of the redesigned prototype. I had to take fault and blame for failing to do my due diligence as a product manager. I assumed too much and communicated too little.
Identify the stakeholders, the influencers. They may be strong personalities, people held in high regard or fear. It does not matter, you need to work with them. Touch base with them early on to understand whether they care or not. Be transparent. Communicate extensively and regularly with those who do care to ensure that you have buy-in. Talk to them. Yes, this will slow things down in the short term and take more effort since everyone has an opinion and perspective, especially when it comes to aesthetics and product names.
Only the likes of Steve Jobs are truly empowered (and brilliant) enough to not worry about others when developing products and making decisions - and we are not Steve Jobs. Some of your stakeholders may think that they are…but that’s another story.
Every company is concerned that customers cannot see how their product and services are any different (better) than that of the competition. If so, the buying decision will be based on the lowest price. If you cannot distinguish yourself, then you have reduced your product to a commodity and in the words of my favorite professor, Dr. Arnoldo Hax, “Commodities exist only in the minds of the inept!”
First, stop focusing on your competitors and base your strategy around the customer. If you constantly look at and compare yourself to the competition, you end up basically copying each other – you may try to “one-up” them with a few new features or offerings but really have no major differentiation. You simply react. That is how commoditization happens. In this way, most Windows PCs have basically become commodities. They can all run Office, go on the internet, etc.
You must understand your customer and their environment. The customer must be your driving force and you create a value proposition that is unique for them, that distinguishes you from the others. In some respects, you are creating multiple niches – what Hax would say is strategy done one customer at a time. No two customers are exactly alike or will use your product in the same manner. Let’s go back to Windows PCs as an example. Panasonic was able to recognize a specific customer persona and market need in law enforcement. Two thirds of the 420,000 patrol cars in the United States today are equipped with the company's rugged Toughbook computers.
Make Love, Not War
So instead of a strategy focused on war (focused on beating the competition), go for a strategy of love (focused on embracing the customer).
Think about strategy on a more personal level. Did you pursue and win your wife or husband by focusing on your romantic rivals? No, you were focused on what your future spouse liked, what she/he cared about, and turned yourself into the most creative value proposition that blew away your competition!
Arnoldo Hax’s Delta Model is one of the best for looking at different customer, centric strategies. The Model shows a wide range of potential strategies – all pointing to the use of technology to promoting bonding (with customers, partners, etc.).
The range of Delta Model potential strategies include:
· Low Cost – Southwest Airlines, Walmart. This is very difficult since you must have the correct infrastructure and operations to sustain it.
· Best Product – best technical features, superior in performance, etc. Apple arguably has a number of products in this area.
· Redefining the customer experience – Amazon (both Amazon.com and via the Kindle), Starbucks, Apple iTunes, Singapore Airlines. This is an appreciable change in the customer value proposition.
· Customer integration – SAP, UPS, Fedex are tied deep into many companies’ IT, manufacturing.and logistics.
· Dominant Exchange - Google, YouTube, Facebook, Wikipedia, iTunes are the defacto paths to browse, see videos, network socially, research, and sell/buy music respectively. Dominant exchange is achieved when a critical mass of collaborating users (“complementors”) is reached and each new user makes the service even more useful (e.g. YouTube, Facebook).
· Horizontal Breadth – Fidelity, Amazon offer “one stop shopping” for financial products and very much all products respectively.
· System Lock-in - Intel, Microsoft very much own the microprocessor and operating systems in PCs. Apple owns the tablet market with Google Android moving in. Amazon is pursuing lock-in with e-content via Kindles and cloud. System Lock-in is the strongest form of bonding and integration among complete industries around a product (e.g. all the software companies developing Windows specific solutions). It focuses in the entire system economics instead of product-centered economics. Success is due primarily to the complementors that create solutions based on your product.
Strategies based on Best Product or Low Cost are the most difficult to sustain. Dominant Exchange and System Lock-in strategies are the most sustainable because they involve the complementors and the whole system.
You can see the Delta Model strategies being used in companies today. Amazon is a dominant exchange in ecommerce and becoming the dominant exchange in e-reading with the Kindle (ultimately, e-media content with streaming & Cloud). Apple is covering many of the strategies with arguably Best Product(s), Redefining the customer experience, Dominant Exchange, and System Lock-in. Google is arguably Best Product (browser and analytics), Dominant Exchange, customer integration (Analytics), and also moving toward System Lock-in with their Chrome browser and Android.
All of the companies mentioned are aggressively using technology to enable their strategies. How does Walmart achieve a low cost strategy? Technology is the foundation of their supply chain. Walmart has the largest information technology infrastructure of any private company in the world. Walmart can accurately forecast demand, track and predict inventory levels, create highly efficient transportation routes, and manage customer relationships and service response logistics through its network.
