Darwin helped us understand that species evolve over hundreds or thousands of generations. Genetic attributes get sorted and refined as slow changes in the global environment impact ecosystems and their residents. There’s an obvious business analogy in there. Changes in the global economy impact business ecosystems (customers, competitors, vendors) and year-to-year evolution is usually slow and hard to see.

But what about more disruptive change? Are there any business lessons to be learned from the response of natural systems and their inhabitants?

In a major disruption of the environment, quick genetic adaptation isn’t an available response. Many organisms die right away and most of remaining have only two paths. They can try riding out the change, struggling to survive in the new conditions, or they can try migrating to a new ecosystem, struggling to survive as they make the journey.

In response to a major disruption of the economy, organizations are pursuing some of the same strategies. Cutting operating costs and prices to ride out the change or trying to migrate to new markets and ecosystems. Both come with serious risks - of competitors able to price lower and last longer, and of new ecosystems that are already fully occupied.

Cutting or running are bleak options in either world, but in the natural world, there’s a different case worth considering. One that speaks to success not just survival. It’s the case of the thriver, the form of life that proliferates during big change. 

What makes thrivers successful? It’s having attributes like warm blood as the earth suddenly cools or the ability to stand upright when forests become grassy plains. Meaningful differences that make the thriver a better match to the new environment. In the language of business, it means possessing a unique set of competitive advantages.

In response to this economic change, some businesses will be thrivers. They will do much more than cutting prices. They know that if everyone else is doing it, it’s not a competitive advantage, it’s table stakes. Thrivers will adapt by discovering what else, beyond price, customers will value in the new environment, and they will thrive by adopting a unique set of meaningful attributes that connect with those values.

It’s already starting to happen.

As Klayman & Thomasch discuss in this Reuters article (http://snipr.com/crkdr), Hyundai is beginning to thrive by offering something that is relevant to people right now. Anyone who purchases a car from Hyundai can return it they lose their job. Is it working? In January, Hyundai’s vehicle sales rose 14% while the rest of the market declined 37%. How many cars have they had to take back? One.

Gregg Bagni (www.thealientruth.com), a business & brand strategist in the outdoor industry, is suggesting that this is a year when people will upgrade what they’ve already got. If he’s right, retailers who make it easy for people to update or accessorize their current gear are going to be more successful than retailers still focusing on pushing new, high-end gear.

By connecting with people’s needs & concerns about money, Mint (www.mint.com) is thriving. They help people understand and control their own personal financial situation, which is hyper-relevant now. They make it a priority to address people’s concerns about online security. They provide personalized offers that help people to save money. 

In the natural world, having adapted competitive advantages to match a new reality is a matter of luck. In the business world, it’s a matter of choice. By choosing to understand, and by adapting to, what is relevant to people in this shifting economy, your organization can thrive - even today. 

Having spent over half my career in the corporate world, I know that companies can become echo chambers too. An idea wins favor with a few influential people, it gains momentum, people jump on to embrace it and pretty soon the idea is echoing everywhere. It becomes local truth. Great when an idea is a good one, but an echo chamber can amplify bad ideas as efficiently as it does good ideas.

Years ago I was involved with a new product idea that echoed. We thought we had something really innovative, it applied a new technology and it fit a trend. We shared the idea with others in the company. They loved it too.

Then the idea began to echo hard. Before we started in-home research, someone took it out for retailers to look at. They wanted it now! Industry experts looked at it and said it would be big. The echo became overwhelming. We need it yesterday! The in-home research we had planned would now take too long. What should have been a limited launch followed by a slow, careful ramp became a massive launch and steep ramp.

We released the product and the sell-in was phenomenal. Stores climbed over each other to get it. Everyone, absolutely everyone, wanted it. You probably know the rest. The people who ultimately determine a new offering’s fate, customers, decided. It failed to connect with them.

The decision to skip our planned, rigorous customer evaluations felt right to everyone because we were all caught up in our own echo. The validation of people “in the know” added power to the echo. You can’t trust an echo. An echo is not another opinion it’s just an echo. The walls that separate a company from the real world return sound as efficiently as those in a real echo chamber.

Just like a concert hall uses baffles to improve the accuracy and quality of its acoustics, a company needs a kind of baffle to keep the wrong idea from echoing. There are a lot of possible baffles a company can deploy, but since the goal is to shape an offering that will connect with the people who will buy and use it, the best baffle is a deeper understanding of customers. The deeper the understanding the more effective the baffle. If you have that baffle in place early enough, it helps you to shape the idea, improving its quality and accuracy.

