Moving at the speed of molasses - Interview with Mike St. John

By Peter Roosen

Freight trains and toilet paper have a lot in common when looking from a marketing perspective. They are examples of products that have been around long before we were born that will still be around long after we are gone. They are among the 95% of the things we see and use that are considered established products and services from traditional industries. You won't see them featured in media because they are simply part of the landscape.

Marketers can easily lose sight of everyday products and the marketing opportunities related to them. This is especially the case for stove-pipe industries that produce the many industrial goods and services that form the backbone of our modern industrial economy. The highly popularized electronic gadgets that entertain and keep us in contact do not exist in a vacuum. Most of them are brought to market on the backs of those freight trains that trudge back and forth across the landscape virtually unnoticed. And let's face it, the only time anybody notices toilet paper is when there isn't any.

This month's newsletter takes a look at a great marketing and innovation example from the very traditional lumber industry. Marketers be warned. Making a big splash in a traditional industry isn't an easy thing to do. Last week, we traveled to Boise, Idaho to interview someone who has done just that - in spades - and who continues to do so. Former navy seal Mike St. John was the marketing man behind the shift to engineered structural residential building products from the basic sawn timber that has been used for centuries to hold our floors and roofs together.

Mike has over 32 years selling and producing these structural building products that involve efficiently using the whole tree rather than just the pieces sawn out from the middle to make our buildings. Introducing Trus Joist products was the highlight of his career. These products now have approximately 50% market share and are still growing. At the start, 1976 sales were less than $1 million, and today sales of over $2 billion are made annually. Mike is currently a board member for the APA (American Plywood Association) and he is chair of the EWS (Engineered Wood Systems) committee. He is also a director for Pacific Woodtech Corp. www.pacificwoodtech.com where he also serves as vice president of sales and marketing. Mike teaches courses on marketing and innovation to engineers while remaining keenly interested in these areas.

The road to successfully transforming an industry is not an easy one but Mike is someone who has traveled this road and is happy to share his insights for those of us who are undertaking a similar journey. You'll gather from our interview that there are some key ingredients that can be used to help transform any industry where a good idea's time has come.


Interview with Mike St. John.

Q. Who would you hold out as an inspirational leader?

A. Harold Thomas and Dick Hansen are two who spring to mind immediately. Harold is still alive while both were highly influential from our beginnings in the 1970s. I'll focus on Harold who is a salesman who started a company. He always believed and still believes that if you give salesmen an opportunity to make money, they will perform. The good ones will sort themselves from the rest. When I was vice president of sales, there were more than 300 salesmen of which 250 made more money than executives and managers. We celebrated that. We truly had an organization that the head of was a salesman's champion.

Trus Joist would not be alive today had it not been for the sales guys. The products were very expensive compared to traditional methods.

Q. How were you able to get such expensive products into the market?

A. I had an important accomplishment back in the early days. It was in Colorado at a time when there were fancy ski resorts being built that needed very large roof trusses that if made using conventional materials and methods were too big and difficult to truck through the highway tunnels. At the time, we were just making floor joists. I figured that since we could make these engineered pieces in any length, they could make great trusses while being relatively easy to transport. It worked.

Q. What drove you and your team?

A. We were and still are on a mission to build better homes.

Q. What do you see as the success drivers for successful innovation in a traditional industry such as yours?

A. You need to be truly committed to the idea. Beyond that, execution is important. In my experience, the long term follow up gets bound up in financial performance numbers. So many underestimate the time and cost of doing the execution - even in a traditional lumber business which is like watching molasses flow. It took 30 years to get 50% market share. Sometimes great ideas take that long. A $2 billion market is all it is in our case. Initially we were 5 people going after this market.

In some industries some great ideas, no matter how great, have very slow traditional speed. This is unlike ipods, cell phones and other tech products that move at the speed of light. The backbone of all commerce in the world are still ugly traditional products like sheet rock, timber, steel, petroleum and rubber. These are traditional businesses or products that just don't move as fast.

I've always been envious of the computer and software guys who build extinction into their model. If you buy a computer today, it will be gone in a couple years. If you buy an I-joist today, it will still be around and you'll be able to buy one 25 years later just like the one 25 years before. I've had three Blackberries in two years because they keep advancing. Take the two by fours in my house. I could have bought the same ones in the mid 1800s.

The big lessons are having great patience, deep pockets and making sure the traditional products and industries evolve so that we don't lose our planet. Today we plant 23% more trees worldwide than we take. But not all countries are on side. Hardwood from southeast jungles are an exception as they are stripped for cash - as our northern lands not so long ago. The lumber business can outgrow demand but we have to do it right. Switzerland, Finland and New Zealand have been doing a good job and are able to grow more than they demand. The lumber business takes a huge amount of carbon out of the atmosphere.

The innovation gets down to using every bit of the wood fiber from the tree. Today, in North America, we don't waste a single ounce of wood fiber. The forest products group as a whole has really figured out how to preserve itself through sustainable practices.

Real Estate 2.0? Understanding the basics with Ben Smith

It's great this month to get some perspective on innovation from a leader in the real estate, an industry that's been hit so hard in recent year, they are ripe for innovation. Beyond the obvious financial hit, real estate, like travel has been dramatically impacted by the web.

