Develop your organization to consistently deliver successful products
Sure, we all know that innovation holds the key to success. If done well, it drives profit, growth and shareholder value. Things all companies love, but it comes at a price; innovations reap these rewards because they are risky. The failure rate of new products is estimated to be between 35 and 50%. Disruptive innovation is hard. You need to provide true value for a customer and they need to know your solution exists. Two things that don’t come easily.
Some headlines sound just too good to be true, and they generally are. Making more money by doing less sounds like a ‘contradictio in terminis’ as the old Romans used to say, ‘a contradiction in words’.
But it is not. We probably all know how to do it, we’ve all learned about it in university or college, but kind of forgotten about it or didn’t believe it was applicable. The answer is a basic economic law that arose in the same country that gave birth to the old Romans who gave us so many posh sayings.
What is at the core of every company out there? It’s what that company offers to its customers and gets paid for, the Product.
It doesn’t matter what the product is. If it’s a service or a physical object, software or hardware… it’s what customers buy from you. It’s your reason of being as a company. And there are plenty of important questions that surround the product.
Some of you might very strongly oppose the title of this blog, others will be nodding. If you are working in a company that has a strong CMO (Chief Marketing Officer) at the director’s table, then stop reading. If not, you might carry on.
Why is it that in so many B2B companies, marketing no longer sits at the executive table, the center where all the important decisions are made? Was Kotler mistaken in 1967 when he first published the corner text book of the entire marketing discipline? Is the potential of marketing no longer relevant for B2B players?
Determining the right cost price is crucial for every manufacturer and service provider out there.
As everybody knows, it is the basis of our product margin. And as such it drives all the behavior on the shop floor. Unfortunately, sometimes the law of unintended consequences kicks in. Something that was set up with all the right intentions can become very sour.
Your customers truly adore your products. You have the best R&D guys and Product Managers. Your offering is the envy of the industry.
But still your sales team is complaining that the plants and warehouses never deliver on time.
Their precious selling time gets wasted on handling customer complaints about late deliveries.
And all this happens whilst your finance director just opened an extra credit line with the bank to pay for the truck loads of inventory on your docks. You seem to be wading in product that customers don’t need at this moment. Whilst you’re completely sold out of the ones they do want.
When new sales management arrives in a long established company that is active in multiple markets with different product lines, ‘cross-selling’ is often on top of the new director’s agenda.
Selling different product lines into the same customer is the sales Walhalla. It allows sales teams to reach their targets by increasing the share of wallet. A lot easier than hunting for new customers.
Also many acquisitions are done because senior leadership teams believe in the synergies caused by cross-selling. But realizing these synergies is often easier said than done.
If you are the person that needs to make the decision, it is often not easy to find a mental framework that allows you to structure the thinking around this topic.
A silly question you might think. Of course we know who our customer is. But within B2B, if you take a closer look, the answer is often less straight forward than you think.
Many B2B companies sell their products to companies that use it to make something new, either as a raw material or as a technical component of a larger solution.
So most companies automatically answer the question on who is the customer, with the answer that the companies paying the bills are the customers. But are they?