Art Petty on Management

Art Petty on Management Has Changed and Moved

I don't like to do things small or simple, so in what I sincerely hope is the absolute last time I put myself and you through this, I have moved and changed the name of my blog. 

You will now find me at www.artpetty.com and the new name of the blog is Management Excellence.

As I'm writing this and realizing that most people that have moved blogs have basically had to start over from zero to build traffic, this seems like taking two steps in the wrong direction.  However, sometimes you have to step back to grow, and I've got some compelling reasons for making the move, including:

• Integrating my former corporate web site and my blog under one content management system.

• Creating a simpler url (artpetty.com...12 characters versus the almost 40 for this site).

• Gaining the tools and the control through a hosted blog so that I can easily add planned podcasts, webcasts, forums and other tools that I will roll out this year.

• Aligning my blog's name: Management Excellence with my personal mission to promote high performance, great leadership and the pursuit of excellence in business.  

All of the posts and hopefully, all of the comments have been moved to the new site, so 14 months,  160 plus essays and a tremendous number of thoughtful comments on best practices in leadership and strategy, project management, product management and marketing and sales, all remain part of the library. 

For those of you that subscribe via your favorite Reader or happen across this post via Search, please take the opportunity to visit the new Management Excellence site and click on the site's feed.  And don't forget to check out some of the new tools, including the live polls, free down-loadable tools and links and references to many other great resources.

Thanks so much for reading and referencing Art Petty on Management, and I hope to earn your confidence many times over in my new home at the Management Excellence blog!

“If I had asked customers what they wanted, they would have said faster horses.”

Students of business history might recognize the quote above as coming from Henry Ford, the founder of Ford Motor Company and one of the early management innovators.  Mr. Ford’s quote raises a profound issue of when and how to listen to customers, or perhaps the more challenging flip side: when not to listen to customers.

The notion of not asking customers what they want and responding directly to their needs may seem like heresy to those individuals and organizations consumed with improving customer satisfaction and creating customer loyalty.  In fact, you should always listen and importantly, observe.  The real art in this process is understanding what customers really need, what problems they really would like to solve and what approaches and experiences that you can create that can surprise and delight them.

Harvard Professor, Clayton Christensen, seized upon this issue in his Innovator’s Dilemma/Innovator’s Solution books, where he suggests that a well-intentioned business may do everything right by listening and responding to customer requests, and ultimately fail as disruptive offerings upset the status quo.  

In my own work in the technology space over the past two decades, it is easy to look back at product development cycles driven by a never-ending desire to cram in customer-driven features, without a good understanding of why those features were needed and whether they were solving key problems or attacking symptoms.  It always felt like we were doing the right thing, but in hindsight, it was blind marketing. As Product Management systems improved and requirements development received more scrutiny, this situation improved.  Nonetheless, it is hard to see how the forest is changing when you are staring so intently at the trees. 

Christensen’s classic scenario is the company that dutifully enhances its offerings based on client input, ultimately creating bloated offerings with capabilities far exceeding what might be required of many or any buyers.  In the interim, a disruptive offering…something perhaps with fewer features and priced much lower (not always the case) can easily swoop in and…well, disrupt the market.  In essence, the well-managed, well-intentioned company created a vacuum that was filled by someone who understood the essence of the client’s problems…not just the features they were asking for.  (Think “Faster Horses” versus a new mode of transportation.)

The authors of the recent book, Tuned In, tackle this important topic by suggesting that a firm focus on developing Resonators, products or services that practically sell themselves.  Their six step process for creating a resonator and for Tuning In is in my opinion, a framework for avoiding the Innovator’s Dilemma that Christensen warns us about.

The design firm Ideo in their famous Deep Dive segment on ABC News showcase a process for design innovation that is what you might imagine a sociological dig would look like, as they follow and observe the various “buyers” of shopping carts in pursuit of understanding how this classic device could be grossly improved to better solve real problems.  While there is a fair amount of criticism of the “made for TV” nature of this episode, it offers some classic lessons in looking and observing to identify significant and perhaps even disruptive improvements.  Just asking a store manager or a customer about what they would like to see improved in their shopping cart may be insufficient for identifying what a shopping cart might actually be able to do.  Think cell phones and the iphone. 

The Bottom Line for Now:

My message here is intended as a cautionary tale.  It is good and right and noble to pursue increasing levels of customer satisfaction in your framework for operational excellence.  However, it is also easy to be misled by false signals, and sometimes those signals come from your customers.  Remember, they know you in a narrow context, so when they engage with you to talk about improving the Widgets that you make, they are thinking about you only as the Widget Company and as users of your widgets.  Their context is to give you ideas to improve your widgets. Just remember that it is quite possible that they don’t need a better widget or a faster horse. 