New sites to short cut the house hunting process have replaced part of the traditional role of an agent. An astounding 80% of home buyers use the web as part of their home shopping process and real estate agents are scrambling to adapt to the newest tools available on Web 2.0.

If ever it was time to consider revamping the industry, the time is now.

Fortunately our guest this month, Ben Smith is a web savvy social media pioneer in the industry. Ben, as VP Marketing of Polygon homes has a catbird seat for theses changes, yet unlike many who embrace social media, Ben brings a solid marketing perspective to the adoption of social media.

He still measures success the old fashioned way, in terms of sales and referrals. But he understand the power of Web 2.0 as a marketing tool to drive those key metrics forward. Ben tweets at @bensmithinc and @polygonhomes. He manages Polygon Homes Facebook Page and he has an eagle eye on the trends impacting his industry.

Though many of us might say, "Who would want to be in the real estate industry in these times", these are exactly the times when great innovation takes place. We know that from history. Every recession has been followed by a boom in innovation and entrepreneurship, those on the leading edge of the new innovations arising from a recession lead the way out of it.

Ben understands Web 2.0 and what it brings to the real estate industry. I was impressed with his insight into how the social networking tools now available rather than replace word of mouth marketing simply move it online. The power of these new sites enables home shoppers to move beyond relying on friends and neighbors for recommendations and opens them up to opinions from around the world.

And though real estate is a local business, new tools arise every day that increasingly make it a powerful tool for local business as well. Now home shoppers can connect with more than just their immediate network of contacts in their community to more or less everyone in their community - at least those that are on the web.

Ben's is a story of adapting to the innovation in one field and using it to drive innovation in another. HOW the real estate uses these Web 2.0 innovations to bring about change in their own industry will be the interesting story as we come out of this recession.

What is your role at Polygon Homes?

VP Marketing.

In your opinion what are the key trends affecting your industry?

As it relates to the Real Estate Industry: the obvious trend or "state of being" is the current economic situation. Currently prices have fallen, interest rates are at historic lows and we are seeing a lot of activity in the market right now. The suggestion is that we are at the bottom... only time will tell. Let's hope that this increased traffic and sales are the "trend" ; ) The other trend is the end of presale and a launch style of marketing and a movement to selling from finished product and a steady tempo approach to sales and marketing.

As it relates to the Marketing Industry in general: let me say first that the fundamentals have not changed despite what all the self-proclaimed "experts" will tell you. Marketing remains about developing one-to-one relationships that grow in to one-to-many referrals, which become huge successes when they transcend to many-to-many conversations. The trend is that the tools we now have to foster this are getting better with Social Media etc. and the trend of "transparency", social responsibility, info sharing, are all just results of customers using these tools and gaining power and a level voice with the companies they support. Don't be fooled, people have always wanted transparency, have been assembling into tribes that multiply since before Jesus and the 12 tribes of Israel, and have always cared about social issues, there has just been a shift in power and share of voice that has elevated these concepts more recently and made marketers pay attention to them. This is grossly oversimplified but you get the general direction.

How do you measure innovation or marketing success?

1. With money. Did it make and / or save any?

2. By leads / traffic. Did we draw anymore to our website and / or to our sales offices.

3. By education. Did we learn anything?

4. Anecdotally. Was anyone talking about it?

5. Emotionally. Did it encourage / motivate / empower the team to move forward, be better, keep going.

6. By speed / simplicity. Did it do any of the above faster or make it any easier?

If you could go back in time and change something, what would it be?

I would be a lot more humble about all the things I didn't know anything about and a lot less opinionated about all the things I thought I knew a lot about. Having said that, youthful arrogance breeds passion and passion allows you to risk.. and I likely would not have pushed myself and my career had I not been passionate and willing to risk, so maybe these were all great experiences and lessons. I suppose it's not about "good" or "bad" experiences, but what you make of them ; ) But now I am getting too philosophical, next question...

What is an example of an innovative company that people have never heard of?

Great question. I saw a company at LPV6 called Mobify.me... they allow you to take your existing website and "mobify" it for your mobile phone - thought that was pretty innovative. www.mobify.me

Also, my friend has a company in San Francisco called Brain Park that is doing some pretty exciting things to connect people, knowledge, and resource in organizations by building an enterprise solution that incorporates many social media type tools. www.brainpark.com

List a few of your favourite sites on marketing or innovation.

Don't really have any "favourites" in particular. Been caught up in twitter lately and follow a bunch of people who tend to pass around good stuff on these topics from a plethora of sources. I do read Seth Godin's blog fairly frequently, and watch TED for ideas, I also get fired up to watch and learn from Apple keynotes.

For a complete list of my bookmarks check out my del.icio.us account www.delicious.com/bensmithinc

www.twitter.com/bensmithinc

www.linkedin.com/in/bensmithinc

www.delicious.com/bensmithinc

About Ben Smith

Born in Hamilton, Ontario, Ben faces the world with the work ethic of a steel worker, creativity of his interior designer mom, and rational science of his dad... he is the guy in the MAC ads standing between MAC and PC facilitating the conversation.

