Commenting on economic downturns, Warren Buffett once observed: “Only when the tide goes out do you discover who’s been swimming naked.” Well, the water’s receding, and unless your company is at the absolute top of its industry, you’re probably more than a little worried about your level of “exposure.” Here are three steps that will dramatically increase your chances of surviving—and even thriving—in our dismal economy:
Survival Strategy #1: Cut the waste. (And I’m not talking about reusing paper clips!) The one function in a company that is more wasteful than any other is new product development, where the average company squanders more than half its R&D resources on new product belly flops.
Most companies don’t have enough R&D people to drive existing projects at a rapid pace. Just kill the dumb projects that are destined to be duds—really kill them; don’t just wound them—and set these people free to actually do some good for your company. And, instead of huddling with colleagues around a conference room table to decide what the project portfolio should look like, ask customers what they want you to work on.
For example, ask customers what outcomes they want—which is much different from showing them your potential solutions. Then, have them rate the importance and current satisfaction levels for each outcome. Do this with several customers in a market and get the market satisfaction gap for each outcome. A high gap means customers are dissatisfied with an important outcome... and are eager for you to fix this.
Company’s are usually surprised to learn what customers really want. But, better to be surprised before development work begins, than after the product is launched.
Survival Strategy #2: Harvest the “best practices” of other companies. It’s easier than you think. Learning what works for other organizations immediately increases your effectiveness in key customer-facing activities, such as pricing, sales management and marketing communications. It’s essential to find, adapt and drive these best practices into your business—fast.
The American Productivity and Quality Center (APQC) is one of the world’s leading benchmarking firms. Based in Houston, APQC has probably already benchmarked any area you can think of. Instead of forming a company benchmark team that will take three months just to frame their work, check out www.apqc.org.
In addition, the Institute for the Study of Business Markets (ISBM) counts as its members more than 100 leading researchers and 70 of the most advanced B2B firms. To check out a wealth of reports, consortia, workshops and other learning opportunities, visit isbm.org. You might be surprised by how much inside information these thought leaders are willing to share.
Survival Strategy #3: Ask customers what they want. Solid research done by Huthwaite International indicates that the best way to sell a product is to ask customers what they want. Why wait until the product is already developed? By asking customers before it’s developed you can develop a better product and engage customers so they’ll be primed to buy.
This isn’t practical if you sell toothpaste to millions of people, but it works quite well if you’re a B2B provider and would like to influence your 10 largest customers.
It’s time to put these three tips into practice and keep a cool head. Human nature being what it is, chances are good your less astute (and more fear-driven) competitors won’t. When the tide goes out and the economy turns down, your competitors will be tempted to forego their long-term prospects in favor of short-term survival. You should hope nobody dissuades them. As Napoleon said, “Never interrupt your enemy when he is making a mistake.” By reducing R&D waste, adapting new best practices and engaging customers, you reduce your short-term pain during the downturn, and increase your long-term gain afterwards.
By Dan Adams
About the Author:
Dan Adams, president of Advanced Industrial Marketing (AIM), has more than 30 years experience working within, and with, major B2B corporations. He is a chemical engineer and holder of many patents and innovation awards, including a listing in the National Inventors Hall of Fame. AIM was built on the belief that understanding your customers’ deepest needs is a competitive advantage you should learn. The organization conducts workshops globally to train commercial and technical teams in advanced B2B product development and provides strong post-workshop coaching support. His latest book, New Product Blueprinting: The Handbook for B2B Organic Growth (AIM Press, 2008, ISBN: 978-0-9801123-4-4, $35.00) is available at bookstores nationwide and from major online booksellers.
For more information, visit www.newproductblueprinting.com.
- People:
- Warren Buffett