Red Zen Marketing

In these tough economic times, many companies' development and engineering groups are examining their stable of products and services,conducting 'line reviews' to search for those quiet, hidden products that are no longer producing at the expected levels, with the aim of raising net profitability. Other firms put their sales analysts to work on analyzing relative customer profitability, producing a ranked listing with the bottom 'losers' slated for receiving a "Thanks for the memories" letter from the VP of Sales.

Though it's always valuable to have data, and I'd argue for monitoring these sort of indices on an ongoing basis in any firm, and I'm sure there are occasions in which each of these approaches bears some fruit, there are some important cautions to be heeded when looking to approaches like these in lean times. My experience with technology-based companies in particular highlights a number of situations in which lean times are opportunities.

Here then, is my list of five mistakes I've seen technology companies make in trying economic times, and a few suggestions of how to avoid making these in your firm.

1. Taking actions without talking to customers -
   It seems so obvious to me after watching this mistake made over and over again, but when your firm as a vendor or partner of your customer is going through a difficult time, that is the time you most  need to know what your customer really needs, what they depend upon you for most, what matters to them about the product/s you provide.  So many times I've seen companies end-of-life seemingly unprofitable products--shutting down lines to save tens of thousands of dollars, like in my first example, and then watched hundreds of thousands in orders disappear the next quarter since customers depended upon that other product to be available from the same vendor. This likewise goes for 'value engineering' projects which end up substituting components in critical customer products-- don't do it wiithout involving your customers in the process!  Often, upon initiating serious and sincere dialog with customers about product offering questions and issues, new opportunities will be illuminated, unseen challenges that they are facing will be uncovered and in pursuing these, you will find a new level of partnership and trust established with the customer. 
2. Becoming absorbed in endless parochial analysis -
   This error appears to be made by a certain type of manager or leader most; those most uncomfortable with making hard choices will put off decisions by continuing to research the problem/s endlessly, calling in analysts from finance, marketing, manufacturing, etc. to all put there data on the growing pile. They are only satisfied when multiple conflicting results continue to hit there desk--feeling that the conflict best represents real world information, but simultaneously giving them more cause to postpone decision-making and order up more research and investigation of the problem: "what about European sales? How has Customer Support been affect in the Fourth Quarter over the past two years? What about legal claims over the affected periods for sales of those products in Canada?" The questions go on and on. The focus stops being on making a pragmatic business decision for the health of the company--or even about using the data to make a decision--but becomes about collecting answers to more questions. In this case, those assisting in collecting information need to provide 'impact and conclusions' statements along with data, to help guide the discussion beyond data to reach directional decisions for the business. If you're the hapless soul that becomes mired in the indecision and analysis paralysis, make sure to scope every analysis assignment with an objective statement: why is this being done? what business question will the results of this analysis guide? It also helps to describe ahead of time what results are expected and what action is likely to be taken based upon those results--all ahead of time--even if only for your own use. Doing this will help you stay focused when the data comes in.  
3. Forgetting sales basics -
   It's all too easy to dig in to start weeding out less profitable customers, but many times the issue is closer to home: Sales Management may be failing. One thing I learned from leading a sales organization -- and those of you with senstive eyes may need to look away - many sales people are lazy.  They often don't spend time on 'tough' accounts that time more time to develop. A high percentage of sales people in the typical organization are 'order takers' and need to be well managed to keep them on task and on track. Low performing customers may be more an indication of sales personnel performance than of customer attributes. Sales management needs to talk to those customers before you cut them loose-- do your due diligence and you may find opportunity lurking just below the phone receiver. It may be time to invest in good old sales training to reinvigorate your team.
   
4. Cutting Back On Innovative New Products -
   R&D or product development may often be the first casualty of a downturn. I've watched this more than once. Sadly, in each episode, the firm had sacrificed its future for the short term. Yes, this may not be the time to start that incredible new cold fusion project, but the project that is 3/4 complete and 5 months from launch, expected to reinvigorate channel and partners is not the place to take aim simply because it's a big number on the spreadsheet. The costs later in lost market position, lost share, lost leadership, etc. are tangible and real. Be cautious when reviewing your future product pipeline for sacrificial lambs during hard times - you want to be sure you still have the fat sheep to take to market when the time comes and it's needed.
   
5. Stopping Web Development and Refreshes/Downplaying Online Marketing -
   Over and over I've been watching well intentioned companies in various categories from software to biomedical equipment to technology materials cut back on previous plans to update and modernize their online presence when faced with their current economic situation. Seemingly flying in the face of obvious trend information indicating the accelerating pace of B2B online research and purchase behavior, home surfing for work purposes, use of social media for business (yes, read- Twitter, Facebook, etc.), and increased business broadband penetration, these businesses are sitting back on their hands. They blindly cede their category leadership to ambitious competitors. They hold tightly to a tens of thousands of dollars while market opportunities worth hundreds of thousands or millions of dollars remain at stake in their segments, with their market positiioning becoming stale and more out of date by the month as they wait for better times. It's penny wise and pound foolish. In today's market, a technology firm needs a leading online presence to be taken seriously. The majority of B2B purchases have vendors researched online prior to any contact via telephone being made--if that impression is not aligned well with a set of competitors, you don't get the chance to make a personal impression, and you've already lost the battle before entering on the field.
   