Much like politicians in Washington losing touch with everyday Americans, companies can lose touch with the real concerns and priorities of customers. When they do, an idea that sounds right, but isn’t, can start to echo. Instead when companies stay connected with customers, when they do the work of understanding the lives, goals and behaviors of people in the real world, the wrong idea never gets a chance to echo and the right idea is freed to resonate.

Steve

We all know that the motivation of individuals plays a big role in their accomplishments. Motivation mixed with vision and talent gives us new art and music. In science, theory, motivation and information combined lead to new breakthroughs. And it’s motivation that underlies Edison’s famous observation about genius being 99% perspiration.  

In the development of new business offerings though, it is shared motivation that matters. Without it teams aren’t really teams and the result of their work is less than it could be. And while motivating one person is difficult, motivating an entire development team is daunting. But since motivation makes things happen, leaders keep trying.

Some try money, but unless it flows steadily and substantially, it becomes not motivational but expected. Some try appealing to “winning”, but its definition is often unclear. It may mean “launching on time”, not all that motivational, or “beating the competition”, hard to see and feel. Some try mission statements, but usually they are more talk than action, which team members are happy to point out.

Of the three, two, missions and winning, are at least in the ballpark. By appealing to these emotional objectives leaders are trying to tap into the idea of “exceptionalism”, an aspirational ideal. The problem is that too often mission statements and “winning” are missing essential ingredients - realism and measurability. 

Aspirational ideals can motivate. In fact the more positive the ideals, the greater the potential (look at the election). But the appeal also has to be realistic. It will motivate only if the team believes that it can be done, by them, and will continue to motivate only if they see progress being made towards the objective.

This is why motivation often flows more naturally in small companies. Growing a small business is an aspirational objective. The mission feels real, and the purpose of each individual is clear. The accomplishments of the team are easy to see because when you are small the needle moves more.

It’s tougher in big companies. Size and bureaucracy add extra dimensions to the problem. The team is more distant from the results, internal barriers to accomplishment are more numerous, and organizational inertia means the needle moves less.   

But what about the large organizations where motivation stays high. It’s not a difference in ideals. The difference is realism - the ideals are embedded in the culture and backed by accomplishment. People line up to join, not because they get paid more, but because there the ideal is real. They are motivated to be part of something truly exceptional, or by an even more powerful motivation, to do exceptional work in the service of others. 

Here’s the thing. Any leader at any level in any business has the potential to authentically tap into the ideal of exceptionalism. It is fundamental to creating a market-leading product, service or company. But for this ideal to motivate teams it has to be real and measurable, and to make that happen leaders need to do three things;

Define what exceptional means in the life of the customer. Customers decide what is exceptional and what isn’t. The development team knows this so when you make your appeal to exceptionalism frame it in terms of the customer’s goals and priorities. To do that with credibility you need an expertise in how your offering will fit in people’s lives. Surveys can’t give you that. The world people live in shapes their perceptions and behaviors so the question of what exceptional means has to be asked and answered in context.  

Connect the team with the customer. The greater a development team’s concern for the customer the more motivated they are to do good work for them. The deeper the connection the greater the concern. When companies designate specific groups as “customer facing”, development teams can become disconnected from the people they are developing for. While you can’t bring the entire team to the customer, you can bring the customer’s voice and story to the development team. 

Make the ideal measurable. Since it is a product or a service that the team is developing, features and attributes need to be derived from your understanding of the customer’s goals and priorities. In turn, these can be translated into metrics and evaluated as part of your company’s existing process. By moving from an understanding of what exceptional means in the life of the customer to metrics, you make the ideal measurable. By measuring progress towards that goal at each monthly or weekly project review you continue make the ideal real for the team.

Exceptionalism resonates throughout successful companies. By making that emotional ideal real, any leader in any company can foster motivation across a development team. A deeper, shared understanding of the people who buy and use what you make and sell focuses the ideal and makes it real. 

Steve

The other day my boyfriend wanted to teach me to play dominoes. I was reluctant, a competitive game, but I always want to give new things a try before saying I don’t like them. The first game really sucked… each time my turn came up I went through this tedious process of adding up each end tile against the tiles I had in my hand and then re-adding and re-adding, trying to figure out if I could score any points. Finally I would put down the only tile I felt I could and would score nothing. Then my boyfriend would take his turn and mop the floor with me. “Sorry, you just keep setting me up” he said. Ugh. I felt like I had no control over it. It seemed as though I just kept drawing bad tiles and fate was determined to see me miserable.

