Using a War Room to Create Pervasive Innovations
Your teams did their market research. They ran an array of consumer insight sessions. They found the customers real Need. They ran professional ideation and storyboard sessions. They created prototypes and performed market tests. They developed their go to market strategy. They executed their plan. Product sales fell dramatically short of expectations. Why? What did they overlook?
Organisations can control the end to end innovation process but there is one thing that they can’t control – Competition. Many organisations make the mistake in believing that competition is only external. Competition is pervasive and attacks you from many angles, including internally.
I am frequently called into organisations to help them manage postmortem reviews when new solutions have failed to take off or achieve the target market penetration. There are, of course, a multitude of things that can go wrong during the innovation process but with good insight and good management many of them, which I will discuss in later articles, can be caught and captured before they cause too many problems. Invariably I find that organisations with well managed innovation processes, if left to their own devices typically conclude that the go to market strategy was to blame. But that is only a part of the story.
When creating your solution your Innovation teams must work side by side with senior stakeholders and other lines of business to develop a deep, empathetic 360 degree understanding of every competitive influencing factor, from brand perception through to channel enablement that will affect the design and eventual uptake of your product. Your Innovation team and senior stakeholders should not work in isolation and have to be encouraged and pushed to spend as much time as possible listening to the needs and wisdom, not just of customers, business partners and industry analysts but also to the needs of their own internal stakeholders. Collectively they must then work together to integrate their findings into the final solution and this includes the go to market strategy. Solutions with the greatest staying power are produced by organisations who build desirable products that can adapt and stay relevant despite the competitions best efforts to destroy their sales.
The competition will come at you from every angle, some of which will be unexpected. The best way to combat the competition is to get inside their heads, understand their access to resources and see the world from their perspective. Asking the right questions and analysing your insights after you’ve finished designing your solution is too late. At best your company will end up having to invest extra resources and money reworking it and at worst by the time it’s finished, for the second time, you may have also lost your first mover advantage.
When I work with organisations one of my first actions, once the market needs have been clearly identified, is to create a War Room which runs parallel with the innovation process. The War Rooms objective is to provide the Innovation teams and senior stakeholders with unbiased real world views, opinions and insights which will help the Innovation team create more rounded and robust solutions and Go to Market strategies that have proven communicable value and are flexible enough to adapt to a continually evolving, dynamic environment. War Rooms are made up of four teams of experienced volunteers taken from the audience they represent and temporally these teams should provide insights that span the whole marketing life of the solution. For example, if your solution has a marketing life of three years your teams should take a three year view of the market.
Team One should be comprised of hand picked individuals from your target customers, many of whom you should have talked to during your Needs market analysis. In time these stakeholders can also become your beta testers and early adopters. Team Two represents your rivals and can be divided into sub teams which represent a mix of competitors. While you will never get your rivals working with you there are still ways you can get wide range of insights into their world so this team can be made up from a mix of industry analysts, new employees who recently worked for your competition, freelance consultants, industry partners and trusted channel partners. Team Three represents your organisations own business and should have participants from each of the lines of business who will be responsible for warehousing, shipping, marketing, supporting, financing and selling the solution. Organisations that are vertically integrated are particularly prone to internal conflict so understanding the agendas and dynamics of your own organisation cannot be over stated enough. Finally Team Four is your Innovation and R&D team and they need to listen and interpret the opinions of the other three teams and integrate the findings in to the final solution. One additional consideration you must account for, particularly if you are developing a solution for a global market is cultural bias and again this can be incorporated into your War Room.
Below are two examples of organisations I’ve worked with and how Competition affected them.
As we move into the world of ‘as a Service’ and Cloud computing, a global market worth over $400 Billion, the world’s largest hardware and software manufacturers are in an arms race to create a new breed of converged systems, systems that integrate storage, compute, network and software into a single unit or ‘stack’. While these new breeds of systems help customers quickly build new ‘as a Service’ revenue streams they also dramatically reduce their ICT departments operating costs. On the flip side manufacturers see converged systems as a means to an end – a way to own the data center, so as you can see these systems are important.
Recently I had the pleasure of working with one of the world’s largest technology companies who tasked me with getting to the bottom of what they saw as a slow product ramp up. The product itself was the result of over $1 Billion of investment and over 500 man years of development time. Consequently it had many USP’s over the competitions products. The market need was there, the price point was appropriate, the company’s brand and channel were strong, the company Executives had made it clear to the sales force that they had to take the product to market and sell it and the sales forces had been extensively trained. Surely a Win Win was on the cards. So why were sales so slow to ramp up? Were the organisations expectations unrealistic? No. The company was suffering from internal competition. Why? The organisation hadn’t taken care to craft compensation plans that aligned with the corporate objectives and this created internal competition and conflict which dragged down sales and contradicted the organisations careful customer focused marketing initiatives.
