In my book, B2B Executive Playbook, I describe four steps that can simplify strategic planning, focus product development and sales and marketing efforts, and, most importantly, create a clear path to market leadership. If implemented properly, it will also add sustainability and predictability to a B2B company’s top and bottom lines.
As with any corporate initiative, however, success can be sidetracked if problematic modes of operating and behavior creep in. Over my next four blogs, I’ll cover each of the top four common pitfalls that prevent B2B firms from succeeding; Inside-Only Thinking, Limiting Input to End-Users, Following a single Customer, Chasing the Competition. Be aware of them, and act quickly if they surface in your company.
Pitfall #1: Inside-Only Thinking
The first pitfall is a mindset among the leadership team that goes something like this: “Hey, we’re smart and we’ve been in this industry for many years. Let’s brainstorm among ourselves (internal off-site meetings) and come up with the next great solution that we can bring to market to change the game and win back our leadership position.” The leadership teams of B2B companies do have deep stores of knowledge and creativity, but when they choose to go it alone, what they are really saying is, “We know better than our customers of what they want and need.” And this is a prescription for failure or even disastrous results.
Far too often, the inside-only ideas and solutions that come out of these sessions are not created with current market conditions or even company resources, business models, and competencies in mind. In fact, they are usually based on legacy customer needs, structures, business models, current competitor offerings, or misguided ideas about a problem that may not even exist in the customer’s mind. This insular mindset and culture significantly contributes to the 60-70 percent product failure rate that continues to plague companies.
Case: The leaders of a $1 billion company invested over $100 million in developing a single solution that they were convinced would revolutionize their market. They did this without including of vetting the idea with a single customer. The result was disasterous. Virtually no customers wanted the solution because it couldn’t be integrated with their existing operations, and the few who did buy, demanded to return it for a full refund, plus damages. The stock tumbled, the leadership team was fired, and the company was sold off at a major discount to a company one-fifth its size.
Successful B2B companies avoid inside-only thinking. At Henny Penny, for example, all innovation and planning initiatives begin with the needs of customers and the market. “This is the backbone of our culture, strategic planning, and success,” explains Rob Connelly, CEO of $148 million Henny Penny Corporation, a family-owned manufacturer of food service equipment. “It has enabled us to hold on to and grow our biggest customers for decades, because our plans help them serve their customers more effectively. We work extremely closely with our top customers. Our design and engineering teams share ideas, collaborating to provide new solutions, solve problems, or change the game.”
One of the home runs at Henny Penny was the development of revolutionary low oil volume (LOV) fryer for McDonald’s Corporation. “We’d been studying innovative ways of improving and shortening usage in the frying process for quite awhile,” recalls Connelly. “Together with McDonald’s, we developed a breakthrough product, which not only yields significant cost savings, but is also easy to operate and minimizes environmental impact."
The LOV fryer earned Henny Penny the prestigious McDonald’s Global Innovation Award in 2008. In 2009, MacDonald’s named it Worldwide Equipment Supplier of the Year and in 2010, Worldwide Equipment Partner of the Year. That’s the kind of market clout and credibility that can’t be bought – and it led to even more sales. In addition to sales opportunities at McDonald’s 30,000 restaurants worldwide, Henny Penny applied these innovations to stock models that were successfully rolled out to the small and mid-sized restaurant marketplace.
Bottom Line: With so many strategic and development alternatives to chose from, you must tap your top customers to prioritize, justify, and focus on the opportunities that will deliver the most impact. Leveraging their industry knowledge through collaborative “outside-inside” thinking is the only way to secure true market alignment that drives Sustainable, Predictable and Profitable Growth.