Make Great Products

Innovating in a downturn

I thought I'd share this article I just read in the WSJ, "How to Innovate in a Downturn". It got me thinking about a few things I have had in the back of my mind during these last few months. One thing I think companies need to be doing right now more than ever is reevaluating all of their products from the standpoint of who their markets are and who their customers are. Are they the same? If they aren't the same, who exactly is your customer and how are you meeting their needs? It's not just about price, either, it is about features and what value those specific customers place in your product.

Trim the fat, but don't sell the farm (and more mixed metaphors)

As should be the case, companies are looking for every way possible to shave off expenses. Many companies have felt the force of this current economic downturn, some are expecting to feel it down the line. How does that effect plans for product development?

Certainly, cutting the fat is necessary but not at the expense of future growth. Otherwise, your competitors who have been hunkering down and staying the course will have the advantage now and especially when things turn start turning around. Smart companies are finding ways to innovate and develop now by making the most of the resources that they have.

I read this New York Times article called "It's no Time to Forget About Innovation" and found this quote by Chris Shipley, "The worst thing that a company can do right now is go into hibernation, into duck-and-cover. If you just sit on your backside and wait for things to get better, they’re not going to. They’re going to get better for somebody, but not necessarily for you.”

Feedback from MDT article

I had some feedback from my "perspective" in the Perspective's section from the September 2008 issue of Medical Design Technology magazine where I argue that improvements in benefits and cost savings will produce more of a competitive advantage for companies than simply being "green". You can read the whole section from the link on the front page of Amoebic, Inc.

 In response, my colleague Mark Bowes disagreed and said, "at the moment, there is a segment of the consumer population that wants to be green, or wants to be be  perceived as being green. These people will pay a premium to buy products that  are associated in consumers' minds with lowered environmental impact, regardless of whether the products make sense environmentally."

I agree that there are certain products that benefit in the marketplace from simply being labeled as "green", whether or not they have been proven to actually be better for the environment, because some consumers want to be perceived as being environmentally conscious. But from my experience in product development, this has also created skepticism, since many consumers have already caught on that "green" can mean relatively little, depending on the company and product.

Particularly in this environment of economic uncertainty and customers watching their wallets, companies would be wise to demonstrate and quantify the "greenness" of their product if there is no tangible other benefit, or they should demonstrate cost savings or additional benefits to cut through the "green" noise and be competitive.

Applying Consumer Goods Industry know-how to technology (and other niche) products

The consumer goods industry is where arguably the most sophisticated product development takes place. It is a highly competitive environment that thrives off of innovation, differentiation, and branding. Consumer goods companies have what many technology companies lack: sophisticated marketing departments that are experts in marketing analysis, positioning, and consumer research. Many technology companies devote themselves to research and development, engineering and invention, but neglect market analysis and consumer value determination. This can lead to a company shooting themselves in the foot by spending on features that customers don’t want or developing pricing models built on faulty assumptions. Both types of mistakes can cut deeply into product profitability.

Sometimes there is a tendency for highly technical and niche product companies to “adopt a religion”, or put faith in internal ideas that don’t necessarily have a real basis in market needs. An “I know better than they (the customers) do” attitude, or similarly, “I know what the customers will pay for” without conducting the proper intelligence and investigation.

What are some ways that companies in niche markets can improve by adopting the tenets of the consumer goods giants? Here are a few:

- Invest in the customer: find out what your customers value most and what they will pay for
- Value is what the customer says it is
- Know absolutely, positively everything you can about your competition
- Build long-term profit instead of short-term gains
- Maximum profitability is a result of defining maximum product value to the consumer

For product managers, the art of persuasion

Product managers are in charge of the product features, profitability, and ultimately a product's success. Years ago, I started out in product management. Being a product manager is a wonderful position to have because you essentially manage the entire business of your product. I’ve heard product management called the “accidental profession” because many people stumble into it. 

If I had one piece of advice for a new product manager it would be to learn the art of persuasion. The art of persuasion is very necessary in product management. A product manager might know that they have a great idea for a new product, service, or enhancement, but they must be persuasive if it’s going to be funded and supported. Those closest to the product know the most about it and often must convince those who control the resources who perhaps know the least. The best product managers are fighters, and to excel at your job you must be persuasive. One meeting won’t do it and you better come prepared to fight. That is how successful products get made. Otherwise, it’s just an idea in someone’s head. I’ve seen some wonderful, solid, important ideas dissolve because there was no advocate for them who really made a push. Come prepared, have solid numbers and meaningful assumptions to back up your argument, craft a compelling argument, be persistent, and be persuasive.   

Product strategy and the business plan gap

I work with a lot of companies that create business plans for the purpose of raising capital. Plans created for fundraising are often not of value for guiding strategic product decisions on a day-to-day basis. This is because they have a singular purpose: to make the company appear as attractive as possible, and while being truthful, highlight the successes and diminish the blemishes that all companies have. But companies that succeed must put their blemishes under a microscope. Companies can’t confuse their beauty queen (fundraising business plan) with their workhorse (strategic product and business plans).

To make your products successful, you have to highlight your blemishes, prioritize your top initiatives and man them accordingly. Plan on a quarter-by-quarter basis with the resources you have available to add value to your products and company. Get real with your projections. Your market analyses may look great on your fundraising business plan but too often these numbers are too general to drive strategy and won’t give you the granularity you need to make successful product decisions. Come up with real numbers that reflect what you can capture. By the time the funding rolls in, you just might be able to make those projections.

Innovation

Innovation is a big buzzword these days.  There are innovation experts, innovation planning, and innovation strategies. I just read The Innovation Killer by Cynthia Barton Rabe. To those involved in product development, a lot of her ideas won’t come as a surprise, though it’s a well thought out book and highlights some important points. I particularly enjoyed her take on the value of what she calls “renaissance tendencies” defined as someone who has “broad interests in a variety of fields” and the value to innovation. Because after all, innovation goes hand in hand with curiosity and curious people are curious about many different things. Indeed, the most innovative people I know are also the ones who have multiple, seemingly unrelated interests, whether it’s baseball minutiae, robotics, whaling history, or World War II aeronautics (you know who you are). Rabe hypothesizes that people with renaissance tendencies are able to “connect the dots” for innovative thought.  I've had an amateur interest in neuroscience for many years, and find connections between seemingly unrelated things endlessly interesting and intriguing. New business and product innovation is very much about exploring and harnessing creativity, coupled with disciplined research and development. Unfortunately the term "innovation" has been overused lately, particularly in consulting. I'm getting a little weary of the word, but I did enjoy the book.