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.
At some point, after the information search process, a prospect gets down to comparing products and services based on particular attributes. This phase is called the “Evaluation of Alternatives or Options”.
Customers break down their buying decision criteria into basically 3 three interconnecting realms:
A - Crucial – These attributes must be available or no sale, e.g. a family may consider side air bags to be a requirement in an automobile purchase
B - Important – Features or functions still considered as priorities but some substitution may be acceptable.
C - "Nice-to-Have" – Incidentals which are a plus but to be strictly considered as bonuses in the overall buying process. For example, a copy machine may make coffee but that usually will not factor into the purchase criteria.
During the evaluation, the buyer will place different levels of importance with each attribute, e.g. safety, performance, ease of use, cost of ownership. The buyer will evaluate and rank how each brand rates on each attribute. Much of this evaluation may be highly subjective. The attributes and order of importance may be based on a customer’s particular set of problems that needs to be solved and past experience. Marketing and Sales may influence the list and order by raising unforeseen problems or benefits tied to solutions based on their product* attributes. Advertisements, Case Studies, and Buyer’s Guides are just some of the tools to influence the Buying Decision Criteria.
A Seller must understand the buying criteria from a customer’s perspective and honestly assess how their products fulfills the attributes in addition to how aligned their attributes are with the buyer’s order of importance. This also applies to assessing their competition and alternate sources.
I find the diagram above to be a clear and simple way to illustrate the customer’s buying criteria relative to one’s own product and the competition:
You will quickly see what the Buyer perceives as your strengths and weaknesses in comparison to your Competition.
From here, you can take action. Tactics may be to raise the order of importance for your unique attributes if they rank lower on the Buyer’s list, improve your offering to match the Buyer’s list and order, or exploit any competitive weaknesses in comparison to your attributes and ranking. Another important consideration is to reflect upon whether your product(s) and offerings are out of step with the market and really need technical improvement to be competitive.
* Attributes may be more than product related. They may be service support, installed base, name recognition, etc.
Blackberry recently placed a paid post on LinkedIn with the comment that “We’re not the only ones questioning Knox’s security” and a link to a research article criticizing Samsung’s Knox security platform for Android.
The reader reaction was decidedly mixed and swift. Almost half the comments were negative:
Notice that the readers weren't even questioning the validity of the post or linked article (Blackberry could have been 100% correct) - they strongly objected to the delivery. Although Blackberry's target, Samsung, is not a little underdog, the audience sensed a lack of fair play.
The lesson is that outright negative selling and trash talk leads to a double edge sword. People generally don’t like it and are put off. It makes the seller look petty and small. Always strive to highlight and discuss what makes your value proposition better and present your differentiation in a positive manner without disparaging the competition.
The same applies to your personal life. Don't talk negatively or take cheap shots about others behind their backs. Stephen Covey advised that you always speak about others as if they were present. Otherwise, your listener(s) will think that you will do the same to them when they are not around and view you as one not to be trusted.
So I also left my humble comment with Blackberry:
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
One of the top buzzwords today is “innovation”. Many equate innovating to pioneering – being the first to market, creating and dominating a new product segment or business model. It’s true that some real innovators, e.g. FedEx, SouthWest Airlines, Amazon, have created some truly successful businesses but these are exceptions rather than the rule. Just like pioneers in real life history, most get shot down by arrows in unexplored territory. The truth is that timely and effective execution of an adequate imitation is more important than innovation.
Pioneers do have a market advantage if they can lock in key customers, suppliers, or intellectual property (e.g. patents). The key is to build up market share, brand awareness, and an ecosystem that hinders upcoming competition. YouTube and LinkedIn have done this and have become dominant exchanges. In other instances, it pays to wait and learn lessons from earlier players. The pioneering Osborne was the first successful personal computer - widely imitated and then overtaken by several other computer companies who improved on deficiencies.
The paper “Entrepreneurs' Decisions on Timing of Entry: Learning from Participation and from the Experiences of Others” written by Moren Lévesque, Maria Minniti, and Dean Shepherd in Entrepreneurship Theory and Practice, Vol. 33, Issue 2, March 2009 states that the decision to be the pioneer depends on how “hostile” the learning environment is - how much entrepreneurs can learn by observing other players before they launch compared to what they learn from participating after they enter.
Patrick Barwise, Emeritus Professor at the London Business School, wrote in The Myth of Pioneer Advantage, that in new markets, it is not the pioneer but what he coins as the “fast follower” who reaps the rewards, specifically the fast follower with “a mass-market perspective, willingness and ability to invest in scale and marketing, a focus on customer understanding and continuous improvement, and an existing customer base. The follower learns from the initial market response to the pioneer’s offer, improves that offer, scales up production and distribution, reduces cost, and builds a dominant market share during the new category’s critical early growth phase--which it also helps to drive by investing in marketing as well as in distribution and production. Once the successful follower has established market leadership, it can (and should) aim to be the “first mover,” with relentless incremental and adjacent innovations, to sustain its lead. At that point, there is an advantage in being the first to innovate.”
A perfect example is the famous story of how Bill Gates got rich. Gates started by licensing the DOS operating system software to IBM - software originally named QDOS that Bill Gates actually bought for $50,000. IBM engineers then debugged it further for market release and IBM/Microsoft did all the steps outlined by Professor Barwise to mass market DOS as the dominant PC operating system. Microsoft arguably took steps to also become the “first mover” by incremental updates and to DOS, then moving to Windows 3.1*, etc.
Innovation is critical but effective imitation and timing should never be overlooked. The early bird can catch the worm but the second mouse gets the cheese. It is a matter of situation and timing.
*One may argue that Microsoft stole the Windows GUI from Apple. This still supports the “fast follower” concept (and it could be further argued that Apple was a fast follower who imitated Xerox PARC for the mouse and GUI).
Here is a fine example of user innovation which brings back painful memories. We talked about “User Innovation” – innovation by intermediate or end-users, rather than by the producer or original designer.
Recall Prof. Eric von Hippel's research: many products and services are modified by users to meet their particular needs. Modern manufacturing is based on economy of scale so products are developed to meet the widest possible need. When individual users face their own “unique” problems, they develop their own modifications to existing products (or new products) to solve their issues. Users readily share that with the producer or other users in hopes that their changes and ideas will be incorporated into the product.
Case Study: The Feather Duster
The unassuming feather duster is used by most of Western society for dusting. Ah, but the Chinese mother has literally “turned it around” - into the child disciplinary tool of choice. The parent comfortably grips the feathers while whacking the child with the bamboo or stick end. I have never seen my mother use the feather duster for dusting…but I was very well acquainted with the stick end. Many Chinese parents have used the feather duster to the point of bending or breaking the stick while permanently compressing the feathers with their tight grips. My mother must have replaced at least 5 feather dusters because of me. (One replacement was due to my attempt to surgically saw a duster stick just enough so that it would break the next time it was used. Unfortunately, I sawed it all the way through which really upset my mom - leading to a serious beat down after she bought 2 new feather dusters, always keeping one in reserve for the future).
