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Excerpt: The Difference is Outside
From The Secrets of Tuned In Leaders
Why do some products fail while others succeed? That question keeps many CEOs, venture capitalists, employees, and shareholders up at night. Customers want to know too, because after all, they are spending their money on these products.
At Pragmatic Marketing, our business is to study technology-company leadership, marketing and how companies develop best practice methodologies for creating products people want to buy. We train, and provide services to the teams that develop and market these products. We’ve studied the introduction of thousands of products across the technology industry, including those from big, well-known companies like Intuit, SAP, Microsoft, EMC, CA, Iron Mountain and SAS; breakout products from Blackberry, Salesforce.com and Google; and offerings from startup or niche players you may have never heard of like WebSense, Macrovision, FeedBurner, Act!, and AccuMap.
Recently, our focus has been studying the DNA of market leaders. We’ve surveyed our 45,000 alumni at 3,000+ customers and compiled data for the past five years. And, in early 2007, we sat down for one-on-one discussions with 30 CEOs to dig deeper into what they think it takes to be successful. Drawing from our research and these discussions with CEOs, we looked at culture, organization, and process for building products; strategies for optimizing go-to-market plans; and measurement of best practices.
Our research validated anecdotal information that market-driven companies are 31% more profitable, twice as fast to bring products to market, twice as likely to lead, and enjoy 20% higher customer satisfaction rates. We also found that there is a much more fundamental reason for product failure than features and price. By pulling this information together into this e-book (and the Tuned In book), we will show you how to dramatically increase the likelihood for your success. And while it is possible to be successful by following a path different than what we outline here, the risk factors of going down an alternative path are much greater.
In fact, our research helped us uncover some startling observations about Apple which all technology company CEOs can learn from. Based on the evidence collected, we feel that the utterly different leadership styles—particularly the market-driven leadership habits at Apple under John Sculley and Steve Jobs—is the difference between failure and success. We’re convinced that typical technology company culture leads to the kind of inside-out thinking that creates products like the Newton. The development process becomes bloated with stuff that company insiders thought was cool, but that people weren’t prepared to plunk down money to buy. However, once a company’s leadership focuses outside-in (paying attention to the needs of the marketplace), it results in the development of breakthrough products like the iPod—a product that solved an unmet market problem (an easy-to-use MP3 player) and one that people were happy to spend money on.
We heard a lot about the paradox of growth. We also heard that all CEOs want to be market-driven (but so few actually are)—so we asked why is it so challenging to become tuned in?
There is absolutely no doubt that the evolution of technology companies follows a predictable pattern. The success of the initial product is a rush, intoxicating for everyone involved in the company. However, too often, it’s short-lived. In the predictable evolution of a technology company, the second and third products developed (like the Apple Newton) almost always fail. Why? Evidence shows it is because the entrepreneurs who started the company and who understood buyer problems soon become occupied with the details of running their organization. They no longer focus on buyer problems and building products the market wants to buy, but rather they obsess about the details of managing an ongoing business like hiring and firing, finance, office space, investors, and the like. Outside pressure forces the company to become the opposite of a market-driven company.
- Becoming competitor-driven (creating copycat products and services and entering the same vertical markets as competitors).
- Becoming customer-driven (letting existing customers define extensions to their products, sometimes creating a market of one).
- Becoming sales-driven (adding channel capacity to drive volume for existing opportunities and defining direction by the current needs of prospects).
