Posts Tagged ‘decisionmaking’

Customers are talking: the complex consumer “buyer”

Tuesday, January 5th, 2010

B2B salespeople are familiar with the concept of the “buying center” – a group of people responsible for reviewing, analyzing and recommending purchases. The best salespeople cultivate relationships with lots of important folks at the client. They know that focusing on a single decisionmaker is a prescription for a lost sale. (Yet the “decisionmaker” myth persists. Salesperson: “Did a product demo with XYZ corp today.” Boss: “Great. Did you talk to the decisionmaker?”)

Consumer purchases don’t have a buying center, do they? Well, I did a project last year that involved trying to understand why people calling into a telesales center didn’t end up buying anything. The most frequent reason for them saying no? “I need to talk about it with my spouse/mother/sister.” They couldn’t make a decision without the concurrence of someone else.

This has implications for consumer sales of any significant size. Consumer sales channels – especially virtual channels like call centers and websites – are focused on individuals, not groups. They don’t have any easy way of involving that other person who needs to say yes. This was the puzzle my client faced.

Perhaps it’s too complex for consumer marketers to worry about. But by ignoring the buying center, they run the risk that their “buyer” loses his/her energy and commitment between the time they are ready to say yes and the time they get the go-ahead from that other person. That equals lost sales, and lost sales are expensive.

The Best Business Books of 2009

Thursday, December 10th, 2009

In the wake of the worst US economic catastrophe since the Great Depression, everybody realized this: Making money is harder than we thought. So, this year, books on innovation had special resonance. Luckily, there were some great ones out there. So many, in fact, that this year’s best-of list includes two “companion volumes”–other good books from this year that cover similar material from another perspective.

These are the best books I read this year:

design-driven innovation1. Design-Driven Innovation – Roberto Verganti. A fascinating book that looks at companies that don’t merely create new products, but develop products and services that create new meaning for customers. Is that important? Well, companies that do it well avoid commoditization and generate outsized profits for long periods of time. Think Apple.

(companion volume: The Design of Business by Roger Martin)

Discovery-Driven Growth2. Discovery-Driven Growth – Rita Gunther McGrath and Ian MacMillan. Verganti’s book covers the more creative side of innovation, while McGrath and MacMillan discuss the process that established companies should use to improve their innovation efficiency–that is, bringing more successful products to market and spending less on the failures. The central lesson: do more work on paper, and scrupulously document & validate assumptions as you go.

(companion volume: Innovation Tournaments by Christian Terweisch and Karl Ulrich)

enterprise2.0

3. Enterprise 2.0 – Andrew McAfee. A clear description for the general business audience of how web 2.0 products, like social network software, wikis, messaging services, and the like, can be deployed to help corporations work more effectively. Excellent combination of case studies, theoretical models, and a clear-eyed assessment of the obstacles in the way of wide adoption.


4. Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You – Sydney Finkelstein, Jo Whitehead and Andrew Campbell. A timely book that shows how smart, experienced people can make terrible decisions, and what safeguards companies can use to improve their decisionmaking. Illuminates the many cognitive biases at work during the decision process, which helps the reader to understand why so many decisions that look atrocious in hindsight were considered reasonable and logical at the time.

Collaboration by Morten Hansen5. Collaboration – Morten Hansen. Discusses how collaboration in business works, and when it doesn’t work, then provides a map for companies to improve their collaborative behavior – including unifying your workforce, nurturing “T-shaped” management and using networks intelligently. Key message: collaboration has a cost, and you need to make sure the payoff of collaboration outweighs it.

Related posts:
Podcast: Sydney Finkelstein on “Think Again”
On “Discovery-Driven Growth”
Podcast: Roberto Verganti on “Design-Driven Innovation”
On “Collaboration”
Video Review of “Enterprise 2.0″

Shop Talk Minipodcast – Sydney Finkelstein on 4 Decisionmaking Red Flags

Wednesday, September 30th, 2009

We talked to Sydney Finkelstein, co-author of “Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You” back in March. In this excerpt, Syd discusses 4 red flag conditions that could indicate faulty decisionmaking.

Minipodcast (4:59)

For more information, you can access a web site with more resources about “Think Again.” And you can find the complete 20-minute podcast here.

Customers are talking: Why do companies continue to do such dumb stuff?

Friday, August 14th, 2009

Two blog posts struck a chord with me this week. First, Bob Sutton posted on Wal-Mart’s decision to stock Girl-Scout-cookie knockoffs (the delightfully-named “Thin Mint-y Gate“). Then David Pogue provided an update on “Take Back the Beep,” his campaign to get wireless companies to stop playing lengthy introductory messages to callers trying to leave voice mail. Verizon’s ham-handed response fascinated me–especially considering the more mature and enlightened reponses of VZ’s competitors, and the high profile of Pogue’s campaign. Here’s how AT&T handled it, then Verizon:

Mark Siegel, AT&T’s executive director of media relations, wrote with some very encouraging news:

David: All the messages we got from customers really made us look again at how we handle voice mail, and we are going to make some changes. I commend you for raising the issue.

– First, we really appreciate hearing from the thousands of customers who have contacted us.

– As I know you know, any customer with our Visual Voicemail service does not listen to an upfront voicemail message. Today, our iPhone customers enjoy Visual Voicemail. In the near future, we will make Visual Voice Mail available on other devices.

– In the meantime, we are actively exploring how to shorten the voicemail message on our other handsets.