I never liked or understood this user innovation. Nor did I understand the warning that followed to “Stop crying or I will give you something to cry about” (I’m crying because you just beat me with that stick so you’re going to beat me some more because I’m crying? Talk about a “vicious circle”.) Now, of course, my mother as the grandmother of my children admonishes me to never physically punish her grandchildren: “You should always reason with them. They’re young. It can hurt them physically and mentally.” To which I reply: “Hello? Have we met? Who are you?! Don’t you remember beating me with that feather duster?” And my mother’s final reply would be “Well, you were a different case.”
Note: There is an actual Facebook group named 'My Chinese Parents Used to Beat Me with a Feather Duster'.
What is a key tool that the FBI uses for catching criminals? They profile them. You may have seen this on TV shows such as Criminal Minds with a a team of profilers from the FBI's Behavioral Analysis Unit (BAU). They analyze the minds of offenders to understand their motivation, their "M.O." (Method of Operation) and anticipate their next steps. As a marketing or product manager, you should be doing the same with your customers or target users.
You must know your customer before you can sell to them. Customers use products in different ways, have different problems to solve, and work in different environments. You need to have a 360 degree view of the user, putting yourself in his or her shoes, to understand their mindset, unique problems, and operating process. We call this the “User Experience” (UX). User experience is real insight from empathy and data; it is a critical way to differentiate from competitors. “User Experience” helps you create the “Product Experience” – how to differentiate your product to win and delight the user.
Key questions to understanding the user include:
1. What is The User Perspective?
2. What are the Personas & User Scenarios?
3. What’s the real need/opportunity?
4. How do/might they actually behave?
5. What motivates them?
6. What’s their environment?
Basically,, you are trying to learn the "Who, What, Where, When, and How" someone uses a product.
Your research will help you create User-centric models. User-centric models represent your users, the things they do related to your products, the things they need to accomplish with your products, and their relationship with your products.
User-centric models help your product teams:
1. Focus on the user at all times (not on the product)
2. Provide a common understanding of who the user is and what is important to them
3. Illuminate how your product will interact with the user
4. Minimize subjective debates about what features are important to users
If you have an (or more than one) easy-to-understand model that represents your user, based on research, you will be more efficient and effective in making design decisions. Two user-centric models are: Personas and Experience Maps.
Personas represent your end users. Each persona has tasks, behaviors, and motivations that your users perform that help your team make the best possible design decisions. They put your design team in the shoes of real people using their products. For example, one persona for a camera product may be a “Fighter Pilot” – A professional who knows photography and likes to play around with lens, lighting, wants total flexibility in configuration, likes connecting to other software for editing, output. A different user persona would be the “PHD” (Push Here, Dummy) – A weekend user who just wants to take family photos, does not want to fool around with settings, wants things to be as automatic as possible.
Process / Experience Maps
Process or Experience maps show how users interact with your products – you see the phases in their workflow, interactions with other people or processes (who the product “touches”), the pain points, bottlenecks, opportunities, etc. Process maps provide a high level, strategic look at how your products fit into the user’s lives and help you understand the broader context where your product is situated. No two maps typically follow the same format or layout, but they often contain a few key components: phases in the journey, touch points, pain points, and opportunities.
How to Create User Personas and Process / Experience Maps
Observing users in their environment is one of the best methods for learning the various User Personas and creating their unique Process / Experience Maps. Some called these “VOC” (Voice of the Customer), OE (Opportunity Evaluation), etc. Create a list of questions for the various users. Ask open ended and closed probing questions, e.g. If there was one thing that we could eliminate in this process, what would it be? What keeps you up at night? Who is the actual end user…an internal or external customer? Many recommend having 3 people for such visits: an interviewer, a “wing man” to observe and jump in when the interviewer gets lost or misses an important follow-up, and a scribe who usually frantically writes down everything he/she hears. (There’s a whole procedure for “Voice of the Customer” which we will discuss in the future.) Create the user experience map with your users to see if they agree with the interaction and flow.
Training customers in their environment is an other excellent method - you'll see the daily interactions, disruptions, and what they actually do versus what they say they do (not necessary the same). Involve your Sales and Service staff to help develop and refine your models.
Segmentation - Different Strokes for Different Folks
Don’t forget to apply segmentation in each of these exercises. Segmentation may be based on user attributes (gender, income, age group, market segments, regions, etc.). 18 year olds don’t necessary behave the same as 30 year olds so you want to create user personas and process/experience maps for these distinct groups. You may further “slice and dice” the segments further, e.g. 18 year old girls vs. boys, to get better understanding of the target user.
Product teams often get narrowly focused on a particular product, or feature set within a product, and lose sight of the complete user experience. User personas and process / experience maps help teams keep their eye on the big picture and generate new, innovative ideas to help make the experience better.
A very entertaining introduction and summary of UX Design is embedded below:
"Who is your Rabbi?"
During the early 20th century in New York City’s Lower East Side, Jewish voters of particular neighborhoods would vote in blocks. You would know who a Jewish voter would vote for by finding out who was his rabbi. The rabbi thus became very politically powerful, with favors owed to and doled from him. Hiring halls would assign work based on your answer to “who is your rabbi?”
In life, you need to find your modern day rabbi – your mentor(s).
What is a mentor?
- Someone willing to tell you that you are wrong
- Someone who has been where you want to go
- Someone who holds you accountable
- Someone whom you admire, respect, and trust
- Someone who genuinely wants you to succeed
- A guide. Your Yoda.
- A sounding board
How do you find a mentor?
Just look around and ask! This can be a colleague or manager, someone at your company, someone you met at a conference, church, old classmate, etc. The worst that can happen is that they pass on the opportunity so don't be afraid to ask (at the least, they'll still be flattered).
It’s difficult to go through life and navigate alone…so go find your rabbi(s). If you are in a position to mentor someone, then pay it forward. (The more you give, the more you get back.)
I attended the awesome SASE (Society of Asian American Scientists and Engineers) Conference as a representative of ITW - the keynote speakers and workshops all emphasized the importance of mentors. SASE's Executive Director, Khanh Vu, asked me to spread the word about their new video on this topic, so here it is:
Thank you, Dr. Dennis Howling, Thomas Kennedy, Ken Andersen, and Dad for being my rabbis.
Now how many of you think that you can multi-task - do many things at once?
Really bravado, macho, power thing to do, eh?
Research shows that you cannot multitask. Think about machines - it is physically impossible to multitask with single processor PCs; they simply switch very quickly between tasks. Humans have a single processor CPU - you can't process more than one thing at a time with your brain. (Some woman argue that men think with their other organ but we will leave it at that.)