By age 30, he had been the Managing Director of a leading boutique creative agency, the VP Marketing for a leading Vancouver Real Estate Developer (current), got married and had four kids. He's worked for brands both large and small and everyone in between. Credentials aside, it is an insatiable curiosity that fuels him to innovate and pursue excellence in marketing.

Tackling Telecom: Innovation at Telus

This month we're featuring an interview with Bob Petrovic, Director of Services Planning at Telus. In his role at one of Canada's leading telecommunication companies, Bob has been closely involved with managing innovation and sheparding new communication products through the new product process.

As Bob is at the forefront of one the fastest growing segments in virtual communication, mobile services, I was interested in his take on managing innovation. Huge capital expenditures are common in the telecommunications industry, so Bob has a common challenge on a bigger scale, in these economic times - trying to manage long-term investment with short term risk.

In times of financial crisis where companies of all sizes are challenged with funding projects, innovation tends to come from those smaller, more nimble and less capital intensive companies. However, on the telecommunications front, where building the infrastructure takes massive amounts of money, larger companies with legacy systems have the advantage.

In my interview with Bob I was particularly struck by his comments regarding the disconnect that often occurs between Marketing and R&D. In a technology company, in particular where new product development tends to reside with those involved in technology development, this

communication gap can mean the difference between being first to market with an innovative and successful product and time spent developing products that don't meet consumers' needs.

I've talked before about how crucial I believe it is to develop strong working relationships between Marketing and Product Development. Cross-training and working groups comprised of members of both departments tend to improve communication and prevent "orphan" products. I've seen this time and time again, where a great technology product lacks a champion in marketing and so languishes in development stage or the reverse, when marketing research uncovers a consumer need but, without R&D support never moves beyond the idea stage.

In the fast moving and competitive telecommunications marketplace, this type of disconnect can mean the difference between being first to market, and obtaining critically important patents and scrambling to play catch-up as the industry moves forward. Marketing is tasked with correcting identifying the drivers that rule the market is critical and communicating that to those responsible for developing products to meet those needs. When this type of communication breaks down, the result is lost time and lost opportunities.

Bob points out in our interview how critical it is for those of us on the forefront of innovation to reach out beyond out own industries for new ideas and expand beyond our computer screens for ideas on managing innovation. I know you'll enjoy reading his thoughts on managing innovation in this critically important time.

What is your role at Telus?

My primary responsibility at TELUS is for consumer services planning. The scope of the role is broad, ranging from development of product strategies through to incubation of new mobile and broadband services. The goal for these activities is to align activities across the organization & assess emerging opportunities.

In your opinion what are the key trends affecting your industry?

Economic conditions are obviously a key consideration for network operators, impacting a range of decisions from market planning to capital spending. This will be an ongoing consideration for mobile and wireline service providers for the foreseeable future.

In terms of technology trends, it's fair to say that the rise of 3G adoption, driven by smartphones and mobile applications, is a key mobile trend. Video continues to be a key theme in the home with an increasing number of options for time & placeshifted viewing. As with any trend, there are opportunities and risks that need to be understood and acted upon.

How do you measure innovation success?

Commercial endeavors are ultimately measured by profitability and I don't think innovation can be treated differently. Successful innovations will be those that drive usage and adoption in a sustainable way - they have to fulfill a need and be convenient so that people will want to use them. While forecasting commercial success for new initiatives can be tricky, convenience, as measured across economic (price, cost) and esthetic (ease of use) dimensions, is usually a pretty good indicator of future performance.

What is a biggest pitfall that impedes successful innovation?

In any industry, a disconnect between technology and marketing organizations is probably the greatest hindrance to innovation. Opportunities that arise in one area may not be fully appreciated in the other. Maintaining an on-going conversation across these groups goes a long way to realizing opportunities appropriately by managing priorities & expectations.

What is an example of an innovative company that people have never heard of?

In my industry (and hometown), Teradici stands out as a company that's using technology to solve some real problems today with a great vision for the future. They develop thin client solutions that push computing power into the cloud efficiently and transparently.

Outside my industry, I really like what folks like HippoRoller and Kyoto Energy are doing by creating low-cost, simple solutions to real-world problems for emerging nations. Both are applying innovation in a way that increases convenience for the basic needs of life.

List a few of your favourite sites on innovation.

I find myself gravitating to books more than websites for understanding the art & science of developing ideas - I really liked Blue Ocean Strategy and find myself going back to it often.

Lightreading.com is a great site for telecom developments and they do a great job of covering startups which helps me keep a pulse across a wide range of my industry's topics.

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Bob Petrovic is the Director of Services Planning for TELUS Consumer Solutions. In his decade with TELUS he product managed the mobile computing services portfolio from early telemetry to mobile broadband. Prior to joining TELUS, he launched a number of industry-first solutions for Internet developers. Bob has a Bachelor of Mathematics (Computer Science) from the University of Waterloo. He lives in Vancouver with his wife, 2 kids, and some fish.

Watching And Waiting For Early Adopters On Web 2.0

The credit for the explosion in Web 2.O companies goes to early adopters and Web 2.0 companies' ability to reach them. Unlike the Web 1.0 companies of the early part of the century which, diverse though they were, focused on one to one interaction with consumers, Web 2.0 companies focus on multi user platforms.

