If you follow my blog you know what a fan I am of SPIN Selling
Understanding your Value Proposition from your customers perspective may be the most important strategic advantage you can have as a company.
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Information designer Tom Wujec talks through three areas of the brain that help us understand words, images, feelings, connections. In this short talk from TEDU, he asks: How can we best engage our brains to help us better understand big ideas?
Tom Wujec is a Fellow at Autodesk, the makers of design software for engineers, filmmakers, designers. At Autodesk, he has worked on software including SketchBook Pro, PortfolioWall and Maya (which won an Academy Award for its contribution to the film industry). As a Fellow, he helps companies work in the emerging field of business visualization, the art of using images, sketches and infographics to help teams solve complex problems as a group.
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In Dr. Reidenbach’s book, Listening to the Voice of the Market: How to Increase Market Share and Satisfy Current Customers
He goes onto to discuss, which I paraphrase below:
Many companies are still embracing a Product Orientation and others have only recently discovered the perceived benefits of a sales orientation. And because change takes place grudgingly and haltingly, many claim to the tenets of the production orientation with its emphasis on low-cost and its lack of focus on the customer. Others, who embrace a Selling Philosophy focus simply on selling the organization’s products and utilize sales and advertising to promote the product versus centering on customer needs. The Customer Focus model was a shift on what the company could sell to what the customer wanted. Their commercial organization existed solely to satisfy what the customer wanted or needed. Companies began to understand the importance and power of the Voice of the Customer. This orientation generated the key metric, or measure, of customer satisfaction and increasingly gave credit that a satisfied customer is a profitable customer.
The Voice of Market is a simple concept that expands on the Voice of Customer so that you're not listening just to your organization’s customer but also listening to your competitors’ customer. Taken together, your organization's customers and your major competitors’ customers constitute the market, or a good approximation of it.
Market-share is a function of both of retaining your own customers and adding new ones. These new customers come from two basic sources, new entrants into the market and your competitors’ customer base. Your competitors’ customers aren't your customers for reasons. Assuming that your customers speak for the market is a major error. What they consider important is not necessarily what the market considers important. If your strategic focus is on cementing the loyalty of your own customer base, the Voice of Customer is essential. If however your strategic emphasis is on growing market share, including both retention and acquisition, the Voice of Customer is insufficient.
A second important reason to embrace the Voice of Market is that you need to understand what your competitors are doing. What successful general engages an enemy without first understanding the disposition of the opponents’ troops, their strengths, and weaknesses? Yet many a company plan is drafted the confines of an office without customer intelligence, resolving the process he calls strategic guessing. Many organizations that engage in strategic guessing think that they know what the market wants and needs, when they really don't. Do you know who your competitors are? Are new ones emerging beneath the radar? Do you know how strong they are? Only by listening to the Voice of Market can you answer these questions with any validity a singular focus on your own customer base cannot and will not give you this information.
Voice of Market is essential and at the core of your marketing process. I have always promoted that it is imperative to manage your Work in Process (WIP) or your pipeline effectively and efficiently. This being the quickest way to increase revenue and decrease cost. This includes customer retention as part of the process. The next extension is acquiring new customers (It is also where we spend our most money). To do this, you must have knowledge of non-existing customers. For example, when you read a survey, do you learn more from a customer or a non-customer? Does both columns in a win-loss analysis look the same? .
Voice of Market information goes much deeper than this. It unlocks the mystery surrounding value. Value is such an abstract term for most companies because it is difficult to measure and can be somewhat subjective. However, the value gap between you and your competitors is not. It is real and can be quantified. These gaps whether positive or negative enables you to address real criteria in your marketing efforts. This is a great eye opener for most companies
Most companies have a tendency to look at additional markets in a recession (I think many of us believe that the grass is greener on the other side). However, seldom are they offering breakthrough products to this new market. Determining Voice of Market information and deciding the most attractive market(s) to pursue is imperative in a down economy. You cannot afford to enter markets that you have little chance of winning.
Understanding the key metrics certainly helps your marketing efforts but just think for a moment what it does for your innovation efforts. It opens up tremendous opportunities from a fact driven methodology versus a hunch or maybe a limited view of an existing customer. Voice of Market is a key strategy in driving market share and is imperative to understand in a down economy.
Disclosure: At this time there is a ongoing business relationship with Six Sigma Marketing Institute founded by Dr. Reidenbach.
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Good video talking about startups of course but with a slightly different slant: “Stop Wasting Peoples Time.” He takes the Lean Startup to a different level and talks a little more about entrepreneurship management. He claims that it needs to change because of the level of uncertainly that exist.