It fact, it takes 6 minutes to recover and switch back to a task when interrupted.
Your IQ also drops when you multitask:
- Your IQ drops 5 points every time you get stoned.
- Men’s IQs drop 15 IQ points every time they multitask.
- Women’s IQs drop 5 points every time they multitask.
So do the math, trying to multitasking is comparable to smoking a joint!
- Focus on one task at a time.
- For larger tasks or projects, break big tasks into little tasks.
- Set aside time to concentrate and work.
- Use the “Seven Habits" Time Management Matrix (above)
-- Work on Quadrant II, avoiding Quadrant III and IV
-- Work on important tasks that contribute to your mission, values, and are high priority goals
-- Avoid working on non-important, trivial time wasters
- Begin with the end in mind – take a few minutes before you start to sum up the task:
– what your goal is, what needs to be done
-- how it will be done
-- who you need to interact with to get it done
-- the estimated time and effort
United We Stand, Divided We Fall!
One of the problems for many companies with different business teams and Product Managers is the danger of “turf battles”. Each group and manager has their own set of priorities, view of customer needs, maybe even different target customer, and thus, different product strategies. For example, Service may be a separate profit center measured by revenue so they may seek to raise maintenance and support prices based on their perspective that the installed base is captive (since the products have proprietary parts, firmware, etc.). However, a prospective customer may look at the lifetime service costs and total system price as part of their initial decision process and decide not to purchase the product(s) based on the high annual service cost. So the company, as a whole, lost the initial product sale and future service revenue. Sales may try to save the initial sale by deeply discounting which results in a lower profit margin – and then the product may be viewed by upper management as a low margin product not worthy of future investment. This can start a vicious cycle. The company is competing against itself and acting like a ship with many rudders.
Think of this as a country going to war (and you are going to war against your competition). You can't have the Navy, Air Force, Army, and Marines each deciding their own targets and strategy - they need to know who the target is and share the overall strategy and mission. You then allocate the bulk of your resources to get that done. Whatever is left over can be used for their projects, maintenance or other purposes.
What happens when companies have individual product managers setting individual product strategy? The result is:
1) Limited resources are spread even thinner.
2) Short term thinking wins. He who generates immediate revenues gets the attention of upper management.
3) Everyone fights for Sales mindshare and the best product does not necessarily win.
4) Products lack commonality and rarely share the same user interface.
5) Sales people end up selling product features, not value propositions or benefits.
6) Engineering gets to decide the product priorities. Many times, the “sexiest” or most exciting project for them wins.
7) Mixed or conflicting messages to Sales, prospects, and customers.
So how do you prevent this?
An organization must align with the customer and develop its strategy around customer alignment.
You focus on the target customers and put yourself in their shoes:
1. How do they buy?
2. How do they budget?
3. Is service money a separate annual budget?
4. Who ate their customers (internal and external)?
5. Who are the key players/influencers?
6. What does the customer want to do?
7. How does the customer want to accomplish this?
8. What does their current work flow/process map look like? What would they want it to look like?
9. What’s critical, important, or minor in importance to them? Today? Tomorrow?
10. What keeps your customer up at night?
11. What are their priorities and initiatives? Today? Tomorrow?
12. What current or future events, e.g. regulations, market forces, technology, can affect them?
13. How much growth is in their business or market?
Once aligned, you set your strategy based on “the big picture” – a portfolio of products and services designed to show that you understand the customer, the problem(s), and have the total solution with the best value propositions.
Customer Alignment provides:
1) A true overall understanding of what a target customer values.
2) A true understanding of the revenue streams.
3) Knowing where the real growth and potential are.
4) A unified & clear overall product portfolio strategy & direction for all.
5) Common branding.
6) Use product breadth as a selling point – one stop shop concept.
7) Better prioritization of resources.
8) Better control of sales negotiations with overall package pricing and discounts.
9) Engineering focused on how solutions developed versus which products to work on.
10) Easier for Sales to focus on selling solutions and benefits.
One of the best companies in customer alignment has to be Amazon. By understanding what a customer wants, they introduce the Kindle family at an attainable price and know that the real money is in advertisements, ebooks, and streaming media. The Kindle hardware manager isn’t trying to make an obscene profit (maybe no profit in this case) and Amazon wins by aligning not just with one customer but two – the tablet buyer and the advertisers whose ads appear on their discounted ad subsidized tablets!
Sensemaking and Mapping
Imagine that you are suddenly transported and standing on a street in Topeka, KS for the first time. What is one of the first things you do (other than cry because you are in Topeka, KS)? You look at a map to see where you are relative to everything else. And what do you do if your map leads you astray, appearing more and more incorrect as you use it to navigate? You start confirming places by your own walking around, ask people for directions, show the map to locals to validate it, and then finally toss it, redraw it, or get a new one. If you don't have a map, you'll still go through the same steps to create one and validate it.
One of the most important skills in product/project management (and any management) is learning how to make sense of your environment and map the situation.. “Sensemaking” is what I consider the first skill for a leader - Karl Weick describes it as organizing the unknown so we can act upon it. It’s an absolutely necessary skill in a complex world where things are in constant flux - what used to work no longer does due to new technology, market shift, etc. Sensemakers do not "shoot from the hip". They do fact-finding, gather as much input as possible, involve others in getting the "big picture" and watchful for changes. As Stephen Covey said, "Seek first to understand, then be understood".
One person whom I greatly admire and had the privilege to work for was Jim Garrison, the former CEO of Instron. Jim was CEO of H&R 1871, a manufacturer of shotguns and rifles, and became CEO of Instron, a high tech company and manufacturer of test instruments. It’s hard to see the connection between guns and test equipment. One of the first things that Jim did was travel to meet with sales, service, employees, and customers worldwide. Nothing drastic as a start – just intensive data gathering without bias. Colleagues worldwide called me with amazement that the new CEO was actually listening and actively soliciting their opinions. Departments were actually excitedly waiting for their opportunity to share their thoughts and observations. Generally, higher-ups tend to sit together at lunch. Jim made a conscious effort to sit with everyone (and it was noticed by all). Jim even reached out to the retired founder of the company! Only after fully getting the "big picture" did Jim Garrison take steps to change and improve the organization. Instron grew under his leadership with huge improvements in quality, processes, and customer satisfaction.
I learned from Jim when I took over “Dynatup”, a small impact instruments business unit that my company acquired. Two previous managers came and left. I knew nothing about Dynatup, impact testing, the products, customers, or people. So the first thing that I did was keep my mouth shut to hide my ignorance and embarked on sensemaking to create a map.
How to Sensemake and Map:
1. Seek out as many different types of data and sources as possible. I spoke with every possible person who could provide information so that I could make some sense of what we had and where we were – the upper management who acquired the new business, past and present customers, and every person who was working in the acquired buiness – including the manufacturing staff, sales, service, as well as external research, e.g. external professional groups, competitors, etc. No one can give you a better perspective on quality than the people assembling, servicing, and supporting the product.