Web 1.0 companies were selling something; supplying something; providing something for individual users. Web 2.0 companies are providing platforms for users to create their own experience…with other users. Think Myspace, Facebook, Twitter, FriendsFeed, Flickr, blogs and wikis.

Early adopters, that is, the technologically savvy have played a big role in driving the popularity of these new companies. When you're a tech or Internet Company, your early adopters, the ones that eventually drive your business or sometimes are your whole business, are easy to find.

But there are ramifications of Web 2.0 and the companies it spawned for traditional companies, old line manufacturers, service providers and even offline retailers too. Web 2.0 companies have made it much, much easier for many traditional companies to find innovators and early adopters for their products and reach them with marketing messages...maybe.

While frequently early adopters are associated with technological products, the basis for the theory Everett Rogers developed that segments users across a bell curve based on how quickly they adopt innovations, is applicable to just about any category of product.

Two key challenges marketers face is finding and communicating with early adopters and crossing the chasm where momentum picks up and the product gains acceptance by the early majority. Web 2.0 solves both of these problems for many companies.

If you follow Lazarfeld and Katz' Two Step Flow Model, which goes something like this:

... mass media information is channeled to the "masses" through opinion leadership. The people with most access to media, and having a more literate understanding of media content, explain and diffuse the content to others.

You can see why the new way of communicating, creates a funnel which smart marketers can use to direct marketing messages to the wider market. Opinion leaders have always played a key role in the success or failure of new products. In the 21^st word of mouth marketing is becoming one of THE key strategies used to launch a product.

Seth Godin writes this week in The Myth of Launch PR (which by the way, I found when it popped up on Socialbrowse) about companies that passed on the big media spend usually associated with a new product launch: Starbucks, Apple, Nike, Harry Potter, Google, William Morris, The DaVinci Code, Wikipedia, Snapple, Geico, Linux, Firefox and yes, Microsoft. (All got plenty of PR, but after the launch, sometimes a lot later).

Many of those names you'll recognize because... someone told you how wonderful the product was. Today that's even easier and happens at a much faster speed through social networking sites, blogs and other Web2.0 companies.

Finding and exploiting that user or users that can spread the word about a new innovation, cheaply and quickly is the Holy Grail of marketers in the 21^st century. But, the quest is not without its challenges.

Social networks and book marking sites frequently rise and fall before anyone has a good grasp on the audience they serve. Unlike the mainstream media, potential reviewers are fickle. They agree then choose not to review a product. (OK, sometimes the mainstream media does this too, but less often.) They create a big presence and attract a large following ...then disappear because life gets in the way. They get lost in the shuffle overshadowed by tech savvy, early adopters of the Web 2.0 TECHNOLOGY.

Just as marketers scrambled to try to determine how most effectively use Web1.0 technology, we'll struggle with Web 2.0 in its nascent stage. We know that early adopters are much easier to find now…if we could only figure out how to locate them. :P

Moving From Marketer To Content Creator Drives Sales In a New Era

Often lost in the discussions about innovation is the role that enlisting consumer, especially key influencer, support is in determining the success of a new product. Despite hours spent in labs and on exacting market research, many an innovative discoveries fail because of ineffective launch strategies.

Identifying and building relationships with opinion leaders is something we try to do in all of our projects from well before the product launch. This is, of course something that the software industry does on a regular basis, enlisting developers in the early stages and releasing beta versions for testing.

In the consumer products arena however, this is used somewhat less often and frequently results in lower visibility and ultimately less success. In an age when consumers are easily accessible through the internet, it seems almost irresponsible to ignore this opportunity to involve them in the early stages of development and create an active community of supporters prior to launch.

An article, How to sell Vodka, discusses how one company, using limited resources, created a hot new product by using the power of the internet and word-of-mouth marketing to build a winner in the distilled spirits category.

"We can't do things with more money or more people. Our aspiration is to find people - customers - who are discoverers and disseminators."

In an era when budget cuts force companies to look for creative ways to market products, innovators are changing focus from top down marketing to content creation.

"We have gone from being a marketer to being a content provider," Phillips said, and he wasn't referring to the contents of a cocktail glass. "Our job is to create photos and tools and content that others can use to build our brand."

How to implement or even initiate this strategy leaves established marketers scratching their heads and grasping at straws. This is, perhaps why it is often the purview of smaller, quicker, younger companies filled with entrepreneurs not MBAs.

Working the web, filled with social networks, blogs and message boards can be a daunting task for the uninitiated. Navigating the realm of social marketing in search of key influencers requires an understanding, not of strategy, but rather of tactics of the web that may be unfamiliar to mainstream marketers.

But that's where the innovators of the product adoption cycle reside these days - on the internet.

Word-of mouth marketing is rapidly replacing aspirational marketing as the tactic of choice for rapidly growing companies. Yes, celebrity endorsement still has the power to drive sales, but a positive review from a well-known blogger can often add legitimacy to a product claim. Viral marketing campaigns and well-executed online PR campaigns reaching key influencers often perform just as well as a mass media ad buy, particularly in smaller fragmented categories. Original content, particularly amusing YouTube videos can raise awareness faster than broadcast ads (though reposting those on YouTube works well too) as they rapidly spread from user to user.