You need to build the institutional intelligence, the systems and of course the talent that truly focuses on understanding the unstated needs of buyers.  Of course, once you understand this, the real work of meeting and exceeding those needs as an organization begins. 

Preventing Product Launch Failure: Watch Out for the Pitfalls!

G. Michael Maddock and Raphael Viton writing in the Innovation Engine column at  BusinessWeek online, offer a sobering look at the Ten Reasons Your Next Launch Will Fail.   From the propensity of companies to create solutions for unknown problems (Science Run Amok) to the recurring theme of teams convincing themselves that they can't miss (Death by Consensus), this insightful and witty column offers some priceless guidance for marketers, product and project managers and executives everywhere. 

Having been on the winning side of some great launches and the losing side of a few spectacular failures in the B2B tech world, I can relate to the problems that Michael and Raphael describe all too well.  Some thoughts based on my own experience:

• The Swiss Army Knife or Requirements Run Amok Product: This one finds erstwhile Product Managers (usually unseasoned) working hard to pack every possible feature into an offering in the naive believe that this Swiss Army Knife approach will create a stronger offering.  They did not understand their buyer's problems/challenges sufficiently, and they over-specified to compensate.

• The Offering Just Slightly Ahead of Its Time:  Yep, I made this mistake.  As Maxwell Smart would say, "Missed it by that much."  Followed by, "Sorry about that Chief."  By now, drinks were supposed to be poured by a Drink Tower robot in Quick Service Restaurants everywhere, saving a veritable fortune in labor and improving time efficiency.  My Drink Tower interface from the Point-Of-Sale system burned a lot of time and money.  It was really cool in the one site that actually tested a drink tower in 1996.  I hear that there are a few more sites now.

• The "We'll Release No Product Before It's Time, Except This One" Launch: This launch failure usually involves a management team that built their budget around a new product launch, only to see schedule delays cut into their nicely developed sales dream.  Pressured by the urgency of the situation and the upcoming Board meeting, a watered-down version of the product is launched and you can guess what ensues. 

• The Product that Won't Be Born: OK, maybe this is a cheap shot, but it's my column, and I get to offer at least one gripe to a development team or two that couldn't get its act together.  It's not always the Product Manager's fault!

The bottom-line for now:

Like the forward pass in football, there are a lot of things that can go wrong and only one thing that can go right: the pass is caught and the product launch is successful.   Successfully launching products requires the organization to be Tuned In to their buyers.  Solving a vexing problem in a unique way for a distinct group is a great starting point.  Creating the culture, systems and approaches requisite for a successful launch requires committed, focused leadership at all levels of the organization.  Establishing a high level of competence in product launch is table stakes for success in a world where opportunities are fleeting and  and product life cycles shrinking daily. 

Hmmm, now, if 5,000 locations save .2 people due to the automatic drink tower, the savings will be worth millions.  I wonder if it's time to re-launch that puppy?  I suspect that Michael and Raphael would advise against it.

Sirius and XM: Does Satellite Radio Resonate?

With thanks to the team of Phil Myers, Craig Stull (Pragmatic Marketing) and David Meerman Scott (Web Ink Now), I'm looking for "Resonators" everywhere I go.  And no, "Resonators" are not some new cool gadget, but rather, as defined by the aforementioned authors in their soon to be released book, Tuned In, they are products or services that so perfectly solve problems for buyers that they practically sell themselves. (Full disclosure,  I've had a sneak peek at some of the concepts in this great new book, and I am presenting my take on what their book means for leaders in a webinar, entitled: Tuned In Leadership, next Friday, June 13.)

An article in the Wall Street Journal last week entitled "Slowdown Generates Static for XM, Sirius," outlined the challenges that these two (planning to be one) satellite radio companies are having in generating the much needed growth in subscriptions, given a slowing economy and especially, slowing automobile production and purchases (a key source of new subscriptions for both).  Now that the companies appear to be moving towards gaining the final OK to merge, they are running into their next hurdle, trying to solve the riddle of profitability by delivering premium content and commercial free music to customers willing to pay.  Both organizations have purportedly invested heavily in adding celebrities (e.g. Howard Stern) and major sporting events (NFL, MLB, NASCAR etc.) in an attempt to lure enough subscribers and advertisers and eventually generate profits.

According to the article in the Wall Street Journal, the combined subscriber count for both companies is in the neighborhood of 17.9 million...adding a net total of 3.7 million last year.  The article contrasts this with 21 million Ipods sold last year and the fact that 54 million people tune in to internet radio every week.  Of course, many more people tune into traditional terrestrial radio—in spite of the mundane and redundant programming and the mindless and endless commercials (this author's opinion).