You can get some very conflicting information but the different perspectives are real. For example, one existing product had a controller on an articulated arm which swung in and out. It was very difficult and expensive to manufacture, but advertised as a unique feature. Every existing user bluntly told me that they hated that articulating arm – it constantly got in their way!
2. Put aside your own prejudices and beliefs. Be totally open...no blinders. Practicing empathic listening, learn to understand the perspectives of others, why they feel the way they feel, and also what’s important to them. I learned that the employees had tremendous pride in their history and products but felt aliened like a foster child – they also wanted a manager who was committed and would stay. There will also be some very negative and downbeat data from "naysayers" that should still be accepted at face value until you can validate and sort things out.
3. Think like a shrink - ask alot of questions (especially open ended questions). "What do you think of x?" "What do you think we should be doing?" "What can we improve to make your life easier?" The people on the "front lines" see and hear things that we would never know. Once people realize that you are genuine in your interest and really care about them and the topic, they tend to open up and give you information that you wouldn’t have even thought of asking.
4. Involve others as you go through the exercise. Practice humility. No man (or woman) is an island so I constantly went back to my sources to confirm what I thought I heard and understood.
Why? 1) I sometimes misunderstood or filtered information, 2) I was able to validate and refine my slowly forming map of the situation, 3) I had conflicting data which needed to be resolved or understood, and 4) I gained trust from others by demonstrating that I listened and respected their opinions and perspectives.
5. Create the Map! Make the map as you get your questions answered and information starts falling into place. You have to see the forest, not the trees to get the big picture. Then go back to #4. Look for common trends and patterns. What I learned from all my information was that we had acquired a niche business which meant operating in an entirely different manner. The conventional structure and processes could not be universally applied. We re-organized our unit to operate like a niche.
6. Walk the Talk. Validate your map by experimenting. At some point, you start taking action. Otherwise, you will be forever gathering and drowning in data and you will frustrate everyone for wasting their time, (How many of your customers or staff get turned off and negative because you constantly ask them for input but never follow up? Don't ask if you are not going to do anything about it.)
Start slow. Christopher Columbus would have fallen off the world if it was indeed flat...so Spain was smart to send just 3 ships with an Italian to test that map. See how accurate your map is and where the boundaries are. Going back to our Topeka, KS example, you walk a block and then see if you are in the right place on the map - you don't run down 10 streets and then check. So experiment before you bet the farm, e.g. if you think that your market can bear a price increase, start with one region or product. Nail it, then scale it (up).
7. Continually sensemake and refine your map. People have driven into buildings because their GPS maps were out of date! Keep an open mind as you use your map. Markets, customers, competitors, technology change so you always ask questions and seek input with a fresh set of eyes. IBM was able to sense that selling only mainframes and hardware was a losing proposition and have successfully transformed into a service business. Dell may not see the new map that PCs are turning into a commodity business with some very strong Asian competition. Your maps will constantly chnage in a dynamic world.
Credit belongs to Dr. Debbie Ancona at MIT Sloan for introducing me to Sensemaking. A link to a detailed article is linked here.
Happy Father’s Day to me. I celebrated Father’s Day by spending a day with the boys at the playground and at home while my wife went out. (She has them for the whole summer so she can use the break.) I really sincerely hope that I can watch my boys grow up, get a good education, (happily) earn a decent living, marry some nice girls, have their own families, and just be very, very happy and healthy. I’ve been thinking about advice and thoughts that I'd like to pass on to my boys.
Words to My Boys:
1. Be happy (just not at the expense of others).
2. Laugh. Smile. Sing. It’s fun to imitate Curly from the 3 Stooges (nyuck, nyuck, nyuck).
3. Father beats boy up; when boy grows up, boy beats father up. Remember: I never beat you.
4. Be humble.
5. Be grateful.
6. Run your own race. Find your own your path, goals, objectives, meaning in life.
7. Your attitude will determine your altitude. Think positive and constructively no matter what the situation. You may not be able to change the direction the wind blows, but you can adjust the sails.
8. Stay away (run!) from negative, pessimistic people. They will only drag you down and waste your energy.
9. The most meaningful things in your life should never be sacrificed to those that are least meaningful.
10. Every label you give yourself limits who you are.
11. Work hard. Play hard.
12. Save money for a rainy day.
13. Money cannot buy you love. (It can rent love but don’t do that.)
14. Don’t lend money.
15. Don’t gossip. Always talk about others as if they are present.
16. The 10 commandments are pretty good rules.
17. Read “The Seven Habits of Highly Effective People” by Stephen Covey.
18. Don’t ever be afraid of anything or anyone. Live with passion, awareness, and purpose.
19. Be kind and charitable. Don’t ever look down upon anyone unless you are offering to help them up.
20. Soda is bad for you.
21. Stay away from drugs. Don’t even try or experiment.
22. Brush and floss every day, after every meal if possible,
23. Deep down, you will know if it is right or wrong without trying to rationalize it. Always live with integrity.
24. Love and care for each other. We are family.
25. Of all my accomplishments, treasures in my life – being your dad and having you two are number 1. (Also marrying your mom, just in case she reads this.)
I'll probably have more but these are the top 25 on my mind.
Product Managers need to see their customers and sales/service staff worldwide. You can’t assume all regions have the same requirements or perspective. Market and competitive conditions vary.
I’m working in China this week and been up since 4 AM due to the time difference. I have flown, taken the train, subway, walked, and taken many taxis. The country is still growing impressively. I was in Harbin a few days ago, a northern city close to the Russian border (you can order Borscht). Harbin is famous for its ice sculptures in the winter because of the freezing temperatures in the winter but the weather has been very pleasant in the 70s deg F.
I was on the high speed train going from Shanghai to Hangzhou in less than an hour’s time. It’s very similar to the Japanese Shinkansen system. The country is building up its infrastructure and the city has a very well planned transportation system of high speed rail and subway. Surface transportation is another story. Drivers seem to change lanes constantly and abruptly, while playing a game of chicken with one another in seeing who will blink first and allow the other to continue with fenders merely inches apart.
I've really enjoyed working with some wonderful colleagues and countries in different countries and gotten to know them as friends. You learn to appreciate their perspective when dealing with the home office and markets..
Here are some notes on working in different cultures and countries:
1. Don’t be an ugly American (or Canadian…or Brit, etc.). Too many folks from the head office are loud, boisterous - basically just plain rude. You will be tolerated but not respected. The China social media has been buzzing about some recent events involving a drunken Westerner (identified as a Brit) sexually assaulting a Chinese girl in Beijing (graphic video of the man getting his due) and of a Russian cellist berating a Chinese passenger on a train (he boasted that he was a cellist, was tracked down online and sacked) so anti-Westerner feeling is higher than usual.