As companies, large and small, scramble to refocus established marketing departments in the new era of Web 2.0, creative strategies evolve to become personal. Content creation becomes the goal. And it is, of course, not your "father's" content. Hipper, of course, but more honest and interactive as consumers play a greater role in influencing product design.

Innovation Inspired By Other Industries - When Existing Ideas Are New

Building an organization focused on innovation often requires realignment of priorities and focus on a new approach to doing business. Unfortunately in the quest to do something new and different, innovators often forgo looking at what's already out there for inspiration.

Innovation doesn't necessarily happen in a darkened room. Often it occurs when an old or existing idea in a different environment takes on new life.

A video that recently appeared in Martin Lindstrom's column in Ad Age online, Where to Find Inspiration for New Marketing Concepts- Watch Industries Other Than Your Own, discusses one way effective innovators find new ideas.

Pointing to an unusual exhibit in the Museum of Modern Art that electronically maps New York City's global telecommunications traffic, he notes that one of the best sources of new marketing ideas is in industries outside of your own.

Lindstrom goes on to discuss how the map of incoming and outgoing calls in NYC gives us a snapshot of where business activity is happening around the globe. This is, of course, of interest to other industries beyond telecommunications - such as the airline industry. An increasing number of calls to a locale means increased business there which requires more flights. By viewing the work of the telecommunications industry, airlines have a head start on developing new routes.

While the example Lindstrom gives borrows the marketing research conducted by one industry and applies it to another, there are countless ways to benefit from the successes and failures of other industries.

As I mentioned in a post Innovation: Old Often Becomes New, that appeared in Fast Company: originality is overrated. As successful marketers and innovators we know that the path from inspiration to effective execution contains many pitfalls, mistakes and miscalculations. That's why, in many cases, the most effective way to innovate is to recast an old idea in a new way.

By looking beyond your own industry, with which you surely are familiar, you bring added brain power to the search for inspiration. The quest for ideas for new products and services happens in all industries. Both success and failures in an industry not your own can provide inspiration for ideas that can work or work better in your industry.

One approach that I like to take is to look at an industry that is more progressive than your own. This may be one that is more consumer focused or more fashion forward or simply more consumer driven or less.

Retailers, often frustrated with inappropriate packaging or displays often guide potential vendors to manufacturers from another industry for ideas. This shortcut saves time and energy that industry-centric companies often waste trying to reinvent the wheel and frequently enables the innovative company to gain entry into new channels smoothly and quickly.

Technology companies, especially in the consumer hardware space, frequently hire designers and marketing folks from other industries to help them understand the needs of their target market. While early adopters are drawn to the technology, later on in the product adoption curve, consumers look more to fashion and "coolness", hence the need to "borrow" ideas from fashion industries.

Manufacturers selling to many small resellers and service providers do well to look at companies with similar channels of distribution both inside and outside the industry served. Often a change in the distribution landscape in one industry is the harbinger of a change in another.

Being truly innovative doesn't mean just coming up with new ideas. It means using all of the tools at one's disposal to come up with new, effective and executable ideas. Sometimes that means just looking at what already exists.

The Billion Dollar Question: An Interview with Jim Estill

We found a secret weapon in marketing - an engineer that can sell! Jim Estill was a University of Waterloo engineering techie who got into selling computers and became really good at it. The business he started from the trunk of his car became a substantial acquisition for one of Canada's leading computer distributors, Synnex Corporation. Jim is currently CEO of Synnex Canada which sells about a billion dollars of computer products a year.

Jim also became a highly involved shareholder at an early stage with Research in Motion (RIM), makers of the popular Blackberry device, where he remains on the Board of Directors.

On top of this, he is as curious and interested in new ideas as ever and has become an expert blogger. His CEO-Time Leadership blog at www.jimestill.com is a great place to learn about leadership and making the best possible use of your time.

We interviewed him to bring some of his insights into marketing and leadership to you.

Q: How has your engineering background helped you in your business?

Jim: When I started my business, it gave me credibility (I was young and looked younger). And simply spending the time in school helped my maturity level and gave me confidence.

Q: What made you go into selling from the trunk of your car, rather than staying in the engineering world?

Jim: I was designing a circuit board and needed a computer. I got a better deal if I bought 2 so I did and sold one then someone else wanted one etc.

Q: Who were your early role models and what were the main things you learned from them?

Jim: My father taught me self discipline. I have always loved business biographies so was inspired by many of them like Edison, Ford, Weston etc.

Q: What was the most important thing you had to learn to become able to take your EMJ business from zero to $330 million in 25 years - with 99 consecutive quarters of profitability?

Jim: I had to learn to give things up - to trust that other people were capable of doing parts of the job. This can be a very limiting challenge for an entrepreneur.

Q: What were the keys to R.I.M. Blackberry success?

Jim: Success is usually never just one thing. I think their focus has been good. RIM has always hired good people. RIM thinks big. RIM has good technology backed with great marketing and market understanding.

Q: What have you mainly been bringing to the R.I.M. organization (in the early stages and now)?

Jim: In the early stages, I was the big company, the public company, the company who had grown etc. So I could help with growth issues/rolodex etc. I have always been a techie so I always float my ideas on product (most of which were not done and I do not want you to think I was the brains behind product because I was not).

Right now, continuity helps. I am also a working CEO running a $1B+ tech company so certainly have relevant experience.