The company was a vertically integrated enterprise split into Compute, Storage and Network lines of business but it was now trying to sell a horizontally integrated product. So while the sales force had listened to the Executive communications and taken the training the sales teams in each of the individual vertical lines of business were still being compensated to only increase the sales of their traditional product portfolios – the same traditional product portfolios that had now been knitted so neatly together to create the new converged system. Compensation drives behaviour.
For example, a salesman in the Network business was given a target to increase sales of networking equipment in his territory and hitting those targets got him paid and more importantly kept him in a job. Despite this though the business commanded him to sell the virtues of the new converged system to his customers. While he would get paid for the network component selling the new converged system meant he had to talk a new language with a new suite of alien customer stakeholders he’d never spoken to before. In addition to this because of the horizontal nature of the new technology he would also have to bring in sales and technical people from the Compute and Storage lines of business who still ‘owned’ their part of the solution, suddenly the sales team had just tripled in size and in some cases he would have to relinquish the control of the opportunity itself and this would put his target – a target that the other salespeople didn’t individually care about, in other people’s hands. In the salesman’s mind all this was simply an unappreciated distraction that created complexity, uncertainty and increased the sales time so the organisations salespeople were reverting to type. They were keeping it simple, selling what they knew to people they knew and retaining control of the opportunity and their own careers.
In the end resolution was simple. Re-certify the sales force and assess their skills, comprehensively align the sales forces compensation plans so they were focused and paid against the organisations objectives and align the technical and managerial resources horizontally.
Your competition hates you
A little while ago I was invited to work with one of the world’s largest Telecoms organisations to help them increase their American and European revenues. Today over 40,000 of their employees have forward facing R&D responsibilities and they have over 30,000 patents to show for it. In addition to this they have an annual growth rate of 20% Year on Year so outwardly it would appear that they are in a strong, if not dominant, position.
When you look through their annual reports though and speak to their Executives you quickly come to realise that a lot of this growth is being driven by Africa and the BRIC countries and that over the next five years they expect to reach saturation levels which will cause their growth to tail off. Consequently this knowledge was what was driving them to make a concerted push into new territories. So why did they need help? You would be forgiven for thinking that they could port their successful Go to Market strategy across to their new target markets but despite their clear market dominance and innovative product launches they couldn’t Why? They faced two highly disruptive, external competitive influences.
The first problem they faced was executing their Channel Strategy. This organisation is a significant competitive threat to the revenues and profitability of one of America’s largest technology companies and that organisation had worked hard to make their channel partners aware that when contracts came up for renewal they wouldn’t look favourably on those partners who had chosen to take on their competitors portfolio of products.
Secondly, as if being blocked out of the US and European channels wasn’t enough the organisation also faced significant trust and perception issues. While I won’t go into details here many of you will know that you can develop world class products but if your organisation has a ‘brand’ issue then at best you face a very long and protracted battle to win back the hearts and minds of your prospective customers.
The resolution is a work in progress still and will be for a number of years. Resolving the Channel execution issues was straight forward. If it is difficult for you to recruit partners then you need to boost your direct coverage model. While the direct sales model is organisationally resource intensive, more costly and limits your market coverage it does give you control. Perception however is a harder issue to resolve and there are very few quick fixes. Firstly you have to get a deep 360 degree empathetic view of the problem and take time to understand the root cause. When you are certain you know the root cause then, and only then should you start formulating your strategy and that strategy must rebuff each issue with unbiased, evidence based facts. Resolving a perception problem often needs a multidisciplinary approach so the company is now investing significant sums of money into the top five target territories, working closer with regulators and Governments, appointing a new Non Executive board made up of industry veterans, working more openly with industry analysts and fighting hard to win big, strategic reference-able customers. While the progress has been slow the company has so far seen a 400% growth in Europe and a 140% growth in the US.
image credit: commons.wikimedia.org
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Matthew Griffin specialises in creating new medium and long term revenue streams for both private and public sector enterprises. Recently, he has helped McLaren Formula 1 and the FIA, Toyota, Barclays, Lloyds, GE, DHL and ADP create new differentiated revenue streams.
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