Marketing Expert's Corner
This article written in 2005
Marketing is the art of the possible, the craft of turning an improbable and unknown product into the desirable winner. With the right thinking, good timing, and the right budget, well executed marketing can turn the competition upside-down in six months.*
But taken too far, there's a dark side of this force:
"Don't constrain yourself to marketing what engineering says they know how to build."
- A not-famous Marketing VP who became an infamous CEO
by stuffing the channel
The problem is, too much imagination and creativity can lead to profoundly losing touch with reality. And the irony is:
"The best marketing is always based on logic and truth."
- A famous Marketing VP on his way to becoming a famous CEO
My experience in the executive suites of US companies is that nobody wants to hear about constraints and real problems. They're boring, irritating, negative. In the words of Ronald Reagan, "facts are stupid things." Even Peter Drucker wrote, "Don't solve problems: pursue opportunities."
Of course businesses solve problems and deal with constrained resources every day. But they waste a lot of time on things that really won't happen. Eventually, businesses focus on the hard problems and practical solutions -- but only after having wasted a lot of time (and often money).
What forces them into this waste? Congenital boosterism on the part of the VP of Marketing, the emotional and political needs of the Sales VP, and over-optimism from the CEO. Expectations ratchet upwards because it's more fun to think about the sexier, low-probability outcome. Take a look at Why Flip a Coin to find out more about this side of human nature. Far better (or at least cheaper and less wasteful) outcomes would result if everyone operated within reality from the outset.
In science, math, and logic, certain kinds of problems are actually solved faster if you start with the constraints (or limits), backing off to find the optimal result within the realm of the feasible. The trick is to stay focused on maximizing the outcome you can really get, rather than being hung up on a dream that's attractive but impossible.
Let's try to apply the idea to business problems. First, let's look at the three universal constraints:
Time is the most important constraint because it's an infinitely expensive resource: you can't buy it from anyone. You can buy effort or deliverables, but you cannot create more days on the calendar.
Money is the most insidious constraint because everyone monitors it, and believes they've got it under control. Usually overlooked, however, are the costs of invisible assets: "free" hours from employees, customer goodwill, credibility, etc. A strategy that uses these "freebies" excessively will come crashing to earth after initial miraculous success. This is what sustainability means to hypergrowth.
The Market -- the amount of demand and the adaptability of what customers want -- can be the most unforgiving constraint. Demand is too often taken for granted, and competitors jump in fast. Customers' tastes typically move much more slowly than the vendors' ability to make new things, so supply rapidly overtakes demand.
Let's look at a few real-world problems that would be better solved if you started working with constraints from the beginning.
Product Strategy -- In high-tech (even in established public companies), product strategies too often do not consider constraints of the market, the channel, or marketing. The product strategy consists of the engineering roadmap, assuming the constraints of time and capital but not demand. Unfortunately, just having a great product is not enough: the biggest effort (and cost, and maybe even time) of a winning product strategy is involved with making the product successful in the market. It is essential to understand the constraints your product will face in customer acceptance, channels of delivery, and demand generation, so that you can allocate time and effort accordingly. If you conclude that you don't have that much time or effort, find a credible channel partner and create a joint go-to-market strategy. Or, scale back the strategy so it is feasible for you to do on your own.
Engineering -- Engineers want everything to work, and can fall into the trap of perfectionism. Although they feel schedule pressure every day, engineers generally ignore the Market constraint of the customer's patience. Whether it's expressed as a market window or as frustration with a delayed patch, customers generally prefer something that works passably today to something that works 25% better next month. Microsoft killed many a competitor's product by ruthlessly following this principle. You could do worse than to drive Engineering decisions on the basis of "get something small to market before it's 'really done,' and improve on it in 90 day increments." This constraint-based argument is the ultimate driver for eXtreme Programming and iterative product development.
Sales Pipeline -- There isn't a sales force in the world that says, "we have enough leads." But the reality is that pipeline development is an incredibly constrained function, and most teams only have the capacity to handle a few new names a day. Presented with 1000 new leads, the sales team will cherry-pick what seem to be the sexiest 3% and summarily declare the rest junk. Almost invariably, they will never look at the other leads again. If the lead generation process were designed around constraints, the focus would be on quality of leads and timing that matched the rhythm of the quarter (don't bother producing leads that appear in weeks 10-13). The lead cultivation process would focus on working the existing database (who already know your name and have already declared interest), rather than lusting after new names. The lead and pipeline metrics would be completely different, and the marketing metrics would be both stiffer and more relevant to the business.
SFA system -- Free resources will be over-consumed. So, when setting up and using Sales Force Automation systems, most companies have way too many data entry fields and reports because "somebody else" will be entering and maintaining all that data. It's all too common for the Marketing guys to want 30 fields entered for each and every lead, whether it closes or not. This virtually guarantees that no data will be there, and makes serious negative points with the sales reps. Starting from constraints, you'd ask questions like:
How much time will the marketing guys actually have to use the data they're asking for? How often will they even be able look at the data, let alone think about it?
What decisions would actually be changed if you had the perfect report? How much money would actually be saved?
How much time does the company want Sales reps to spend on data-entry that doesn't move a deal forward (can you say, "zero?")
Branding and Advertising -- I've never met a Sales VP or CEO willing to say "we have enough visibility and don't need more advertising." There's a truth here -- you can never look too big, too strong, or too credible. But explicit branding and advertising activities are outrageously expensive and require meticulous attention and lots of repetition to work. Often, these kind of campaigns push against all three of main constraints listed above, and there is a huge amount of waste (either in the form of re-work or outright failure). If you step back and look at the objective you're trying to achieve -- visibility and credibility -- there are often much less expensive (and no more effort-intensive) ways of getting there. Even big companies can benefit from Guerilla Marketing tactics and web communities that provide an echo chamber for customer perceptions.
Epilogue and footnote: After the publication of this Taber Report, I received a number of questions regarding the Studebaker Avanti photo at the top...along the lines of, "what's the connection?" To me, the Avanti is a clear example of a product waaaaay ahead of its time. It was well conceived and executed, an example of a real leap-frog. Yet it didn't sell well at all (compare it to, say, the Mustang). Because even though Studebaker could succeed at producing a high performance looker sports car, they just didn't have the timing or market credibility for them to succeed at selling it. Studebaker hit a hard external constraint that limited their business even with nearly perfect internal execution.
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