Q: If you could redo something in your past, what would it be?

Jim: We are the product of all of our past - including our mistakes. One of the things I often say is "Fail Often, Fail Fast and Fail Cheap" and "Having a failure does not make you a failure" so there is nothing I would want to redo.


Thank you Jim for sharing these insights with us. This should serve as an inspiration to any engineers or techies among us to explore developing our leadership abilities and learn how to become really great at selling. Visit Jim’s blog and connect with him at www.jimestill.com

Do you have a terrible idea?

I just finished my #2 speech for Toastmasters. Let me know what you think.

Speech title: Do you have a terrible idea?

How many of you have watched Dragons Den or American Inventor? These shows feature entrepreneurs and inventors all pitching their ideas to get financing from these business experts.

Like these experts on these shows, we see a lot of ideas too. It's funny because we actually have talked to many of the same people.

People regularly ask me, "What do you think of our product or idea?"

I tried all sorts of tactful ways to answer this question (and believe me I tried many)

I finally found the perfect answer.... (Click Play if you are interested)

Marketing ROI - Kodak's "Celebrity Apprentice" Experience

Last month Andy wrote in asking "I'd love to see something on marketing and cost benefit analysis, it's been my experience the two things rarely go hand in hand. I hope I'm an isolated case but guess that I'm not."

I'm making that the focus of this month's newsletter. On Thursday, Peter Roosen and I interviewed Jeff Hayzlett (2nd from the right), Kodak's Chief Business Development Officer and Vice President and David Lanzillo Director, Corporate Communication and Vice President, Communications & Public Affairs.

Tip #1: Try something new if what you are already doing isn't working.

We asked them about their experience in having Kodak featured on Donald Trump and Mark Burnett's "The Celebrity Apprentice" show a few weeks ago.To put this into perspective, Kodak, a 125 year old company, has undergone a major transformation as its traditional photographic films and papers business has been virtually eliminated by the advent of digital photography. The company has gone from having 150,000 employees in 1988 to 51,000 in 2005 and 27,000 today. 60% of the current employees are new to the company within the past 4 years. Yet Kodak remains on the Fortune 500 list in spite of these huge changes to its traditional business.

Jeff said there were two impacts of having Kodak featured on "Celebrity Apprentice" The first one was internal. "It was a morale lifter. Employees see that we are back on the air." He said of the major transition completed at the end of 2007 that employees had experienced considerable "transformation fatigue" resulting from "cost crushing" and "pumping into new businesses."

Tip #2: Don't stack various campaigns if trying something new. Kodak focused on one big one for this time frame - a risky one.

The second impact of being featured on the Trump show was external. Kodak paid about $2.5 million to engage in what Jeff described as "the best product placement deal in history." He said there were "4.6 mentions per minute, about one every 15 seconds, with a total of 89 million viewers. We doubled our sales that week and weren't doing anything else at the time. This was for sales on consumer stuff for what we normally had going out the door."

Tip #3: Create slogan to help communicate your idea or strategy.

Kodak's focus for the show was promoting its new cost model for printer ink consumables. Kodak is launching into the high margin ink market with its "pricey ink stinks" slogan. Jeff said that he would be on live television this week "debating Gene Simmons on getting rid of pricey ink."

David figured the advertising and public relations value equivalency for the Trump show was in the "tens of millions of dollars."

Tip #4: Activation counts more than buzz.

With the improvement of technology and increased competition, there is ever-increasing pressure to make marketing spending more accountable. David and Jeff claimed that activation (marketing efforts that drive sales and not just awareness or buzz) was the thing that counted. Jeff said "if you talk about buzz building in this company, you buzz yourself out the front door."

Tip #5: Have people from different key areas on board with your marketing.

Kodak has a brand and development council with representation from R&D, legal and M&A on it. It also has a marketing operations council tasked with ways to leverage the marketing spend. The company also has its marketing strategy council led by the CEO. Kodak has an EMM (Enterprise Marketing Management) system across the company with dashboards or predictive indicators for campaigns and growth initiatives. This is especially important when one considers that 80% of the company's revenue comes from 19 products, only half of which were in existence 10 years ago.

Tip #6: Make things measurable using whatever tools are needed.

Quantifying marketing ROI (return on investment) is not new. It just hasn't been very doable in the past. Soft measures including brand awareness were more easily determined than strict financial measures such as ROI for marketing investment. Technology and improved ways of measuring customer behavior is making the difference today. Beyond basic software like CRM (customer relationship management) packages, the ability to employ technologies to help track and analyze relevant knowledge helps companies to deepen their understanding of the customer. That is a prerequisite to being able to apply the financial return on investment measurement. Kodak is a large company that has taken this to a high level as an important part of its strategy for transforming itself from a traditional photographic films and papers company into a key competitor in the digital marketplace.

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Product Marketing versus Service Marketing

Product marketing is more specialized and detailed than most people may realize. If it wasn't, there wouldn't be nearly as much investment lost on products that do not become commercial successes. General marketing companies that don't seem able to clearly differentiate between marketing products and services haven't been able to effectively increase the commercial success rates for companies that specifically market products.