Verizon’s PR contact, Tom Pica, hasn’t responded to my request for a progress report.

He’s probably still irritated at me. When ABC News interviewed him about this campaign, he told them that customers can already turn off the instructions. Which isn’t true. So that night on Twitter, I said that he was lying.

He called me to let me know that he wasn’t lying—he was misquoted. What he said was that you can turn off *voicemail altogether* if you don’t like the 15-second instructions.

Besides the Schadenfreude factor, these stories are notable because they show how isolated large companies are from the outside world. In other words, they are able to take carefully-considered actions that, once revealed in public, are immediately ridiculed and seem perverse and self-defeating. “What were they thinking?” is the only sane response.

But there’s an explanation. Most large companies are hermetically sealed off from the outside world. Within the walls, these decisions don’t seem perverse. They seem sensible and logical. Verizon responded to Pogue’s campaign as an attack, not as a dialogue. They defended, counterattacked, and discredited. Pogue (who of course has the easier job here) retained his considerable sense of humor and used Verizon’s words against them. One can almost feel the VZ spokesperson’s frustration when he claimed he was misquoted–all his tactics conceived inside the company walls had backfired.

This bunker mentality infects companies when they deal with outside criticism. Wal-Mart has learned volumes of lessons on its responses to the environmental movement, union organizing, community protests, etc., and now much more sensitively deals with these outside critics (even learning from them!). However, Thin Mint-y Gate shows how inside-the-walls corporate strategy, obsessively pursued, can create “what were they thinking?” moments.

Sutton writes in his post:

The brilliance –and the Achilles heel — of Wal-Mart is that they talk and act as if the answer to every problem is to use their scale, bargaining power, and speedy implementation to tackle any problem by driving down the price they pay and pass it along to consumers.

Wal-Mart’s strategy has made them the largest retailer on Earth. So they apply it “to every problem” without enough reflection, questioning or dissent. Inside the walls, mint cookies are just another product, not a national symbol of the Girl Scouts.

Companies have increasingly realized that the outside world matters–whether in questions of sustainability, regulation, trade and economic policies, etc. They have groups that do face outward and deal with these issues. But the Wal-Mart case in particular shows that departmental approaches are insufficient.

It’s not enough to open the curtains in one part of the building to let the world (and all its messy opinions, obstacles and arguments) in, while leaving them closed in other parts. The light, too, must penetrate to the very center of the organizations, where people far from the customer, the press and the government continue to drive decisions that, when presented publicly, make their companies look stupid.

It’s time to bring the outside in, indeed.

Related post:
Why are companies so inwardly focused?

Shop Talk Podcast: Sydney Finkelstein on “Think Again”

Tuesday, March 3rd, 2009

I recently finished “Think Again: Why Good Leaders Make Bad Decisions and How to Keep it From Happening to You” and it is my favorite business book of the year so far. Sydney Finkelstein and his co-authors, Jo Whitehead and Andrew Campbell, systematically dissect why we sometimes make and carry through terrible business decisions–whether it’s a poor acquisition decision, an ill-fated product redesign, or even deciding to park our money with Bernie Madoff or Allen Stanford. Even better, they let us know how to create structures that identify possibly faulty decisions in order to avoid them or, at minimum, monitor their outcomes carefully so bad ones can be reversed as quickly as possible.

Syd is a clear, engaging speaker, and was a delight to have on the podcast. Listen in for a 20-minute lesson on how we decide and how we can decide better. The podcast file is here.

Summary:

0:33 – Why studying decisions gone wrong is interesting and useful

1:05 – How our brain’s evolution impacts sound decisionmaking

2:35 – Has the complexity of our businesses outpaced our brain’s ability to keep up?

3:38 – Four red-flag conditions indicating possible faulty decisionmaking

8:03 – Decision-affecting attachments to people, ideas, things

9:20 – Important decisionmaking process safeguards

For more information, you can access a web site with more resources about “Think Again.”

[Theme music: "Up the Coast" by West Indian Girl, from their album "4th & Wall."]

Sometimes crowds aren’t wise

Saturday, January 17th, 2009

I like Surowiecki’s book, a lot, and I have experienced many instances where the collective judgment of a group was far better than even an informed individual. But the “wisdom of crowds” catchphrase is dangerous–oftentimes crowds are not wise at all.

We are experiencing right now an era in which crowds are really dumb. I’m referring to the financial markets and the related economic recession. The financial markets and news affecting the financial markets have merged into a massive echo chamber, wherein bad news begets pessimism which keeps prices down which begets another cycle of bad news.

We’ve seen this in reverse, of course. Do you remember 1998-1999, during which time everyone was watching CNBC or checking Yahoo Finance all day long, in real time assessing the value of their stock portfolios? Oversubscribed IPOs begat good news, which kept prices high, which begat more buying, etc., until it all came crashing down.

I thought it was clear to everyone that market groupthink, which afflicts us in good times and bad, obscured the true value of securities, and therefore paying close attention to news items in order to make sense of the markets and our economy was, at best, a waste of time.

But no. Felix Salmon, in his Portfolio Market Movers blog, points to a Financial Times article introducing us to a service from Reuters that collects news items and alerts traders when news trends indicate potential market movements.

In other words, lean into the echo chamber, and listen real hard for signals you can use to make decisions. Um, it’s only January, but I will bet there’s not a stupider product idea introduced for the rest of 2009.