So remember: Focusing on the competition will have you constantly looking back over your shoulder; a customer-centric strategy will have you looking forward. You must take advantage of technology to employ your strategy.
Successful project or product teams have people who share a common mission, have a sense of ownership, are committed, get along with each other, and willing to fight for the team’s success. As a team member from Marketing and Product Management, I have to be cognizant of the team’s resources and guard against feature creep that will throw off the delivery schedule, yet stay aware of changing market conditions and technology that may require some change in specifications. I also have to defend and sell decisions made by the team to others. Likewise, I expect other team members to do the same from their perspective and function.
How do most teams usually get created and work? One would think that choosing members for new project and product development teams was modeled after the military - the military draft system. Members are usually selected from various departments by their managers based on availability, knowledge and expertise. Sometimes, new members are selected so that they can gain team or project experience. They are almost always a mix who have other duties and objectives.
Due to the process, what’s interesting (and ironic) is that teams usually gain the most cohesiveness and team members really get to know each other personally…at the product or project release celebration – when it’s all over!
It would make a lot more sense to have a team get-together BEFORE the work begins. Have some team building exercises off site, a team lunch/dinner/trip, etc. so that people can gather informally to get to know, understand, and trust each other. It doesn't have to be expensive or formal. Go bowling, play mad-libs...you want the team spirit at the beginning, not just at the end!
I received sad news that a long time mentor and someone whom I looked up, Thomas Kennedy Sr., had passed away. Tom was the first sales engineer whom I travelled with. He taught me about life as well as sales. I still remember his first words to me when he picked me up in Chicago in his company car with his arm stretched out over the passenger side headrest, “This is how I drive, I am not getting fresh with you.”
One thing that seemed odd during our first trip was that Tom called his wife and ended the conversation with “I love you”. It was all strange to me because I had never heard my parents say that to each other (at least not in front of their children) and I thought that only younger couples would say that. (Asian families tend to hold back on positive emotions.) I asked Tom why he said that to his wife and he simply replied that he always ended their conversations with those words and because he meant them. Over the years, I learned more about Tom and what the most important things in life were. Tom was a hard worker and also a good man who was kind, truthful, and caring. He talked fondly about his wife, children, and grandchildren. I learned the wonderful story about how he hitch-hiked a ride from a couple when he was in the army – they introduced him to his future wife and became his in-laws.
In many ways, Tom was a father to me. I thought hard about what great, insightful attributes that my real father and my “Irish American father” had so - that I could write about the leadership skills that they taught me. I could not think of any.
What they taught me is far more important.
When we pass away, no one will talk about how many companies you took over, how many people you supervised, how much money you made, or how many consecutive quarters that you beat plan. Your eulogy will be about how good a husband or wife, a father or mother, son or daughter, sibling or friend you were, how many people you helped along the way, and what difference you made to others whom you touched.
A Shameful Lesson from My Past
I worked in my father’s restaurant in my youth and worked in the kitchen for a while. One night, I complained to my father that a dishwasher named “Ah Bun” was slow and should be fired. Ah Bun was old and I could wash dishes twice as fast as him. I felt that he wasn’t pulling his weight. My father looked at me and said, “Son, you need to think about his situation. Do you notice Ah Bun’s facial complexion? He suffered serious burns in an accident a long time ago and is trying to make enough money for medical treatment. Ah Bun’s life is not easy. You need to think about others.” Shamefully, I didn’t think or care about “Ah Bun” as a human being or learn about his situation.
Now years later, I continuously undergo “leadership training” and read about the latest “5 Things that All Great Leaders Do”, etc. I can say that the majority of leadership and management teachings lack compassion and the human element. I hear about people laid off with their CEOs telling them that “It’s nothing personal”….yet, I cannot think of anything more personal to someone losing his or her job. Jack Welch (aka “Neutron Jack”) is admired for his “business skills” – any idiot can let go of people to balance the books. When Jack became CEO in 1981, GE had 411,000 employees. When Welch left 20 years later, it had just 313,000 employees. GE lost nearly 100,000 jobs during a tenure that spanned two of the most robust periods of economic growth in American business history. Yet this is the guy who people read about for leadership.
While we continue to talk about UI, UX, CVP, Branding, Price Elasticity of Demand, please remember to laugh, to love, to care, and make the lives of those around you a little better. Think about what you want people will say about you at the end of your life - and live accordingly. As my father admonished me, "You need to think about others".
(I hope that you're knocking a bucket of golf balls up there, Tom.)
Frank Lio is a Product Manager, Strategist, and Change Agent in the Hi-Tech industry. His growing track record of successes include creating 3 winning software products, leading nationwide seminars, and turning around a failing business unit. He is currently serving a dual role as Product Manager and Business Team Support Manager at Instron ITW.
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