There are the kinds of personal changes everyone experiences as kids and parents get older, our own hair gets a little greyer (and sometimes thinner) and people, animals and places come and go from our day to day lives. And then there are day-to-day external changes that we typically have no control over – such as traffic and weather.
I would hazard a guess that most of us manage these kinds of changes pretty well, as they are well-understood. Even when these changes are unpleasant - such as when there’s a big hailstorm or a traffic jam that makes you two hours late – you can use your life experience to handle that change.
And, as people, we all have resources that we employ when we’re experiencing difficult change. Friends, family, psychologists, doctors and people of faith are all typical go-to sources of support, ideas and comfort during those times.
So hold that thought – that vision of how people manage change. And now start thinking about companies and how they deal with change. And I suspect there’s something to be learned from one about the other.
MANAGING THE DEATH OF A PRODUCT
Bringing a new product to market is a tough business that involves a lot of blood, sweat and tears. But pretty much every product - no matter how smart, cool and amazing it is on the day it’s launched – has a lifespan.
For some products, that lifespan can be measured in decades. If you look at the flagship product of a company such as Coca Cola – which, despite many changes in marketing and formulation, still sells vast quantities of sugared water every year.
For technology companies, however, the life of a product can be measured in months. Some products barely make it off the drawing board and into manufacturing before the company that sells them pulls the plug. This is particularly true in highly-competitive, mass market technology products such as smartphones – where competitive advantage can disappear quickly and manufacturers are tracking data daily on the success or failure of their product.
|Photo courtesy of Dell Inc.|
I remember some years ago talking to Michael Dell, the CEO and founder of computer maker Dell. In a piece I originally wrote for The Financial Times, he talked about how his manufacturing model helped him gain insight more quickly about what products were succeeding or failing – but it did not make him immune to failure. Here’s an excerpt:
Mr Dell also said that the direct manufacturing model gave his company an unparalleled insight into the kinds of product areas that his company should move into – as well as those from which it should retreat.
‘One of the magic abilities of any great product company is to understand technologies and customer requirements and come up with the perfect combination to solve a problem’, said Mr Dell, although he admits that customers sometimes do not realise that they have a problem that technology can solve. ‘The customer is not likely to come and say they need a new metallic compound used in the construction of their notebook computer, but they may tell us they need a computer that is really light and rugged. Where some companies fall down is that they get enamoured with the idea of inventing things – and sometimes what they invent is not what people need.’
He said that by using the Dell model, he knows very quickly when a product isn’t going to sell. ‘When we launch a new product, we know within 48 hours whether or not it’s going to work’, he says. ‘We had a Web PC that didn’t turn out so well. But if you have no experiments, then you have no success. Occasionally, you just miss.’
PUTTING CUSTOMERS AT THE CORE
On another occasion, Michael Dell talked about his approach to managing companies in tough times. To set the scene, these comments were made in a speech 2003, when the economy was still very much recovering from the economic downturn between 2000 and 2002 (and the aftermath of 9/11).
Here’s some of what I wrote about it in IT World Canada (the full article is here: http://www.itworldcanada.com/article/simple-management-advice-for-tough-times/19971#ixzz44bP5nMOz )
“Dell said that while he recognized that we were in tough economic times, the fact that times are tough didn’t really change what he had to do: listen to customers and deliver products that offer great value. It sounds like a hokey and simplistic solution to a complex situation. But it seems to be working for Dell ...Dell is making good money and growing its business at a time that all is supposed to be doom and gloom. In his speech, Dell talked about having built his original business on the simple proposition that both consumers and businesses shouldn’t have to pay thousands of dollars each for computers that really consisted of about $600 worth of parts per system.
He figured, correctly as it turned out, that if you cut out the overhead of a delivery channel and a number of other costs along the way, that you could still make a decent margin and deliver systems that people would be happy with. Dell also later figured out that if you did this directly via the Web and supported it with fast delivery times and good service, you would have much closer links with your customers and could count on repeat business.”
CHANGE IS CONSTANT
So, as with people in their own personal lives, the one constant in business is change. Things WILL change – to a greater or lesser degree – in most businesses from one year to the next.
One of the best things you can do to prepare your company to deal with such changes is to be really, really clear about what your assumptions are – and then have a laser focus on continually re-validating those assumptions. If any of your key assumptions prove false (and wildly optimistic), you’ll need to adjust your plans accordingly.
And most assumptions are never 100 per cent accurate – positively or negatively. That’s why many companies can end up with a huge glut of product they can’t sell OR end up having customers sign onto waiting lists because they can’t keep up with demand.