I have been a subscriber to satellite radio almost since its inception...first XM and now Sirius.  I have a subscription in my car, and I have a portable unit that I use in other cars, on my boat or in a boom box when I'm working in the yard.  I drive a fair amount, and I love the constant access to CNBC, other news channels and some great talk shows.  I also appreciate the opportunity to tune in to commercial free jazz content on the ride home after a day training, teaching or working with a client.   I am almost as passionate about my satellite radio as I am about my family's growing number of Apple computers and related products, but I worry a lot about the survival chances for this incredible medium.

I reviewed the afore-mentioned article in a management class of working professionals last week, and the discussion and key points might be germane to the teams at XM/Sirius.  In this northwest suburban Chicago class of 15, I was the only subscriber, and while several had heard the names of the companies, there was little perception of  what satellite radio is all about.  Overall, the class struggled to describe why anyone would pay for radio, although most agreed that the commercial free aspect was nice.  After discussing the features and benefits (and pricing model), a few offered that they might pay for Howard Stern or some sports, but overall didn't find the concept of satellite radio solving any real problem or didn't find it exciting and unique enough to place it into the "must have" category.  Truthfully, I even let some of my passion for the offering filter through and in spite of this, the reaction to the concept of paying for radio (even premium and commercial free radio) was that it is not doing anything to solve a problem that anyone could identify, although it sounded like a nice luxury.   Clearly, satellite radio was not a Resonator with this audience.

The bottom-line for now:

As stated, I'm a big fan.  I would be sad to lose my Sirius radio.  (It's playing in my office right now as I'm typing this.)  However, I've long suspected that this medium has bigger problems than the scrutiny they are receiving over the prospect of merging.  The companies (in my opinion) have failed to do what other companies and products like Apple and the Ipod do so well...to create something that is so compelling, that solves such vexing problems or creates such an incredible experience, that large number of buyers cannot live without it.  Sirius's new Stiletto 2 combines the best of a portable, Ipod-like device with the ability to play MP3 files, but still total subscriber numbers remain low.

If I'm XM/Sirius, I would be losing more sleep over why people aren't knocking down the proverbial doors to take advantage of their quality offerings.  I hope they make it, but if my class is representative of a large part of the potential subscriber base, satellite radio either doesn't resonate, or the companies have failed to communicate the value in a way that resonates.  I hope that the management teams are Tuning In.

Seven Suggestions to Consider When Creating A New Market

If you've ever worked in an organization or on a team that got caught up in the quest to create a new market you know that the experience is all consuming and exhilarating.

While the all-new pure white-space scenario is elusive, a fair number of organizations leverage their deep knowledge of a specific segment, a group of customers or a set of customer challenges to create new offerings that don't fit traditional market definitions or boundaries.  The combination of blazing a new trail and believing that what you have created and what you are espousing will help reshape and transform for the better how something gets done is intoxicating. 

I met the other day with a CEO living through this very situation right now, and from listening to her very real challenges and reflecting on my own experiences on one of these market-creating odysseys, I offer a number of leadership and management suggestions that might prove helpful on your own journey of market creation. 

7 Issues that Should Keep You Awake at Night on Your Way to Creating a Market:


1.  You have to surround yourself with flexible, free-thinking and adaptable people.  Hiring the former BIG CO executive who hasn't lived through what it means to swim without a life raft may not be the best plan in the early phases.  You don't have time to wean people off of big company practices...bring in the professionals that have already been through this process somewhere else.

2.  Listen to yourself and your people talk and read your own propaganda.  If everything that comes out of your mouth is about how great your new product is at the feature/function/capability level, you've got a problem.  If the answer to every business question is something about the unique capabilities and elegant architecture of your revolutionary product, you've got a problem.  If your web site is nothing but more of the above, the problem is real.  The prospective clients that you are seeking as early adopters are motivated by a bigger vision, not by the elegance of your technology.

3.  Markets don't emerge on anyone's schedule.   If you are banking on going from nowhere to critical mass on a short-horizon, you and your investors are likely to be disappointed.  While everyone in awhile markets emerge at remarkable speed, most of them take years and often never emerge.  If your market's emergence is dependent upon people and institutions changing long-standing practices and overcoming deeply embedded approaches, you better be planning for a marathon, not a sprint.    

4.  Back to the message coming from you and your web site.  Like it or not, you are evangelist and educator all at the same time.  If all you do is shout product, you will not appeal to either the hearts or brains of your prospective customers.  Make sure that your people, your web content and the preponderance of your conversation is educational and informative and not pure product propaganda. 

5.  Traditional marketing tactics don't work when you are creating a market.  Give it up and shoot your marketing head if he/she is suggesting advertising, trade shows and direct mail as primary vehicles.  (OK, this one will generate some controversy.  Sorry, I believe that the world has changed and people gather their information and assign trust in very different ways than they used to.  Before flaming me on this topic, read David Meerman Scott's: The New Rules of Marketing and P.R.  and then let's start the debate.)