He discusses the myths of the Lean Startup:
If you would like to learn more about the Lean Startup:
Eric Ries’s blog: http://www.startuplessonslearned.com/
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A subtle lesson in the power of time, what it means to us and the way we observe the world. In my next podcast, I have a discussion with Dr. Terry Barnhart on John Boyd’s OODA Loop. The second O, orientation – is the repository of our genetic heritage, cultural tradition, and previous experiences and is the most important part of the OODA loop since it shapes the way we observe, the way we decide, the way we act. See how time affects are Orientation!
From Wikpedia: The OODA loop (for observe, orient, decide, and act) is a concept originally applied to the combat operations process, often at the strategic level in both the military operations. It is now also often applied to understand commercial operations and learning processes. The concept was developed by military strategist and USAF Colonel John Boyd.
Dr. Barnhart made this observation after our podcast about Observation:
If you think, even for a moment, about isolation in companies, you see it EVERYWHERE. The corner office is a deliberate form of isolation. Offices are isolationist to the extent that people use them. Going to the Gemba, however, restarts observation. Those observations are never quite what we expect, hence we immediately begin the process of orientation change. The most interesting fellow I have heard about was Soichiro Honda, who would walk around his plants in Honda whites, and talk to people, pick up trash on the floor, etc. Many people did not know what he looked like, so he would often get raw views of how his company operated. He had no separation between himself and his company, hence it was difficult to blind him to the barriers and opportunities present.
As technology increases and our virtual communication skills or maybe our control skills(from the video above) get better and better, what will that do to our orientation, our observations? Will Gemba still be important?
About: Dr. Terry Barnhart is the Senior Director Strategy and Continuous Improvement at Pfizer Global R&D and currently does research, facilitate, study and teach the improvement of R&D and management performance through the design and implementation of fast-learning systems. His passion is the development of Lean interventions for durable, break-through (2x or better) performance improvements in creative environments
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Jason Fried is the co-founder and President of 37signals, a privately-held Chicago-based company committed to building the best web-based tools possible with the least number of features necessary. 37signals' products include Basecamp, Highrise, Backpack, Campfire, Ta-da List, and Writeboard. 37signals also developed and open-sourced the Ruby on Rails programming framework. 37signals' products do less than the competition - intentionally. Jason believes there's real value and beauty in the basics. Elegance, respect for people's desire to simply get stuff done, and honest ease of use are the hallmarks of 37signals products
Great Lesson on marketing by Jason. If you have not read Rework, Jason co-authored this, you should. His emphasis on sharing is very interesting. He has one blog post that has had 800,000 views and linked by 700,000 other sites.
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Lean Accountants are active and a central part of a company’s operations. This is a transcription I had with Jim Huntzinger a leading authority in the world of Lean Accounting. Jim is the president and founder of the Lean Accounting Summit, TWI Summit, and Lean and Green Summit.
6th Lean Accounting Summit…Lean Accounting Summit organizers have announced the dates for the 6th annual Summit as September 21-22, 2010. The Summit will again be held at the Red Rock Resort in Las Vegas.
Related Podcast: Leading with Lean thru Accounting
Jim Huntzinger authored the book, Lean Cost Management: Accounting for Lean by Establishing Flow
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Dr. Charlene Spoede Budd was my guest on the Business901 Podcast titled Developing Predictive Measures with Throughput Accounting and as you would expect our discussion was about the Theory of Constraints Through-put Accounting methods and the application of the knowledge that we gain from this information. This is a transcription of the podcast.
Dr. Budd was a contributor to the recent Theory of Constraints Handbook
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You have been struggling for a while and now the recession is really hitting hard. you are starting to wonder… Where have my customers gone? Are my competitors just buying jobs? How can I cut expenses? Do I have to many people on board? How did I get here? That is precisely how a mental model could work: if nothing bad happens, you must be doing something right. So as time moved on, bad practices became part of our business model. 
Despite signs of trouble, we adjust our mental models to accommodate larger deviations from the norm. Without a mechanism for reframing our behavior or redefining our group, the effects are ignored, as they were at NASA, until a catastrophe happens.
As the investigating board put it, both Columbia and Challenger were lost also because of the failure of NASA’s organizational system: both actions were failures of foresight in which history played a prominent role.
So influential board NASA’s models and scripts, and so delusional self-confidence bred group is, that even after Columbia broke up, killing all on board, the space program manager told the press that he was comfortable with his previous assessments of risk and didn’t think the foam debris could cause the accident. But remember that a key feature of this system is that, taken one small step at a time, each decision always seems correct.
