Chasing Outcomes: You Can’t Get There from Here
Of all the causes of tuned out behavior, the most common we’ve observed is the logical (but incorrect) assumption that, because you’re an expert in a market or industry, you therefore know more than your buyers about how your product can solve their problems. It’s natural, for instance, for 20-year auto industry veterans to assume they know more than 100 mothers do about how to drive preschool-age children around town each day.
Or a cell phone manufacturer might think they are able to guess which capabilities are most important to users because “they use their own products daily.” Similarly, a software business leader might assume because of the complexities and/or flexibility of their leading-edge technologies, the company is best equipped to decide how to present solutions that package a comprehensive set of capabilities. Wrong!
Too often, this type of assumption results in poor products, such as those created when Detroit product development experts design the radio (or keyless entry system or cup holder) that they themselves would want to buy. How many tech devices and software products have overwhelmed even the power users? We’re missing a fundamental ingredient to the puzzle here:
When was the last time you bought your company’s product?
Leaders who guess at what the market wants, follow a typical and familiar path: They start chasing outcomes. They get trapped doing this for two very simple reasons:
- Their business case (implied) was built on an n=many assumption.
- Their research was based on an n=1 foundation.
The result? You pretty much get what your research predicted…a solution that satisfies a small audience (sometimes only you). You then begin the slow and painful process of developing marketing plans, sales strategies, and new incremental development projects targeted to reach big audiences (executed rapidly because you are “agile”). It is then that you start chasing outcomes.
Sales are lower than expected, so you launch more marketing campaigns. Marketing results are lackluster, so you create a new version of your offering and re-launch. This time, you hold the sales channels accountable and start adding more management to each cycle to ensure that buyers “get it.” And then the cycle repeats.
Bad news everyone. You’ll never get there!
Chasing outcomes is analogous to playing a sport and spending all of your time watching the scoreboard. Those who have tried this approach will tell you that you lose all sense of competing and end up with the result you feared. If you had channeled all of that energy into the right things earlier, the result might have been different.
But, that would require a better perspective…a tuned in perspective.
Debunking the myths
We’ve analyzed hundreds of companies to understand the process of becoming (and staying) tuned in, and we’ve determined that most have a single, dominant focus that drives their approach to business. Think of it as a “company personality” that determines how an organization structures itself and behaves in the market.
The most successful organizations are tuned in to their markets. Whenever leaders create products or services—for potential new customers or even entirely new markets—they seek to solve buyer problems first.
We have also identified three other common types of organizational cultures. When an organization allows one of these three cultures to dominate, the resulting approach to business is very different from the one we outline in the Tuned In Process:
- Innovation Is Everything
- Revenue Cures All
- Customers Know Best
While most companies exhibit at least a small amount of each of these driving behaviors, one usually dominates. And the choice directly correlates to their success (or failure). Let’s explore each of these cultures in further detail—debunking the myths along the way.
Debunking the myth that Innovation Is Everything
These days, innovation is hot. Check out all of the magazine articles, business school courses, and books on the subject, and you’ll find countless examples detailing how innovation creates breakthroughs. This focus has led many organizations (start-ups in particular) to focus exclusively on their ability to innovate and to create a disruptive breakthrough that will make them famous. But directionless innovation is a common road to the business scrap heap.
The culture of “Innovation Is Everything” breeds tuned out behaviors. Innovation-driven leaders tend to listen only to themselves, although they do religiously track competitors. These companies fixate on “one-upping” alternative products in the marketplace. And they obsess about who’s getting credit for the most clever or unique inventions.
Focusing on “changing the game” is not inherently a bad thing. Some organizations are really good at creating and marketing innovative products—Bose, Nike, and Brookstone are three that come to mind.
Unfortunately, what we tend to see more often are companies that innovate for innovations’ sake, using inside-out thinking. In other words, they create products that are new, hip, and cool—or that have new, never-before-seen features. But these feature-laden products and services aren’t developed in response to buyer-defined needs.