Not ready to base my entire opinion of the game on one try, I agreed to one more round. Early in that second game patterns started to reveal themselves to me. I saw how to quickly evaluate the potential for scoring, how to evaluate my tiles without re-adding everything on the table every time… and I won… by a respectable margin.

Now I still hated that for me to do well my boyfriend had to lose, how do you have fun when someone you care about is bummed and you caused it, BUT what I was excited about was cracking the code on how to play the game. Each turn went from being a long, drawn out process of counting and re-counting to the excitement of seeing what would open up next. From feeling like fate determined my opportunities, to testing my theories of how to evaluate point scoring potential and learning from what worked (and what didn’t).

Not to put too simplistic a spin on this, but that is the transition from analysis to synthesis during the research process. It’s that movement from laborious, oblique processing of individual moments to the clarity and order of frameworks and models that brings such satisfaction. Beyond that, it becomes faster and easier to assess situations for opportunities, to choose an action, and more accurately predict outcomes. It’s more than just identifying patterns, it’s understanding the mechanisms that create the resulting patterns.

Too often research pays little attention to synthesis. This is a shame because in the context of a new business endeavor or problem the creation and application of models and frameworks improves one’s ability to navigate to a successful outcome. Think about it. Analysis tells us what is happening, synthesis why it is happening. The opportunity is in the why. When you know “what”, you have observed. When you know “why”, you understand. With understanding comes greater power to achieve successful outcomes.

Now, declining sales have made past levels of overhead excessive; it has become waste too. That’s why companies are cutting and cutting hard. With all of the past and current focus on eliminating “muda” (waste), it’s surprising that one big and important form of waste has escaped attention. 

A 2004 PDMA study of 203 new B2B and B2C products found that just 59% succeeded in the market. In the context of reducing waste, it’s hard to think of an opportunity bigger than this. Think about it, scarce resources; money, materials, energy, time, and smart people, put to work in an endeavor that succeeds just 59% of the time. 

Why the low hit rate? Simply put, 41% of new offerings fail to connect with people’s behaviors or expectations. I mentioned in my last post that this is rooted in a failure to understand the customer. But there’s often more to it. Difficulty in translating customer insight to product plans. Problems in keeping the team aligned as the product is developed. Making time-to-market a higher priority than right-to-market. Or all of the above.

Since the solution requires a change in thinking, a willingness to adjust front end process and a more active commitment to excellence, most companies won’t make the shift. But for you this longstanding problem has become a big opportunity. While others focus exclusively on cutting expenses and prices, your company can seize the initiative by getting new offerings right - really right. By doing so, you’ll maximize ROI, gain market share and build brand equity. 

Three area to focus on.

Deeper Analysis: Market research is more than collecting data. Getting it right requires drawing the correct conclusions from the information you gather. That means the non-obvious too. Spend more time and apply more rigor when analyzing and synthesizing the data you collect. Emphasis here not only helps you make the connections needed to get the basics of your offering right, it leads to the kind of unique insights that create a foundation for innovation that is truly meaningful to people.

A First-Hand Perspective: The story of your customer is a powerful tool in getting your offering right. A power point summary of customer needs won’t align your team or inspire excellence. For that they need to know the customer like a friend, to see, understand and feel how their decisions and actions affect these people who are depending on them. That’s why we use film at Teneo. It allows teams to connect with the story of the customer and it makes ideas stick.

Prepare to Break Through Barriers: Politics, resistance to change or even claims of “this isn’t feasible” are ready barriers to getting it right. Breaking through organizational barriers requires information and credibility. Diligence in research and planning will give you both. Develop clear criteria so everyone knows what getting it right means. Root these criteria in your research and be ready to apply them at every fork in the road. 

When the economy is strong a low hit rate may be an uncontemplated sin, but in a downturn, it’s both a serious problem and a big opportunity. The companies who know their customers deeply and who apply that understanding effectively will improve their hit rates. They will deploy resources more profitably and gain market share even as overall category sales decline.

There is nothing stopping you from helping your company to be exceptional by getting your products right. Just pitch it to the Operations VP as the biggest waste reduction program ever. Lead the charge, get it done, get it right.

Steve

Whether you create, make and sell products or services, getting it right is the foundation for business and brand success. So, is your company getting it right? If yes, it is exceptional. Most companies don’t. The data - and the results - bear that out.

