January 12, 2008

Nuggets of Management Wisdom #19

Posted by Bizaholic | 9:22 PM | with 1 comments »

Don't promote the culture of "confirmation bias" if you want your organization to achieve greatness.

Time and again I have noticed that a large number of people in organizations suffer from "confirmation bias", a deadly corporate disease that attracts you to people who think in the same patterns as you do, while repels you from people who don't think at the same wavelengths as you do.

This is a serious problem. Ideas always blossom amid diversity of thought and action. If the diversity is discouraged, staleness sets in any organization and one finds oneself gasping for fresh air in such an environment. In current times, when world is always in a flux and operating environments of organizations are extremely dynamic; innovation and execution come at a premium. Innovation is something that realizes its full potential only when divergent minds meet and collaborate to shape it up. So is the case with flawless execution; multiple hands of many a thought collaborate to execute an idea to action. When you exhibit "confirmation bias", you stifle the flowering of ideas and innovation in your organization as there is always an "inside-out view" in play without any "outside-in view" to spice up the things and let the creative juices flow in search of an out-of-the-box solution.

One major offshoot of the "confirmation bias" disease in any organization is that it repels talented people away from the organization. In a culture that promotes "confirmation bias", it is very difficult, perhaps impossible, to attract and retail talented people. Talented people tend to question the status quo and often look away from routine way of solving problems. They tend to ask difficult questions and challenge others, even their superiors. This threatens comfort zones of people who are deeply rooted in the culture of "confirmation bias" and prompts them to alienate, ignore, or even punish those who think differently. As a result, talented people tend to move away from an environment that punishes them to think differently.

In the end, it is the organization that suffers. In the absence of an internal environment to fuel fresh, innovative, and divergent thinking, it keeps doing same thing again and again till it is done to death by the ever changing external environment.

January 11, 2008

New Product Development

Posted by Bizaholic | 10:52 PM | , , with 1 comments »

New product development is always a tricky business. A certain degree of uncertainty is intrinsic to the process. Some new products click while many fail. Yet, despite the uncertainty and risk, chances of success can be improved to a large extent with some commonsense.

I am often surprised to see that again and again new products fail in market not because of lack of resources to market it or the product's attributes and features, but due to marketer's inability to understand the consumer and her need - obvious or hidden. The problem starts with marketer's myopic thinking. The culprit is 'company centric' view of a consumer. This 'company centric' view of consumer comes in various flavours, all equally lethal for company's health and well being. Below are some samples:
  1. Marketers try to make a product that they feel is best for the consumer and then go and try to sell it to them. Most of the time this approach fails because how a marketer views the needs of a consumer is often vastly different from how a consumer views her needs!

  2. Marketers get a brain wave for a new product idea. They develop the product after investing lots of money and resources. Once the product is ready, they start searching for consumers who could buy it. It's like shooting arrows in a blind allay in the wild hope of hitting the bull's eye. Seldom have they succeeded.

  3. Marketer sees a product at some far away land and feels that the product seems so nice. He comes with a sample and hands it over to his R&D people to develop a similar product for his market in his country. Once the product is ready, he starts searching for consumers to sell it and then finds that the overall market for the product is so low that there is no business sense to launch the product.
Successful product development has few basic features apart from the luck factor. From what I have observed in my career so far, great and hugely successful products are built around following pillars;
  1. They are backward engineered from consumer. Hence, when developed they have a ready or at least, a latent market to tap.

  2. They are simple from consumer's point of view and satisfy her needs in a simple way sans complication and at a price and experience that gives her maximum utility value and satisfaction.

  3. They have a 'consumer centric' DNA.
New product development requires simplicity. It needs to put the consumer at the center of the gravity and then develop itself around the consumer. This is perhaps the only way I know to develop great products that are loved by consumers and are commercial success.

In the world of marketing, only those products end up with consumers which start with consumers.