2. Don’t get personal unless you are very familiar with the person. It is okay to ask about family to a certain level but I wouldn't ask how much they paid for their flat.
3. Don’t talk politics. You will never win and just leave each other angry. Remember “my country, right or wrong…but my country!”
4. Smile. This is universal.
5. Be kind and courteous to all, including the hotel staff, restaurant personnel, the office cleaning lady, etc. Same for your office staff. Everyone in every position deserves my equal respect.
6. Rest. This may be very difficult since local offices may try to take advantage of your presence by cramming in as many customer visits, discussions, etc. Any time differences and jet lag won’t help. However, you won’t do much good to be tired and sleepy when you need to pay attention.
7. Stay hydrated. Stay hydrated. Stay hydrated. Bring along bottled water because there is much talking to do and you can’t drink the tap water in some places.
8. Be careful of what you eat and drink. This is not the time to get the runs. You can’t drink the tap water out the faucet in some places and you cannot be sure of the ice cubes in some other places. Your “western” stomach and immune system may not be able to take on what locals can.
9. Pack energy bars for a snack. Don't forget Pepto Bismuth, antacid, etc. (A colleague once had to graphically describe that he had the runs to get meds in a foreign country. He started his mime routine by squatting in front of the pharmacist. Suffice to say that it definitely got more interesting visually after that.)
10. Sleep Aides. I tried melatonin and just unsure if it made any difference. It might work for others.
11. Learn some local phrases if not the local language. Don’t expect everyone to speak your language. It will also be appreciated by locals if you at least try.
12. I tend to buy a box of pastries, etc. when I go to the office on the first day of a visit.
13. Have a photocopy of your passport and scan it into your travelling PC or smart phone. This may be helpful if you lose it. Keep your passport with you at all times or in the hotel safe.
14. Let the local office go home and be with their family at night and on weekends. The local office staff may feel obligated to entertain you for dinner or sightseeing. I let them know that this is unnecessary.
15. Do not ask questions or press in an aggressive manner, especially with customers and colleagues in front of their managers. “Face” is very real.
16. Rule of 60/40 applies. Listen at least 60% and talk no more than 40% of the time.
17. Observe local customs. Ask your local staff if you are unsure. For example, you should present your business card with both hands and spend a minute looking at the business card given to you in most Asian countries.
Note that customs change over time!
On an earlier visit many years ago, I addressed stangers by the Chinese word for "comrade" ("Tung Zhee"). I knew that this was a greeting by the older folks in the early days. Not much of a response but some good stares. My wife and colleagues told me that "Tung Zhee" has evolved to refer to someone who is gay.
18. Speaking of faces, don’t make faces or look horrified if you see different aspects or foods that you are not used to. So you see a cooked chicken with the head attached or the host ordered a fish head dish (it’s actually very tasty) – don’t be uncouth. Besides...try it, you may like it.
19. Watch the traffic! The driving lanes may be reversed so look before you cross. I am terrified of walking in China because pedestrians definitely do not have the right of way. I walk in the middle of the pack guessing that this must be the safest (I overheard 1 American walking next to me telling the other to follow the locals when crossing a street. I jokingly advised them not to follow my lead.)
20. Remember to keep promises. You will have much “homework” upon your return. The customer and fellow colleagues remember what you committed to do upon your return to the home office. Don’t make the company and your reputation look bad by forgetting.
21. Watch your language. Here's an example from yours truly...I worked a trade show in Toronto where our booth was based on a theatre theme with products being "premiered". We acted as ushers and passed out theatre candy to trade show visitors. I was curious why passerbys kept taking Raisonettes and not one person would take the chocolate covered peanuts. In fact, some of them seemed rather offended and kept walking. Finally, I asked aloud why no one wanted "Goobers" while waving a box. A visitor carefully studied the box and told me that "Goobers" meant "nose pickings" in Canada. I was offering "nose pickings" to trade show visitors.
22. Enjoy! Soak in the culture and atmosphere! It’s a great opportunity to learn more. I find that I always make new friends with staff and customers alike.
What other tips and notes do you have on travelling overseas?
As a product manager, I rely on the Sales and Service staff to learn, to remember, and love my products. I’m also fighting for mindshare because other product managers are also vying for attention while the audience has only so much grey matter and time. This is even worse when multiple products are being introduced at the same time - which happens since you can only gather people for Sales or Service meetings infrequently.
Games are a fun way to test retention and help reinforce information. We are all kids at heart. People learn when they have fun or in light competition. There are software programs that you can buy to create learning quizzes, but I’ve created a number of simple games using tools readily available online and elsewhere.
I suggest breaking the players into teams so that individuals do not feel the pressure of having to work alone. Sprinkle in some unrelated and humorous questions, e.g. When did the company start? What’s our mailing address? What does our company name mean? (You’ll be surprised at how many people get these wrong.) The goal is to learn, not to make people nervous or look bad.
Here’s a few fun games that have worked well that you can use:
Just like the TV game show. You set up 6 categories, each with a column of 5 questions, each one incrementally valued more than the previous, usually increasing in difficulty. Players are asked questions and reply with an answer vs. the reverse on the TV version.
I found "Stu’s Quiz Boxes" (pictured above) to be very easy to set up and impressive looking. You can create skins for the foreground and background (the pic above shows Borat in front of my company HQ). Up to six teams can play. http://quizboxes.com/
"Flash Jeopardy" is another nice version. The key advantage is that it can be played online so you can share it with staff worldwide (you can password protect it). http://www.superteachertools.com/jeopardy/
Chutes & Ladders (“Snakes & Ladders”)
I had other groups ask our session to quiet down because of the laughter when we played this at a product launch! Just like the classic game, a number of "ladders" and "chutes" (or "snakes") are pictured on the board, each connecting two specific board squares. The object of the game is to roll some dice and then navigate one's game piece from the start (bottom square) to the finish (top square), helped or hindered by ladders and chutes, respectively. Players get to move if they answer a product question correctly. It’s partly luck based on the roll of the dice – but that’s how sales and real life is.
I found a simple version using PowerPoint to work great (link below):
For small settings, a customizing the actual board game is easier and also works. The games costs @ $10 dollars US in a toy store. Players spin the dial and move only if the correct answer to your question is correct. (Trust me, adults have fun playing this.)
This is a simple take-off of the classic monopoly game except that we modified it for software training. Buy a real cardboard version of the game and customize it. Rename the venues on the boardwalk to names of clients or companies and create your own questions. (My mentor, Ken Andersen, created it.)