There are several references that give the failure rates for new product introductions. The normal range is typically from 70 to 80%. These sources include:
1. Various studies cited by Advertising Age,
2. A study by Linton, Matysiak & Wilkes, Inc. of the top 20 food companies reviewing 1935 new products,
3. A Booz Allen Hamilton study on new product management claiming that one out of seven product ideas yields a successful product,
4. Boston Consulting Group vice presidents and directors James Andrew and Kermit King claiming 60% to 85% in an article titled ‘Boosting Innovation Productivity',
5. Some college textbooks claim 80%.

Before looking at the different kinds of marketing and a couple key differences that can help companies improve their commercial success rates for launching or products, let's take a brief look at some definitions.

So, what exactly is a "product marketer" and what is the definition of "product marketing"? What about "service marketing"? The answers are not as obvious as they should be. In fact, there are conflicting definitions of "marketing" that can lead to considerable confusion. Let's begin with a crystal clear definition of marketing - the process of anticipating, identifying and satisfying customer requirements profitably. This is the core of what a business is all about and therefore a clear leadership role. That differs greatly from the opinion held by many that marketing is or ought to be primarily a support or management function rather than a key strategic leadership issue.

Okay, now that we have a clear definition of marketing and positioned it so that the tail doesn't try wagging the dog, we can look at the key differences between marketing products versus services.

Here are some differences between product marketing and marketing services:

1. Product marketing requires more sophisticated feedback systems than that required for marketing services. This is a key difference.

2. Product marketing has a lot of front end investment compared to service marketing which normally has much of its investment in the back end. This is another key difference.

3. People and companies become more attached to products than to service offerings. Few talk about this inventoritis aspect that can and often does have enormous impact on a business.

4. Products are often returnable whereas services are not. This is not a key difference although it is one that is often cited by marketing professionals. More service providers are offering guarantees making this difference somewhat moot.

5. Products except for things like insurance are tangible while services are less tangible. Construction workers building a bridge might argue otherwise but most buyers of services are purchasing intangibles. This is also a commonly cited difference that really isn't that important when looking from an investment standpoint.

Looking closer at the key differences.

When a product is sitting on the shelf at Wal-Mart, it isn't as easy to relate relevant customer feedback into the offering itself. In contrast, service providers are often sitting face to face with the consumer of the service and there is not a multi-link distribution chain involved like there is for most products.

Largely due to the complexity of determining products in the context of often modern distribution channels, it takes a lot more investment on the front end to accurately determine the product, its market orientation, packaging, presentation, etc. than it does for service offerings. Services are not normally distributed through complex or multi-player channels, each of which has specific needs to be considered for the process to work.

Another important and often ignored aspect is that it is a lot easier to get attached to a product than to a service. People and their organizations have a natural tendency to become attached to their products. This is generally not the case for service offerings. Look up "inventoritis" and you'll see what we mean.

Knowing the key differences between the different kinds of marketing will allow you to position resources more effectively. It also makes it easier to better plan your product deployments for greater returns on these investments, while avoiding common pitfalls. The bottom line: greater success with your product marketing.

[1] Brock, D. (1997). Getting the most out of your new product introductions. Partners in Excellence. Retrieved April 27, 2007, from the World Wide Web:
http://www.excellenc.com/articles.htm

[2] Linton, D.B. (1997, July 1). Market study results released: new product introduction success, failure rates analyzed. Frozen Food Digest 12(5), 76.

[3] Dean, B. (2005, March 28). Case study: Incorporating focus group research into the product development process. DM News, Article 32310. Retrieved March 31, 2007, from the World Wide Web: www.dmnews.com/cms/dm-news/e-commerce/32310.html

[4] Andrew, J.P. & King, K. (2003, April). Boosting innovation productivity. BCG opportunities for action, April 2003. Retrieved April 27, 2007, from World Wide Web:
http://www.bcg.com/publications/publication_view.jsp?pubid=847

[5] Friedman, H.H. (2000). Product policy; new product development. Retrieved March 31, 2007, from City University of New York, Brooklyn College Economics Department website: http://academic.brooklyn.cuny.edu/economic/friedman/mmproductpolicy.htm

Zipper inventors had their profits stuck in their teeth (The Zipper Story)

When someone mentions the word "zipper", what's the first thing that comes to mind? For many people, it's "I wish I had invented it." Zippers can be found almost everywhere on the planet. There are enough being produced each week that if they were joined into a long one, it would go around the world. Yearly production for this $8 billion industry exceeds 15 billion zippers - enough to make it to the moon and back five times.

Many inventors who file patents, including the inventors of the zipper - sewing machine inventor Elias Howe in 1851, Whitcomb Judson in 1891 (patented 1893), and much later again electrical engineer Gideon Sundback in 1913 (patented 1917), fall into the trap of being too far ahead of their time or otherwise being out of tune with the market. The zipper finally started getting good market acceptance after 1930 and is now one of the world's best known products - centuries later. It did little good for its early inventors.

Judson showed his version of the zipper to 20 million (20,000,000) people and sold only 20. If he went from door to door selling zippers and found everyone home, he would have knocked on every door in London, New York, Paris, Tokyo, Vienna, St. Petersburg and Milan to reach so many people. Yet he somehow only managed to sell a handful of these things. This seems like the ultimate case of not listening to the market. Judson had a severe case of inventoritis - being completely out of touch with the market and getting such terrible results.