According to Consumer Reports, only half the people using mobile phones are happy with their service, and up to a third are considering switching at any point in time. This shows in the customer satisfaction index maintained by ACSI (www.theacsi.org). Wireless services overall score a dismal 68 on the 100 point index.

In the world of personal computers, where customer satisfaction has never been very high, the index has declined over the last three years. The industry average score is now 74. No surprise, Apple is the exception with satisfaction scores of 85 for their computers, no one else is close. Apple gets it right.

In cars, US auto makers score substantially lower in customer satisfaction than do Japanese competitors like Toyota and Honda. In airlines, Southwest’s score of 79 far exceeds an industry average of 62. In search, Google’s ACSI score of 86 blows away the other search engines whose’ scores average 75. Toyota, Honda, Southwest, Google, they all get it right. 

There’s a key correlation here. The companies who get it right lead their industries in sales and profitability. Their brands are the strongest. Their success is sustainable. They will come out of the downturn in a better position than their rivals. Those not getting it right are incredibly vulnerable. Look at GM, Ford and Chrysler.

What does getting it right mean? It means people are glad to have chosen you. It means that what you offer connects perfectly with their highest priorities. It means that from their perspective your company provided greater value than your competitors. It means that your solution works for them. Your solution enhances their lives or work and supports their goals. You simplified it, but it does everything it’s supposed to and nothing it’s not. It approaches perfection in the areas most important to them. 

Simple, well designed, trusted, exactly what they needed. No excuses, no mistakes.

Since whether you got it right is decided by the people who buy and use your stuff, you need to know them to know where to go, what to do and how to do it. How? Research more deeply to understand their problems, goals and priorities. Learn what will work within their context of purchase and use. That means spending time in their world instead of relying on approaches that separate research participants from their everyday context.  

The companies who know their customers deeply and who apply that understanding will simplify correctly, differentiate more clearly and innovate more meaningfully. By getting it right they will gain market share even as overall category sales decline, weathering the downturn more easily and thriving on the other side. 

Let’s start a movement to get it right. You can be the one to start it and to lead it in your company, in your division or on your team. Your customers will thank you, your company will thrive and your work will make a difference.

Steve

Other than the obvious business motivations, why are we writing this blog? We believe that we have a contribution to make in helping companies create products that are business and human successes. We have experienced and learned from success and failure, and believe that both have given us perspective worth sharing. We have spent almost two decades working, living and breathing research, design and development and have created successful products both as company insiders and as consulting partners. The products that we’ve worked on have generated hundreds of millions in revenue for our clients and have been recognized internationally with awards for innovation and design. We are proud of that. But what we are most proud of is that we have always, constantly and relentlessly, strived to do work that makes people’s lives better, brands stronger and companies financially and culturally healthier.

Through this blog, we want to reach out and engage those who are similarly motivated. Whether you subscribe or just drop by once in a while, our goal is to provide useful information that will help in the important work that you do. In return, we’ll ask for your thoughts on the subjects we blog about and your ideas for the subjects that you think we should explore.

Research, design, innovation, products, services and communications are all topics that we’ll cover. Because our approach to research is contextual - real world - we’re likely to spend quite a bit of time there. We believe in the value of other approaches to research, but in our blog you are likely to hear more about contextual research and its application to product planning, concept development, design and innovation.

Speaking of products, we’ll use that term frequently. Most of the time when we do it will be shorthand for both products and services. Where there are important differences between the two, we’ll call them out. And since the world of design and development is prone to movements and trends (experience design, design thinking and ethnography for example) we’ll offer our perspective there too. Our hope that is every now and then our point of view will inspire you to think differently about designing, innovating, developing and communicating.

In the coming weeks and months we are going to weigh in on topics such as;

• The messy, complex world of people and how going there first lays a foundation for real-world success in new product development.
• How team alignment affects new product development and how to start and stay aligned as you move through development.
• The social responsibility of companies, teams and individuals to get products right.
• How people experience communications, shopping and products and what it means for research and planning.
• Simplicity and people’s priorities.
• Why customer research fails to guide product development teams to an optimum result and how to fix it.
• The impact of politics, accommodation and strong voices inside of companies on research, planning, design and outcomes.
• How the 80/20 rule kills great products and services.
• The trend in product development of abdicating decision-making responsibility under the guise of consumer research, and how it affects outcomes.
• Why inspiration and idealism are underrated in development.

One last thing. We’re going to try and emphasize quality over quantity, so for now look for posts about every two weeks.

Thanks for coming by.