While it is possible that a product or service created by a tuned out, innovation-driven company will catch on, it is much less likely than if the innovation were specifically designed to solve market problems. As a result, these innovation-led companies invest big resources in hopes of a big win (much like a baseball player swinging for a home run on every pitch). Their risk of failure is huge.
Only when an innovation solves people’s problems does it become a potent force.
We realize we’re being a bit radical here. But, consider the piles of money plowed into innovation during the dot-com boom. Venture capital firms funded innovative e-commerce companies, innovative Web tool developers, and innovative portal sites that sounded new, hip, and, well…innovative. Anything with an “e” in front of it qualified. But unless they solved an underlying problem, these exciting innovations are mostly distant memories. Remember, the truly successful Web companies, such as eBay, Yahoo, and Amazon, solved market problems.
We’ve also noticed that many innovation-driven companies obsess over competitors’ moves and try to make incremental (and innovative!) improvements to what the other guys are doing. This approach assumes that your competitors are already connected to the things your market values most and that the game is just a simple matter of establishing a clear area of superiority (through innovation, of course).
Another problem with this approach is that you tend to create products and services that are “better” than the other guys’ because they are bigger, smaller, faster, or cheaper. The problem with this approach is that, too often, your customers don’t care. Focusing on your competitors is a tit-for-tat game that rarely produces a market leader.
There’s an important distinction to be made here, however. It is possible for a tuned in organization to learn about an unresolved market problem that has to do with another company’s product. Interviewing buyers, for example, might reveal that people are ready to pay money for a product that they describe by comparing it to the competitor’s product (“a good quality haircut in half the time that I would need to spend at the hairdresser in town”). Creating a product to solve this problem is definitely an example of tuned in behavior, even though the market problem is expressed as a comparison to an existing product.
But, in the end, a corporate personality built around innovation by itself has a low probability of success. Obsessing over the competition’s product, or over your own product’s increased performance or new features, means you aren’t focused on the most important success driver: the market problems faced by your buyers.
Believe us, there is no such thing as the creative dreamer, sitting in an isolated office, who builds products that succeed every time. It may happen occasionally, but the products made by the vast majority of innovation-driven companies just don’t resonate with the market.
Debunking the myth that “Revenue Cures All”
This culture is often founded on the belief that revenue and sales are always the most important goals—which typically emerges soon after an initial round of fund-raising or some other infusion of capital. When companies enter a perceived growth phase (dictated by the strength of a market opportunity or some early wins), it is common for outsiders (such as investors, the board of directors, or your spouse) to insist on a strong sales focus. In larger organizations, a highly charged sales executive is often hired; some companies even make the new sales person the President and/or COO.
“Getting serious about sales” sometimes results in an initial brief period of success resulting from sheer force of will to push solutions into the market. But, because the revenue-driven company will often resort to signing any contract to make the numbers, lowering the price to bring in the business, or telling any story to close the sale, it’s not long before the organization becomes tuned out to the real market problems of buyers. Then the salespeople start making promises the company can’t afford to keep.
Non-revenue-generating departments (such as marketing, customer service, and product development) often suffer from reduced influence and resources, and can even face elimination. In response, the company ends up acquiring more and more resources to support the dynamic requests of Sales, often resulting in a death spiral that requires the sale of the company, a merger, or even bankruptcy.
The revenue-driven organization worries about individual sales opportunities one at a time, rather than what resonates with a large marketplace.
In many consumer products, the “Revenue Cures All” approach results in jumping on the hype cycle. Some organizations spend huge amounts of money on expensive advertising in an attempt to buy their way into buyers’ minds. These tuned out organizations believe that TV commercials, direct mail, and other forms of interruption-based marketing are the tools they need to succeed.
Instead of spending time understanding buyers and their problems, hype-driven companies spend time with their agencies working on campaigns to bombard people with slogans and messages.
We’re not against advertising when used as a strategy to communicate powerful ideas that already resonate with people. Wendy’s “Where’s The Beef” campaign worked because it communicated an answer to buyers’ problems (hamburgers had beef patties that were too small). But the hype-driven company manufactures buzz that has very little to do with helping people solve problems.