In a culture that involved at NASA, each returned from a successful mission was another moon landing. NASA was silly. Applause that was, by the time of Columbia, more than 30 years old. So instead of appearing more deeply into the problem, they gradually revise your models until they were literally interpreting failure as success. The final report of the commission said:
Engineers and managers Inc. worsening anomalies into the engineering experience base, which functioned as an elastic waistband, expanding the hold larger deviations from the original design. Anomalies that did not lead to catastrophic failures were treated as a source of valid engineering data to justify further flights.
This example is taken from a Laurence Gonzales book Everyday Survival: Why Smart People Do Stupid Things
Rant: So many times our acceptance of our culture allows us to get sloppy in our practices. Good enough is a common word. When I discuss Lean in marketing it is typically met with resistance. When I use the words Six Sigma Marketing; alarms, bells, whistles and even fireworks seem to take place as a result of the connotation of “Six Sigma”. I seldom ever get full understanding that you should look at Six Sigma as a methodology rather than what the strict mathematical definition of Six Sigma. It is the mental model that is in place.
Having a systematic process in place allows us to deal more effectively with the problems and even the future. Our choices of how we do things and what we see (data) have significantly multiplied. Decisions have become increasingly more difficult. Having a proven process such as the Six Sigma tool of DMAIC will result in better informed and more accurate decisions. I use Six Sigma as an example. There are many methodologies and tools out there to solve problems. However, even these processes can become “intuitionalized” and allow good enough to creep in. Keep striving for perfection and always keep asking Why!
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I happened upon this video the other day and could not help but think about the popular Lean Startup and Eric Ries. Eric is ever mindful of getting your product/service into the real world as quickly as possible. He laughs at the notion of creating this full fledge business model and structure that are institutions teach. Listen to Rodney discuss real world economics in this class… I think he has about 4 Pivots during the video.
If you would like to learn more about the Lean Startup watch this short video from an earlier blog post, Dealing with uncertainty in the Lean Startup.
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Received an excellent response on my post yesterday (Measuring The Customer Experience) on Twitter from a @pricingright that said; “With all due respect, it is far too simplistic to use customer advocacy as a measure of customer experience & it is wrong to draw causations. Correlations they speak about are from cross-sectional studies. Interesting but rife with selection, survivorship and other bias.”
I posted the Forrester video because I felt the point being made about keeping measurements simple were important. What needs to be simplistic in measurement is the collection of data. Without simplicity or automation in handling these tasks seldom will they be sustained or not manipulated to get the numbers in!
Do I believe that Customer Advocacy is to simplistic as @pricingright points out? You Betcha! I am from the school of Six Sigma, we don’t make anything that simple do we? ;) In the soon to be released 5 Cs of Driving Market Share program, I had asked Eric Reidenbach, the founder of Six Sigma Marketing Institute what the Net Promoter Score meant to him. An excerpt from an article he sent me.
What drives the NPS calculation? What is the best predictor of whether a customer is willing to recommend it to a friend? Let’s start with what does not predict NPS.
Most organizations would point out that they do some kind of customer satisfaction work. However, Reichhold correctly points out that “most customer satisfaction surveys aren’t very useful…. Their results don’t correlate tightly with profits or growth…Our research indicates that satisfaction lacks a consistently demonstrable connection to actual customer behavior (recommendation) and growth. ..In general, it is difficult to discern a strong correlation between high customer satisfaction scores and outstanding sales growth.”
What does correlate highly with profitability and sales is loyalty which Reichhold defines as “the willingness of someone – a customer, an employee, a friend to make an investment or personal sacrifice in order to strengthen a relationship. For a customer, that can mean sticking with a supplier who treats him well and gives him good value in the long term even if the supplier does not offer the best price in a particular transaction.”
Value, like the NPS, is specific to a product/market. The factors that define value for a credit card will be different than those factors that define value for mortgages. Similarly, farmers will define value differently when talking about tractors than will golf course maintenance personnel. Value, the best predictor of loyalty and NPS, will vary from product/market to product/market and accordingly, must be managed differently from one product/market to another.
Value is conceptually defined as the relationship between a product’s quality and the price paid for the product. Our research also indicates that the brand and/or corporate image may play a significant role in the value definition.
Simplicity is important to measurement. It is imperative that we make the collection of data to include asking the right questions of the right people to get meaningful data. Numbers can be crunched! Customer Advocacy measurements can be a great tool used properly and/or in context with product/market classifications. Creating the correct data sets and manipulating these numbers is what makes Six Sigma such a great companion to marketing.
Disclaimer: At the present time, I am working on a project with Six Sigma Marketing Institute
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The Eagles always understood!