I’ve created Flash quizzes for individual learning using available Flash templates with simple multiple choice questions – all very well received. There’s a great list of quiz makers available at this link:
A Few Words on Incentives
It is nice to have fabulous prizes as well as consolation prizes. A new car would definitely get people’s attention (I kid. I kid.). Barring something that extravagant, small cash prizes (even $20 dollar bills) gets the competitive juices flowing. Gift cards (at Dunkin Donuts, Starbucks) are good. For some reason, Europeans like to hand out bottles of wine.
"If you don't learn from your mistakes, there's no sense making them." -unknown
If you are going to fail, fail early. Those words were from Prof. Duncan Simester. It’s amazing that many organizations tend to operate like battleships – difficult to change course quickly once they get started (if at all). We tend to have an “all or nothing” approach and operate in a serial manner in pricing, product launches and marketing campaigns. The problem is that the initial hypothesis may be completely incorrect and we will not know that we have a major failure until the very end. What used to work in the past is no complete guarantee that it will work in the present or future. Customers and markets change. A new variable may have been overlooked.
That’s where testing and experimentation comes in. Try different pricing schemes, marketing messages, sales scripts to test customer acceptance and resulting sales. Without experimentation, we will see signs of problems but will ignore them, or even worse, throw more money and resources thinking that will resolve the core issues. It will then reach a point when many encounter the “too big, too late to let it fail now” dilemma...except that it will fail. Consider the recent consumer backlash against Verizon Wireless' $2 “convenience fee” for credit card payments, Bank of America’s debit card fee, and Netflix’s rate hikes. Why didn’t they test this in a small segment instead of going for a nationwide rollout? As a result, they faced an avalanche of ill-will, criticism, and subsequently had to reverse course with at least Netflix losing business.
Testing and experimentation is part of life. You did it when you were dating. You try different things to see what works or fails. (Did you get slapped when you used that line? Okay – you may not want to try it again.) In war, armies do probing attacks to test the enemy’s readiness and reaction. The “Charge of the Light Brigade” approach can mean tremendous loss if it fails. McDonald’s offered Fish McBites when I travelled in Texas and Chicago in March but I don’t see them in the Northeast US – they are great at testing and experimenting with their products and promotions.
With the internet and social media, an organization has no excuse not to do business experiments. Test pricing and marketing strategies in different areas or customer segments,
Some Basic Steps to Experimentation:
• Design the experiment
Start with a hypothesis. Measure what happens in a test group versus a control group. Be clear on what you need to measure to produce a decisive result—and whether that’s a metric you can track.
• Keep it Simple and Think Short Term
Small and simple experiments are easier to manage, less costly, and a short timeframe won’t test the patience of upper management. There is also a likelihood that word will spread because many customers are part of worldwide organizations.
• Slice and Dice the Data
Remember that there will be lots of data and that statistics can mislead. Segment and dissect the data. For example, you may want to segment by gender, age, geography, SIC code, etc. Most actions affect some customers more than others. Look for subgroups within your control and test groups.
• Act on Facts
Nothing but a success in a testing environment should be rolled out more broadly. But neither should failures simply be scrapped. Refine the hypothesis on the basis of the results and consider testing a variation. Capture what’s been learned so resources aren’t wasted proving the same thing again!
Two experts and proponents of experimentation are Thomas H. Davenport and Duncan Simester (click on names for links to great step-by-step guides).
You learn about Customer Value Propositions from business school and marketing. I learned about an equally important proposition from my father and Uncle Johnny: the Values Proposition. As I mentioned earlier, my father put his kids through school as a bartender. He and my uncle, Johnny, managed the bar and adjoining restaurant. Business was good and relied on regular, repeat customers. I’ve never forget when one customer bluntly said to me “I come here because I like the people...the food is the same everywhere...same brown sauce”. (That was an “ouch” for my uncle Gao – the main cook.) That statement was probably true back then – it was Americanized Chinese food with the same brown sauce on most dishes. To be fair to Uncle Gao, the customer base in Long Island, NY wasn’t too daring and ready for some of the more authentic dishes today.
What is the Values Proposition?
Bill Taylor, co-founder of Fast Company, coined the term and calls it “doing small things with great love”. My father and uncle knew the names and families of every customer. Neither was particularly fluent in English but always had a genuine smile and compliment for their patrons. Uncle Johnny would have a handshake, hug, and a kiss when you came in and when you left. They would give paper umbrellas and fans to children. They’ll make a special ice cream cake if they knew it was your birthday. Dad would open the restaurant on Thanksgiving holiday – it was a money losing day but he had a few customers who had nowhere to go on that special day. Dad and Uncle Johnny had a great “values proposition” – their differentiator was genuine affection and connection with their customers.
Things went downhill when Uncle Johnny passed away, Dad getting older, and a new aggressive, younger manager joined in. Things were by the books. The new manager spoke perfect English but wasn’t particularly friendly to customers (a bit of an attitude). He started charging for every little item…extra duck sauce and even fortune cookies because it “cost the bottom line”. The “values proposition” just wasn’t there. (Who the heck would go to a Chinese restaurant and expect to get charged for fortune cookies?) The restaurant ended up losing money by trying to save money.
Most companies offer a Customer Value Proposition but don't work on a values proposition, They have become faceless. You cannot find a direct telephone number to call. Customers are asked for an account number and endure the automated "press 1 for..., 2 for ..., 68 for..., press # to repeat". Once connected, you get the feeling that the rep is trying to get to the next call. In our quest to become more efficient, streamlined, and process-driven, we have turned the customer into an object on the flow chart. While companies are faceless, customers are anything else but. faceless Customers are human beings with feelings and emotions. Treat them wrong or indifferent and they will wait for the opportunity to leave (via a competitor or substitute).
Remember, all things (and brown sauces) being equal, people tend to do business with people they like*. Your products or services may be deemed as the same brown sauce (commodities) as in all the old Chinese restaurants. Start by treating each individual customer as an indvidual. Make them feel good about doing business with you. It doesn't have to be costly - it should show that you care about them. As an example, I would send customers a small stuffed teddy bear (in a shirt saying "You're beary special with us") when I heard about a grandchild's or child's birth. That surprise was very warmly received. That small token was appreciated not for its monetary value but as a sign that someone listened and cared.
Ensure that you have a Values Proposition to go with your Customer Value Proposition.
A wonderful article on this: The Values Proposition: Do Small Things with Great Love by Bill Taylor
*Paraphrasing Bob Burg
The entire Lio clan went off to BJ’s Wholesale Club this weekend to stock up on essentials and loaded up the shopping cart. We grabbed a huge mega-rolls package of Charmin Basic toilet paper and left it on the cart so the cashier could conveniently scan it without having to move the bulky item back in. My wife and I curiously watched the cashier continuously place items around and under the toilet tissue as she was scanning. She finally rung up the total…but omitted the Charmin - worth over $25 with tax. I asked the cashier if she missed the Charmin tissue. She was surprised and scanned the additional $23.95 back onto the total.