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It's one of the most common mistakes I've seen new product development teams make, time and again.

Regardless of the firm's industry or category, or whether it's a physical product or software, all too often the team in charge of a bringing a new product to market lose their way--they lose touch with the customer.

Development teams encounter a single problem or focus on a single dimension of the product and begin to get wrapped around the axle on that area. Slowly the initial impetus behind development of the product or service recedes into the background; the customer need/opportunity--the Voice of the Customer--becomes obscured by the deliberations and problem-solving that begin to consume the development team. As this occurs, the concentration of attention moves inward. Focus becomes parochial, with thinking centered around what is best for the firm or on the barriers to making changes. New constraints become givens for the project, even if the project started as an innovation-focused project to reinvent the firm and bring grand new opportunities to bear. I call it the molasses effect.

Examples of subtle obstructionist mindset shifts that occur:
"We want it to look entirely different but It has be made on our existing line."
"This is the best market opportunity but we have to address it without undermining our current channel."
"We know it needs to have those features, but we have to get to market by X so those will have to wait."
"There might be better technologies to do X/Y, but we don't have people who understand those, and besides, we know how to do Z."

Now, I know what some of you are thinking. Yes, I can also think of examples where the raising of those exact objections was warranted, and there is a long story behind each one. Granted, But for each of those exceptions, there are many, many more times that these phrases were overheard in cases where they were nothing but excuses for sticking to the status quo. And, often the reason is fear.

So. How is this best avoided?

1. Use a cross-functional team. Don't allow the development process to proceed to far being run by any one group--whether engineering, R&D, software development, marketing, manufacturing, etc. As appropriate, gather a group from the relevant areas of the firm to participate on the team, led by a strong project manager who does not dictate product outcomes, but guides the project progress and accountability, and let ideas flow against the project timeline.
   
2. Ensure that the product development team--those in the trenches on the team, actively involved in weekly meetings--are closely involved in understanding end customer requirements, desires, frustrations, & needs. I happen to be biased toward use of the Voice of the Customer methods that have proven their efficacy over and over again, but successful products come out of other customer intimacy/research methods as well. 
3. Use Personas in the development process, to keep the target segment customer clearly in the mind of the development team. Personalizing the customer in this way is incredibly powerful, whether the product is a window, an electric fan, a pizza buffet, an online banking service, or an iPhone software app. 
4. Open your mind to partnerships. The best solution may involve working with other firms. Novel solutions to difficult problems in todays connected, global marketplace need not be all resolved "in house". Think "who has the pieces to complete this puzzle?" and take the step of approaching and asking for ideas or assistance. Think win/win. Having a smaller piece of a huge pie is usually a good thing. There's a reason most consumer electronics firms (think Apple, Motorola, Hewlett Packard, etc.) don't actually assemble most of their products themselves, but rely on partners like Flextronics and HTC to do this for them. When siding maker NuCedar ran into a difficulty with paint retention, they went directly to Sherwin Williams for help, and found a willing partner who helped them enter the market with a jaw-dropping 1400-color pallet, dwarfing vinyl siding choices and offering a UV reflective finish to reduce summer heat absorption.
   
   
   
   
   
5. Look to other industries for solutions. Often, others have solved the problem you are up against in a slightly parallel industry for a different reason. It may take some research (luckily there's lots of great tools for that these days!) but it will be out there, perhaps written about in a different industry's trade journal. Try to define the problem on a different level when you search.
   
6. Perhaps it should have been listed first, but this final recommendation comes straight from the second of Stephen Covey's Seven Habits: Start with the End in Mind. In this case, as you move forward in development, the team should always be doing their best to be visualizing the characteristics of the ideal product/solution. These are now 'how' aspects (not features), but are the benefit aspects of the product or service. "It will let me unlock my car while laying in bed on a cold morning" is a visualization of the ideal product outcome. As product development proceeds, this skeletal vision should become fleshed out with more benefits and aspects surrounding the core benefit to the customer, meeting the primary need. Keeping this in mind focuses development in a powerful way, and is similar in many ways to the AGILE method of software development in which the most important/necessary/core aspects of the software are developed first, quickly, in order to create constantly working code. Then, additional features are added to this core, always being sure to test the operating prototype against customers' needs to validate its alignment. By extension, this idea of frequent prototyping also helps to keep things on track, and is a corollary to this same idea, as it is the embodiment of keeping the 'end in mind'.
   

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