Photo: Flickr miggslives
RIM has been pronounced dead by a tech expert, Shelly Palmer, who loved every Blackberry he has ever owned. Hewlett-Packard just announced layoffs of 27,000 employees and has a stock price 60% below where it was two years ago. Nokia, once the king of mobile phones has seen its sales, profits, stock price ($2.67 per share as of this writing) and market share (1% of the smartphone market) tumble.I could go on with other examples, but what’s the point? So many once successful companies are shadows of their former selves or have already died.
What went wrong, and how can other companies avoid making the same mistakes? This is what all companies need to ask themselves so they do not suffer a similar fate.
Thinking inside-out or being product driven does not work long-term.
Most problems start because companies “fall in love” with themselves, think inside-out, and believe that their success is a given and will last forever. Microsoft sustained their greatness when Bill Gates was at the helm and acted with considerable paranoia. Andy Grove, former Chairman and CEO of Intel even wrote a book on the subject—Only the Paranoid Survive. Of course, being paranoid is only one way to combat this problem, and it does not necessarily ensure success.
Understanding the marketplace.
To keep a company on a successful path, the executives that run the company need to really understand that the marketplace is a very unforgiving place. Potential buyers have a very selfish attitude that is embodied in the question, “What have you done for me lately?”
If an organisation has a great corporate image and track record, it may have a Teflon coating that will protect it for a while. After the recession and in the Digital Age, this shield can wear off quickly when companies stop listening to marketplace signals.
What are the signals and how should companies respond to them?
There are many types of marketplace signals companies need to look for. A few of the more important ones are listed below.
- Needs that are not being properly filled. Apple achieved success with the iPhone because it understood that there was a need for a single multipurpose mobile device that served people’s communications, entertainment, information, and other needs. How did Apple achieve this understanding? While this is the subject of some speculation, Apple’s culture post iPod is to act like a startup company. With this mentality, Apple is able to quickly learn, innovate, and test solutions that give its products unique advantages.
- Competitor actions. RIM, Nokia, and HP were very slow to respond to the same needs since they talked amongst themselves rather than to the people in the marketplace that had them. Also, unlike Google and Apple, their bureaucratic cultures have made them slow to react to competitive moves of their rivals. Google responded to the success of the iPhone with the Android Platform. And, when Bill Gates was running Microsoft, he reacted swiftly to the graphical user interface (GUI) that Apple introduced on its first Macintosh computer with a Windows operating system (as memorialised in a famous seen from the movie Pirates of Silicon Valley). Similarly, he reacted quickly with the Office suite of software when he witnessed the popularity of programs such as VisiCalc (supplanted by Lotus 1-2-3) and WordPerfect. Microsoft eventually overtook these products with Excel and Word, which along with Powerpoint became part of Office.
- Complaints. Perhaps no signal is more important than complaints. Customers are very good at complaining when products and related customer service are not meeting or exceeding their expectations. Too many companies respond with cost-cutting measures to get the price lower rather than listening to what customers want. What costs are typically cut first? Customer service and R&D. The “Crackberry” addicts that loved their Blackberrys, such as Shelly Palmer, are leaving RIM because of disappointing new products and more disappointing customer service. Complaints about products and customer service are what drive customers into the arms of competitors.
Develop a good Marketing Information System.
Perhaps the best way to track and respond to these signals is to develop a good marketing information system that captures the information in real time, analyses it to separate what is important from what is irrelevant, and reports it to the decision makers so they can take the appropriate action quickly.
Uniqueness and good execution develops brand identity and loyalty
As companies and products develop good reputations in the marketplace, their brands reap the benefits of loyalty – greater sales, profits, and stock prices. The few that realise that they need to continually listen to the marketplace for new signals and respond to them quickly, survive and prosper over the longer run. Andy Grove might call those companies and the CEOs that run them paranoid.Steve Jobs might say they continue to act like start ups.
Innovating to continually improve products and customer service.
Companies that work to (1) continually improve their products to meet the ever-changing needs of the constantly evolving marketplace and (2) provide good customer service at the back end of the process become the big winners.
Thinking that repeating the past will guarantee success is not good thinking.
Those that fall into comfortable habits, ignore marketplace signals, and fail to innovate because they think that their success will be magically sustained are the ones that run into trouble, decline, and falter.
Kodak, which invented the digital camera, failed to capitalise on its invention because it was so invested in film. If Kodak had a good marketing information system, it would have realised that competitors would use digital camera technology to put them out of business if they did not beat these rivals to the punch. Once great Kodak has filed for Chapter 11 bankruptcy—not too long after Polaroid suffered a similar fate.
Many other once great companies have chosen to compete on price. Lower prices force them to cut costs related to innovation, quality, and customer service. As a result, they become “me-too” companies that give buyers no compelling reasons to buy their products.
Buyers that chase after lower prices to “save money” end up paying more money due to business and life interruptions from defective products and inadequate customer service. When customers need help, they are too often put on endless “hold” by the “Peggy’s” of the world. The money savings turn into wasted time and lost opportunities with considerable aggravation thrown in.
The answer is listening to customers with the help of good systems.
Those companies that listen and respond to marketplace signals with the help of good systems are the ones that are able to continually reinvent themselves at the first sign they are headed in the wrong direction.
IBM, which began in 1911, continues to evolve its business model to remain the successful company it is today despite competitive threats that provide on-going challenges. Even though it is a big company, it learns and reacts quickly. This is what all companies need to do to remain relevant and successful today.
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