Could we have walked out of the store and saved $25? Yes (the staff at the exit didn’t look at the receipt in detail). Could we use an extra $25 in our pockets? Yes. However, even though we could rationalize the cashier’s error, e.g. “it’s a big company”…”they made that money up on all my other purchases”…”not our fault” - we would be violating our own ethics and what we hope to teach our children.
One of the best articles regarding this is by Prof. Clayton M. Christensen entitled “How Will You Measure Your Life?”. (I would urge everyone to read this article.) Among the many insightful points made was how to live a life of integrity. Prof. Clayton has a theory that we are taught to employ the marginal cost doctrine in our lives, basing decisions on the marginal costs and marginal revenues that each alternative brings, and that we erroneously apply this doctrine to decide what is right or wrong. We will also continuously be tested. We were tested by Charmin toilet paper this weekend; Katy Perry may ask me to run away with her today (sorry, I just lost my train of thought*).
In Prof. Clayton’s eloquent and succinct words:
"A voice in our head says, “Look, I know that as a general rule, most people shouldn’t do this. But in this particular extenuating circumstance, just this once, it’s OK.” The marginal cost of doing something wrong “just this once” always seems alluringly low. It suckers you in, and you don’t ever look at where that path ultimately is headed and at the full costs that the choice entails. Justification for infidelity and dishonesty in all their manifestations lies in the marginal cost economics of “just this once.”
I’d like to share a story about how I came to understand the potential damage of “just this once” in my own life. I played on the Oxford University varsity basketball team. We worked our tails off and finished the season undefeated. The guys on the team were the best friends I’ve ever had in my life. We got to the British equivalent of the NCAA tournament— and made it to the final four. It turned out the championship game was scheduled to be played on a Sunday. I had made a personal commitment to God at age 16 that I would never play ball on Sunday. So I went to the coach and explained my problem. He was incredulous. My teammates were, too, because I was the starting center. Every one of the guys on the team came to me and said, “You’ve got to play. Can’t you break the rule just this one time?” I’m a deeply religious man, so I went away and prayed about what I should do. I got a very clear feeling that I shouldn’t break my commitment—so I didn’t play in the championship game. In many ways that was a small decision— involving one of several thousand Sundays in my life.
In theory, surely I could have crossed over the line just that one time and then not done it again. But looking back on it, resisting the temptation whose logic was “In this extenuating circumstance, just this once, it’s OK” has proven to be one of the most important decisions of my life. Why? My life has been one unending stream of extenuating circumstances. Had I crossed the line that one time, I would have done it over and over in the years that followed. The lesson I learned from this is that it’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time. If you give in to “just this once,” based on a marginal cost analysis, as some of my former classmates have done, you’ll regret where you end up. You’ve got to define for yourself what you stand for and draw the line in a safe place."
*I kid. Fanny Lio is the one and only. Sorry, Katy.
There are two strategy models that I use and highly recommend.
The “Five Competitive Forces” model was developed by Dr. Michael E. Porter (Harvard) in 1980 and has become the classic tool for analyzing the industry structure in strategic processes. Porter identified five competitive forces that shape every industry and market.
The model is based on the insight that corporate strategy should meet the opportunities and threats in the organization’s external environment. Competitive strategy, in particular, should be based on understanding the industry structures and the way that they change.
Porter's five forces are:
· Threat of substitute products or services, e.g. Palm PDAs and Blackberries replaced by Smartphones
· Threat of new market entrants, competitors
· Bargaining Power of customers/buyers, e.g. haggling
· Bargaining Power of suppliers, e.g. raising commmodity prices
· Rivalry among existing competitors
I’ve not found much fault with the model except that the advent of the internet has made Porter's model even more dynamic and accelerated. For example, the customer has increased his bargaining power with the ability to compare products and prices online instantaneously and new competitors can easily sell worldwide.
I attended a course from Dr. Arnoldo Hax at MIT Sloan (a brilliant and engaging person) introducing a competing strategic model named the Delta Model. The Delta Model does not treat the customer as a competitive force but rather as the focus and reason for being. The goal is to attract, satisfy (delight), and keep the customer. 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.
· 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 – Facebook, Google is Dell, SAP are tied deep into many companies’ IT and manufacturing respectively.
· 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 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. System Lock 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 exhange in ecommerce and becoming the dominant exchange in e-reading with the Kindle. 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 into System Lock-in with their browser and Android. All of these companies are aggressively using technology to enable their strategies.
Which model is best?
I don’t think that one has to use one model exclusively of the other. For example, one has to recognize the bargaining power of the customer (Porter) and should therefore constantly watch its cost structure but an organization should never think of the customer as anything but the center of its strategy and also work on its differentiators and compelling value proposition. Hax is correct in saying that Porter’s model is very turbulent and always in a state of violent competition from all sides…but that is a true reflection of the market. The Delta Model provides a customer centric approach with a number of potential strategies and is proactive in approach (IMHO). Hax does have a point that you wouldn't constantly be looking over your shoulder at competition if you are looking forward focused on bonding with the customer and doing the right strategy.
It’s worthwhile to review your organization, market structure, and competitors against Porter’s and Hax’s strategic models.
Breakfast Pizza…I finally tried it and am hooked. A combination of 2 of my favorite things: breakfast and pizza. What a country. That’s the thing about innovation – it can be simply fusion (although the wrong fusion can lead to confusion).
Some think that innovation simply happens - that's rarely true. Serendipity can help, but it takes awareness, sponsorship, and grit.
The 3M story about Post-It Notes(R) being simply discovered by a Chemist as a use for a high-tack/low peel adhesive, then used in Church for notes and internally, and becoming a hit is only part of the real story. Dr. Spence Silver at 3M was trying to invent a strong adhesive and ended up with a weak one. He would not let go of the idea that his unique adhesive had some application and held seminars for years to spark internal interest. A colleague, Art Fry, who was in charge new products at the Tape Division and in need of new offerings, heard about it and attended a seminar. He initially created bookmarks that were well received internally but with low demand. Then one day, Fry used a piece of bookmark to write and attach a note to a report and the reviewer did the same - that was the "Eureka!" moment when the sticky notes application was realized.
Still more was needed. Special machinery was required to create the pads and ensure that they remained flat with adhesive on one side. Fry created a prototype machine in his basement when the technical team expressed difficulty. When the Marketing dept. did not see much potential and resisted, Fry and Silver created and distributed pads to senior executives and colleagues(who were directed to call Marketing for replacements). The initial launch in 1977 was a failure. Advertisements didn't work because people who had never seen or used Post-It Notes could not fully appreciate it. Success started when they realized that they had to pass out samples so that people could grasp the concept and application.