Persistence only pays off where there is a real market. Judson certainly was persistent and spent the better part of his life working on his zipper. He brought investors into his new Universal Fastener Company, patented his zipper and promoted it at the 1893 Chicago World Trade Fair. He kept working at it for several years. Eventually, Gideon Sundback, who emigrated from Sweden to Canada, came to work for Judson's company. Sundback worked on the zipper designs for years and patented a newly improved version in 1917, years after both Judson's patent and Judson himself had expired. Sundback's new version did not do much better than the original. New machinery was built and over the next few years, production only got up to a few hundred zippers per day. This wasn't enough to make Sundback rich and Judson was already dead and buried long before then in 1909.

Zippers didn't really get their start in the market until after the B.F. Goodrich Company used them on a line of rubber galoshes in the 1920s. Goodrich invented the name "zipper" to replace awkward sounding phrases "hookless fastener", "continuous clothing closure" and "clasp unlocker" used by the various inventors to describe the product. Other players then started entering the market. The companies started by the inventors had a hard time keeping up. This includes the ones that evolved into present day Talon. Mid-1930s Japanese entrant YKK started from scratch with no patents and now commands roughly half the world market while Talon only has a 7% share. German producer Optilon has a similar share to Talon and much of the remaining share is made up of a growing number of Chinese and Korean producers.

Founded in Japan in 1934, YKK was called Yoshida Kogyo Kabushikikaisha, but 60 years later the company changed its company name to match its brand name. The privately held YKK Co. is headquartered in Japan and is made up of about 100 companies and subsidiaries operating 200 facilities in 60 countries.

YKK's success is based on constantly improving the quality of their products, treating their people with respect, lowering product prices and providing excellent service while managing tight delivery schedules. The company also introduced variations in styles, colors and attributes - highly responsive to market needs. Company founder Tadao Yoshida instilled this philosophy that he called a "virtuous circle" of rendering benefits to others so that benefits would return to YKK. His company is the Toyota of zippers.

YKK keeps quiet about its manufacturing process innovations and prefers maintaining trade secrets over patents. The company obscures the details of its improvements in its manufacturing processes. It does likewise for improvements in its supply chain and distribution management methods, custom-made computer software, and special management techniques. What is impossible for the company to keep secret is that it does not have a bad case of inventoritis. YKK has always been in close touch with the market - with excellent results.

The message for inventors is plain and simple. If you are going to do something, do your homework and always be in close touch with your market. Things don't come easily but they do come along to those who are prepared to engage the market constructively. Don't make it so your ideas and inventions end up being tens or hundreds or years ahead of time like those of the zipper inventors were. Fifteen minutes is about the right amount of time. The product could have achieved market acceptance much sooner if the inventors were better marketers. If they had gotten their zippers unstuck, they might have lived to see spectacular results from what has become one of the world's best known products.

Hope you enjoyed this article. If you are interested, feel free to download a copy of our new book.

Top 5 marketing investments for 2008

We complied a list of top marketing investments for 2008. Enjoy!

1. Position your website as a competitive recruiting tool. Most websites now do a fair to good job of attracting new business. Companies that are interested in attracting and retaining the best and brightest people are focusing more of their website efforts on ensuring it presents the company well to prospective recruits. Recruits would like to know what type of people work there, what the environment is like, where their advancement opportunities are, etc. For example, a short video from the CEO or owner produced with this recruiting perspective in mind can go a long way toward presenting the company. Statements of policy, clear contact information, testimonials, and mention of charitable initiatives, etc. can turn your website into a more constructive recruiting tool.

2. Conduct a reality check. Host a luncheon for your top five customers to thank them for their business and to get firsthand feedback with a view to figuring out how you can serve them even better. The group setting raises the stakes a little and allows for good dialogue between you and these top customers, while letting them bounce ideas off each other. As another part of your reality check, bring in a consultant from time to time to help review or define an optimum marketing strategy. Companies that have well defined marketing strategies that continually are adapted to changing market conditions are usually the leaders in their respective industries.

3. Apply suitable technology to improve or enhance marketing processes. These would include Customer Relationship Management (CRM) programs, managerial accounting tools to help assess markets, products, prices and profits and feedback systems to track and gauge customer satisfaction, etc. Another solid investment in technology is that which enhances customer interaction. Establish an online presence and level of interactivity that goes beyond the website. Blogs, podcasts, forums live instant messaging are among the currently available options. A warning about technology: be careful to not get caught in the technology trap, where resources are invested in technologies that do not add real value to the business.

4. Develop value-added materials to help educate the customer. Materials need to go beyond a brochure that tells what the products and/or services are. These advanced materials that normally consist of books, reports and articles that educate customers are valuable in their own right to justify the time and effort in going through them. The key is to ensure that the reader derives value from the materials regardless on whether or not they buy your current product or service. The materials should relate to your products and services without being perceived as a sales pitch.

5. Train all your employees to become more marketing savvy. Companies need better prepared staff from a marketing perspective as things become increasingly competitive and as the number and type of options available for approaching your customers increases. An organization can run more finely tuned and sophisticated marketing programs and processes if the internal people are more knowledgeable in this area. This also aids employee retention.