6.  Traditional selling tactics don't work when you are creating a market.  See also the marketing comment above.  Transactional salespeople and sales approaches need not apply.  Your early focus is on market visionaries willing to take a risk to realize something profound for their business.  Match the value creation resource with the task to fuel the vision.

7.  Map the Influencers and figure out how to appeal to their fundamental need.  Don't know what that is.  It's simple.  Market influencers gain influence by having radical opinions on what's right, what's wrong and what organizations need to do about what's right and what's wrong.  Paint your vision for them, encourage them to develop their own vision and provide them with a soapbox to tell the world.  A good influencer will never back you or your product overtly, but if they see the opportunity to enhance their position by grabbing on to the issues that you are dealing with, they help educate the market.  This type of influence is not purchased with a subscription to an analyst firm or via press releases, it is gained through personal relationships and involving the right individuals in your strategic market and client discussions. 

The bottom-line for now:

The above 7-suggestions barely scratch the surface of what it takes to succeed in helping an organization create, define and profit from a new market.  However, they are important issues that I often do not hear the leaders of these exciting firms thinking and talking about.  Creating a market is a non-routine project, and as a result, non-routine thinking is required every step of the way.  Leave the traditional tactics at home, spend some time thinking beyond the moment and trust your gut that this is really challenging.  Remember, if you are right, you want to harvest what you spent so much time, money and gray matter pioneering.  If not you, the companies right behind you will be happy to benefit from your efforts.

Marketers, Are Trade Shows Extinct Yet?

This post is certain to generate some controversy about a long-standing, big investment marketing tactic  that I believe is increasingly irrelevant.  At the worst, if you read this and at least think about scrutinizing your investment in this marketing approach, I've done my job. 

The thoughts were prompted by a recent article in BtoB magazine  entitled: "Exhibition industry sees growth slowing."  What a shocker.  And while the economy is identified as the primary culprit for this slowdown, I submit that this tactic is a carryover from another era when people gathered information and insights about prospective suppliers or service providers in a very different way, and when lead generation was more about trolling and interrupting than pinpointing. 

The Raw Marketing Power of Passionate People in the Workplace

For those of you drawn to this post in the hope of finding something juicy about workplace romance, keep on clicking.  This is about romance of the professional type.  It's about the powerful impact that someone with passion for his or her job has on the working environment and ultimately on the success of the enterprise.

A passionate employee is like rocket fuel for your organization.  These rare and valuable people build your brand, strengthen client loyalty, stimulate repeat business and energize your workplace just by their daily participation in your business. 

Sales and Marketing Managers: Use the Lead Refinery Approach to Improve Results

I talk with a lot of marketing and sales managers and have spent most of my life working in these environments. In spite of the dramatic advancements in software tools available, I still find gaping holes in the way many sales and marketing organizations manage and account for the flow of leads into the sales pipeline.   Although there are undoubtedly some technology constraints, I suspect that the primary issue is one of process more than anything else.  Employed properly, changes in the output of the lead refinery foreshadow expansion or contraction of volume in the sales pipeline. 

Here are some thought-starters for employing the Lead Refinery approach to improve your performance:

The Best Marketing Ever: Employees that Surprise and Delight Customers

When was the last time that you had one of those "Wow" experiences as a customer, where you walked away "surprised and delighted" about how you were treated?

Travel a lot?  It probably doesn't happen for you with the major air carriers.  Most of my customer experiences with the airlines leave me shocked and disgusted. I'm convinced that the airlines study Customer Service Secrets of Attila the Hun.   Shop in Big Box retail stores?  Similar story...perhaps without the edge of nastiness that the airlines (or cell phone or cable) companies have mastered. 

All of this changed for me recently, as I found myself on the receiving end of two different transactions that left me absolutely surprised and delighted.  And no, they didn't take place with an airline, cell-phone, cable or big box company.  They were two retail establishments that clearly didn't get the memo that you have to be nasty to your customers to succeed in this world.

What is it about leaders that tolerate poor customer service from their employees?

Merger Reality-Trust Your Gut, Not the Press Release

If your company is involved in a merger, there is one certainty.  Everything will change.  Regardless of the carefully crafted words in the press release.  (Unless of course your company is being purchased by Warren Buffett, who is famous for only buying well-running companies and leaving them alone to run well.)

During the past few days, I talked with two associates going through mergers in very different industries, and both were attempting to convince themselves that things would be fine following the merger.  They both cited the "no expectations for layoffs"  verbiage in the press releases announcing their deal, and both engaged in some self-rationalization about the importance and "safety" of their respective departments.  My instinct was that neither individual truly believed what they were saying.  They should trust their gut on this issue.