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Products versus Relationships: What Matters?

March 3, 2008

The old ‘4Ps’ (product, price, place and promotion) have driven Marketing thinking since the 1960s. Although attacked in recent years as ‘too simplistic’, the Marketing approach in many companies remains strongly focused on products and features. And while advertising and promotion make extensive promises that go beyond the core product, it is notable how frequently those promises are not supported by intrinsic business capabilities.

We recently researched a number of top corporate websites and explored the strategic goals and advertised benefits . We looked at ‘Corporate Codes’ and their commitments to ethics, standards and policies. Then we tested people in Legal, Procurement and Sales Contracting to see whether they could recognize their own company’s promises and the extent to which the contracts they write reflect these obligations.

The truth is, there is little alignment. In many cases, the Marketing department do not even bother to communicate their messages to these internal groups. It is not clear whether that is because they think it unnecessary, or whether they want to avoid push-back. But either way, the problem is that commitment capabilities frequently do not match market promises.

Does that really matter? I think it does. Executives today are emphasizing the importance of trust and integrity; companies are pouring million sof dollars, pounds, euros etc. into complex (and often ineffective) compliance programs. Yet they are failing on the basics – ‘excellence in execution’.

I admired the honesty of the head of Hewlett-Packard’s channel sales organization when last week he listed the main areas that are threatening channel loyalty and performance. And it was interesting to see the Number 1 issue on his list:

“1. Ease of Doing Business: HP and its partners continue to be victims of the company’s profit and loss structure around different business units that have to negotiate with each other every time a partner needs help closing a deal. This greatly extends the amount of time it takes for the solution provider to get a price quote or approval for specific types of solution configurations. There appears to be no plan to shrink the number of major HP business units, which are responsible for servers and storage, personal computers, printers, and software. But Jones did say the company is working diligently to improve the coordinated response times of the territory managers associated with different business units.”Ease of doing business has nothing to do with products, it is about fundamental ‘business assurance’ and tackling the types of internal processes, organization and measurement systems that – as the example above indicates – frequently get in the way of competitiveness. It is about ensuring that people and organizations can interact with your company seamlessly, that you set expectations clearly and then meet them.The problem in many companies (and this is not a comment directed at HP) is that no one really seems to accept responsibility for this ‘business assurance’. There is one group that makes the promises, but then there is another that writes the promises and a third that performs against the promises. In many cases, these different groups each consider the others incompetent, malevolent or just downright irresponsible. So I wish Mr. Jones luck in attempting to design an overlay system.

For many companies, the situation is getting worse because today’s services economy is driving ever-higher expectations around ‘ease of doing business’. A couple of years ago, I was prepared to get support from a call center. Today, that is a massive inconvenience – I want on-demand answers via the website, at times convenient to me. I don’t have time to read terms and conditions – so if you need to write exclusions, I guess I can’t trust you and I should move on. I want simple, clear, accurate billing – otherwise, I don’t pay.

Our networked world is changing expectations and companies that want to win in the market must develop superior commitment systems that make distinctive promises – and keep them.  This comment that I recently found on another blog sums it up nicely:  “For years, everything has been about planning and execution. This model works great when you have an “inside out” mentality – a push model where you build things and push them out the door. But as soon as you move to an “outside in”, or pull, model, it’s not enough. You now need to empower people with the tools for risk tradeoff and response to manage the daily exceptions that are now at the heart of your ability to compete.”

One Comment
  1. Vasu permalink

    This is happening because of few things.

    1. Every increasing of requirements of the customers, more so the artificial requirements. What I mean by that is, actually there will be no business requirement of the product/service at that point of time, but in the name futuristic demanding that upfront.

    2. We are living in the era of Customer is the “King”, so the demands based of the king which is on the “Thought Process” is much faster than the actual “Excecution” and the Demands of the King are not Reasonable many a times. And if you don’t promise to execute the King will hang you.

    3. As everybody is running fast, No time spent to sit and think. Many loosing the sight of Longterm for the results of the short term.

    Regards
    Vasu

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