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.
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| 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.
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