Debunking the myth that “Customers Know Best”
There are thousands of books, countless blogs and forums, hundreds of conferences, and lots of plain-old common sense that suggest an unrelenting focus on the customer is the best way to guide an organization. But there is a fundamental flaw with being a customer-driven organization: Your existing customers represent a small percentage of your opportunity…they have different market problems than non-customers (buyers who don’t yet do business with you)…and—most importantly—they only frame their view of your future based on incremental improvements to their past experiences.
For example, if a company in the late 1990s that made and sold portable music devices asked their existing customers what they wanted, they might say “more storage” or a “smaller unit.” The companies that listened to their customers missed the biggest market problems that were identified by Apple when they developed the iPod—that the existing portable devices were too difficult to use and impractical for downloading and managing more than a few songs.
Don’t misunderstand us—we’re all in favor of great customer service. We just don’t believe that an obsession exclusively on your existing customers is the right way to design and build product experiences and to reach the total market. Eventually, the customer-driven company gets bogged down by taking baby steps to tweak features in existing offerings (to please existing customers) rather than making the bold leap to develop new products and services that solve potential buyers’ problems.
Because the customer-driven organization relies on existing customer requests for endless extensions to existing product lines, the company can’t develop breakthrough products and services that resonate with non-customers.
Assuming your customer knows best is a comfortable strategy, because it’s very easy to get feedback about how to conduct your business. You ask: “What do you want us to create next?” And the customer is delighted to tell you. This strategy leads to a situation where you have listened to only a few people (those you already do business with) rather than many (the untapped market). Unfortunately, working only for your existing customers usually results in sleepy, increasingly unprofitable companies.
A missionary sell?
Ultimately, a focus on any of these other approaches—being a customer-, revenue-, or innovation-driven company—is more risky than a tuned in approach. It is possible to build success, but the odds are stacked against you. And, if you do beat the odds and develop a winner, you may still fail later. It might take years for the results of being tuned out to become apparent if your initially successful product can be turned into a cash cow.
A resonator is a product or service that sells itself. You find them in the market, not in your mind.
We often see tuned out companies create products and services that do not resonate. To compensate, they must adopt drastic strategies to drum up business for their offerings. You know how many companies talk about their “product evangelists”? And how many organizations say they are “missionaries in the market” and that they need to “educate people about the issues so they see the value of our product or service”?
These missionary selling strategies are simply symptoms of a tuned out company. You shouldn’t have to wave your arms around and shout at people to convince them to pay attention to your product or service.
The tuned in, market-driven company understands market problems and builds products that resonate; these practices drive both sales and customer satisfaction.
Are you tuned in or tuned out?
If your organizational culture is closest to one of the three we’ve outlined here, it means your organization is tuned out. The key distinction is that being tuned out requires you guess when making important decisions such as what product to build, whom to try to sell it to, where to sell it, and so on. But each time you guess at one of these elements, you introduce more risk into your business.
Consider your own organization. How would you answer these questions?
- Do you build products based on what company insiders feel is best?
- Do you use advertising campaigns to “create the need” in the market?
- Do the salespeople dictate what goes into new products?
- Do you watch the competition and make moves to follow them?
- Do you only sell (and improve upon) whatever products you already have on the shelf?
- Is the founder’s (or CEO’s) opinion the most important?
- Do you base major decisions on financial data alone?
- Is gaining market share your primary objective?
You probably realize that a “yes” answer to any of these questions means you’ve got some of the symptoms of being tuned out—and that you’re guessing at what your market requires. A “yes” also means you show the signs of a company chasing outcomes. Like a dog chasing cars, it’s a path that often ends in a bad outcome.
“When was the last time you bought a product and said, ‘I have to tell my friends’? This book will change the way you look at success and failure in the marketplace.”
– Rob McGovern, Founder of CareerBuilder.com, Chairman and CEO, Jobfox.com
Get your copy of Tuned In today.
Looking for the latest in product management news, articles, webinars, podcasts and more?