So we are talking about years of work, stubbornness on the part of Dr. Spence Silver in refusing to let go of his "failure", some luck in the right player, Art Fry, coming into the picture to sponsor it, and more perseverance and creativity in getting the manufacturing worked out, overcoming Marketing resistance, and recovering from the failure of the initial launch. Some organizations would have taken Silver and Fry's perseverance as a waste of valuable time and resources (especially in light of conventional corporate wisdom) and they could have moved onto to other priorities.
It probably took much trying, experimenting, failure, and perseverance to get breakfast pizza right and selling.
3 tablespoons milk (optional)
1 tablespoon Butter or cooking oil
1 (10-ounce) (11-inch) thin prepared pizza crust
6 (3/4-ounce) slices Cheese (Cheddar, American, Provolone, whatever you like)
4 slices crisply cooked bacon, cut into 1-inch pieces or ham, sausage, whatever toppings you like except kippers (that should be totally illegal)
Heat oven to 450°F. Beat eggs and optional milk in medium bowl until well mixed.
Melt butter in 10-inch nonstick skillet (or use oil / cooking spray); add egg mixture.
Cook, lifting gently and stirring slightly to allow uncooked portions to flow underneath, until set (2 to 3 minutes). Remove from heat; set aside.
Place pizza crust onto large baking sheet; top with 4 slices cheese, cooked eggs and bacon.
Stack remaining 2 slices cheese. Cut cheese into quarters; separate. Place cheese pieces over pizza. Bake for 9 to 11 minutes or until cheese is melted.
Cut into 6 wedges. Serve hot.
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It is very important to watch and understand how your customers use your products. One of the best ways is to visit your customers in their environment to watch and interview them. There are quite a few benefits. One is that you will be able to observe the product usability in real life. What you and your designers thought may not match actual user experience. For example, while Microsoft Windows is primarily a mouse and pop-up windows dialog boxes interface, some users prefer to use the Tab and Enter keys for faster operation in software. Highly touted and costly features in software and hardware may also be "so what" in a customer's real world - allowing for some design cost cutting and support reduction without affecting customer loyalty and satisfaction. You also find that users may be having an incorrect and lowered impression of your product due to not knowing the full feature set. This is understandable since many customers may not have been fully trained, do not have the time to learn everything, may not have known enough to ask the pertinent questions during initial training, or just simply assume that the desired function is missing. Being with the customer in this follow-up visit allows you to learn and correct such false assumptions and to “delight” the user; you also learn how to improve your product or training to prevent this was occurring. (You also don't want this misconception to brew into customer dissatisfaction and affect future sales and word of mouth.)
In terms of innovation, I’ve observed that users will modify your product (if possible) to suit their particular needs. Some of their modifications have been very creative and brilliant. You can get some great concepts and ideas to bring back to your design team. Innovation does not have to start from you, Marketing, or Engineering alone. In fact, there's a whole area of study on this by Professor Erc Von Hippel called "User Innovation". An example is soldiers mounting machine guns on cargo planes in Vietnam out of their own ingenuity, which led to flying gunships and attack helicopters. You will also see and learn where you product and its usage fits in the total universe of the customer. Learn the user’s workflow, his/her bottlenecks, and challenges. Remember: people don’t buy products for features; they buy products to solve a problem that they have.
A very important side benefit is that customers usually very much appreciate that you are there in a non-selling situation mainly to learn about their situation, make their lives better, and stand behind your products and them. You also get to know them on a personal level and develop references. There is nothing better than knowing and treating your customers as friends. All things being equal, people will prefer to do business with someone whom they like.
Note: Eric von Hippel is an amazing person who truly beieves in open and democratic innovation, including free and open source software (FOSS). He has a very informative website where his papers and books can be downloaded for free! The man walks the walk.
This tip may change your life: Turn off the Microsoft Outlook email alert which notifies you whenever a new email arrives. Remember how Pavlov’s dog was conditioned to salivate whenever the bell rang? Many of us are conditioned to immediately open an email when it arrives. So stop being a dog! Think about it...do you stand in front of your home mailbox constantly waiting and checking for mail?
Multitasking does not work. It takes 6 minutes to recover and you lose up to 15 IQ points (women lose 5 points) when multitasking. (As a comparison, you lose 5 IQ points when you are stoned. That means some of us lose at least 20 IQ points per multitask.)
I just gave a very successful corporate introduction to GTD, the “Getting Things Done” work and life management system from David Allen. In an oversimplified nutshell, GTD is a 5 step approach where you: 1) do a mind sweep of EVERYTHING, 2) determine next action for each item, 3) organize them into lists, e.g. next action, deferred, delegate, and a calendar, 4) review next action list and calendar daily and others regularly, and 5) consider the context, time, energy, urgency.
I’ve tried a number of organization systems including Franklin Covey with the 1, 2, 3, A, B, C priorities but they all fail to work well. The main problem is that priorities change quickly. Your managers, customers, colleagues can/will give you a “new crisis of the moment” and that becomes your new top priority. You also rely much on others to complete their actions before you can close your tasks so you need to keep track of them.
Some wise sayings from David Allen: “Your mind is for having ideas, not holding them.” “If you don't pay appropriate attention to what has your attention, it will take more of your attention than it deserves.”
For more info, read David Allen’s book “Getting Things Done”, his website: www.Davidco.com, or just Google “Getting Things Done”, “GTD” for a ton of third party information. Another nice thing about GTD is that you don’t have to buy any special supplies and can implement it via paper or software.
Update: August 7, 2102
A number of readers have asked me for my Excel file templates used for GTD. I've converted to an GTD Outlook setup but you can download the Excel template file here. Start with the first tab named "Stuff" and work your way to the next tabs sequentially by transferring items from the "Stuff" tab.
Update: June 1, 2017
A reader, Maximilianah Zales, send me a very nice email and kind enough to share her great modification to the GTD (Getting Things Done) Excel Template. You can download it here.
“ I plan on using your spreadsheet to get started, and just wanted to share with you that I added a tab to include the list of "triggers" from pages 116-120 of the 2015 edition of the book.
It will be helpful to have it on the spreadsheet (instead of the book) to be able to go through it to mentally gather things to move over to the "stuff" tab by using the filters and copy and pasting.
I thought you might want to update and share on your page.”
A "trigger list" helps jog the memory of GTD enthusiasts while doing their weekly review.
Thank you, Maximilianah!
One of the best early advice given to me was to shut up and listen. We all heard that's why God gave us 2 ears and 1 mouth - we should listen twice as much as we should speak. (The other reason given was that no one knows how dumb you are if you don't speak.) Marketing folks, especially with engineering backgrounds, tend to start creating the solution before fully understanding the problem. Listen to the customer and ensure that the engineers and designers understand the true customer need.
Why do people buy drills? They want a hole; the drill is simply the means to get the hole. Perhaps someone on your team has better, more innovate ways of getting that hole instead of you just laying out marketing requirements defacto for a drill.
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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I am happy to share but I’d appreciate a credit and a link back to this site. Thanks!