I invite you to join me as I continue my… well let’s call it a voyage of discovery. Publicly, it all started last week with a post entitled “It’s All About the Customer; 5 Myths to Bust to Get There”, the premise is that businesses have/are moving away from selling a product to selling a solution by focusing on customer relationships and retention. This is how I closed the post:
What’s we as business leaders need to embrace is new answers for old problems – leadership, innovation and growth – and new challenges. In order to do this here are five myths that we need to bust.
Myth 1: We can’t Afford to Fail… Often
Myth 2: Decisions should be based on data not intuition
Myth 3: Past ways need to be totally forgotten
Myth 4: Problem solving and critical thinking are the same
Myth 5: It’s all about the features
I’ll explore these myths more next week.
On Field Audible
We most certainly will dig into each of these myths, however, upon further reflection during the week I think it is well worth the effort to take the time to explore the back-story that’s driving this trend. After all, if we don’t develop a hypothesis around the engine of change (the core) how could we ever expect to formulate reasonable arguments against the myths?
The Post Recession Consumer
I’m not necessarily a fan of trickle-down- economics but ripple effects (repercussions) within the supplier-consumer eco system are all too real. At the core of the current business model renaissance is the impact the past recession (although to millions it is still all too current, so well just think of it as the recession and post recession wave) has had on the attitudes of consumers. In the U.S. we have seen savings rates jump from under 5% of take home pay to in some cases to +10%, territory, an area that has not been treaded upon since the early 1970’s. According a Strategy + Business article “The Power of the Post-Recession Consumer” by John Gerzema and Michael D’Antonio, it is a move to a lifestyle more focused on community, connection, quality, and creativity. These spending shifts have and will continue to send massive disruptive waves through the product delivery process. If for no other reason but that those individuals who directly undertake business purchasing have had their personal filters readjusted. A human characteristic that easily bleeds between personal and business behaviors.
Not all is lost, as well all know, thanks to Clayton Christensen [The Innovator’s Dilemma], disruptions create opportunities for those that are able to best adjust to the new reality. Gerzema and D’Antonio have distilled these consumer findings into four defining principles:
United by Change; trend has no demographic, geographic, or social bounds.
The New Thrift; a desire to do more on their own
Transparency Breeds Trust; true, authentic story are the win the day
Companies That Care; the ability to identify with customers is now a must
Failure is Death, a Slip We’re Cool With
It is almost universally accepted that disruption changes the value proposition in the market. In the case we are studying a revised customer perspective on the measurement of value and the great, easier access to data that has driven the trend towards mass customization of experiences, even for the most core products and services. This in turn has forced a pseudo partnership between supplier and customer, transforming the communications between parties into more of an iterative dialogue, which has opened a window – although be it narrow – into the supplier’s inner workings.
At one point in the not so distant past suppliers believed that they held all the knowledge about what was best for their clients. Locked off behind their gated walls the company’s senior management and strategists mapped out the widget and the internal resources required to produce the end product in the most economical manner. This was allowed because of information arbitrage. The producers knew more about the issue their product solved than customers did, and they used that information advantage to create profits. One of the easiest ways to boost profitability was to gain production efficiency by serving up a homogenous output – one size fits most.
Today, however, there is to a large extent no information arbitrage. Everyone has equal access to data. The customer now holds the largest lever, money, and they are looking to spend it with those who provide solutions that work with their internal processes and allow them to produce the best resolutions within the market ecosystem.
As a result the R&D process incorporates the knowledge of several independent entities; they are truly tied at the hip. False starts and fits are expected, but if one falters it negatively impacts the others. Slip too often and the band will be looking for a new member.
This is why the business development role has taken on a new level of importance. No longer is it just about attracting new customers or entering new markets. The environment dictates a philosophical shift toward focusing on developing strategic-channel relationships. Business Development types must understand everyone’s needs, pulling together the correct course of action, and mustering the required assets and internal political support all in a transparent manner.
In short the emphasis is now on learning (listening & absorbing) and discovery (probing) before execution.
You can observe a lot by just watching.– Yogi Berra