Learning from Dogs

Innovation is manageable

“Innovation” means different things to different people but, generally, it involves the application of novel ideas, products or processes for some purpose. But even if we can agree on “what” it is, do we understand “how” innovation happens?

Managing 'bright' ideas

There is a significant change taking place in the way that the process of innovation is understood. We can put this in the context of developments in the manageability of other areas of business activity in recent times. Read more of this Post

Pizza and a business plan

Here is a wonderful story of craftsmanship in the modern age and its interaction with business expectations. There is a very small, but reportedly excellent, pizza place in Chicago called “Great Lake”; and I learnt about it when a friend referred me to an article about its culture, its success and the consequences published by the New York Times.

The effect of extremely good reviews has been that they have been overwhelmed by demand and some customers have reacted unfavourably as a result. I think that they should stick to their guns and not compromise their principles and standards. However, this does not mean that they could not be doing some other things too!

There also seems to be an interesting systems story here! Read the rest of this entry »

This is more than about the problems with Toyota.

The Economist is a newspaper.  It was first published in September 1843 which, of itself, makes it a notable newspaper.  Many years ago, more than I can recall just now, I became a subscriber to the newsprint version of this weekly paper.  It has become such a companion, so to speak, that when I left the UK in September 2008 to come to Mexico I made arrangements to continue receiving The Economist each week.

However, the Mexican postal system, despite being thoroughly reliable, is rather slow and, rather logically if you muse on it, the postman always only delivers when there is more than one item.  Thus the particular copy of The Economist that carried the story about Toyota arrived late and with three other editions!

Let me turn to the point of this article.

Read more of this Post

On a more professional note …

In the various posts that I have contributed here on the “Learning from Dogs” blog, my approach to the general topic of integrity has been broadly related to people, their behaviour and their contribution. However, it is noticeable that I have barely mentioned any professional interests; so, this post relates to an area which I have usually discussed elsewhere: it is reproduced from my personal blog.

Go, Nokia, go!

You have nothing to fear and everything to gain!

The mobile internet is becoming mainstream, so the smartphone market is booming. Nokia occupy the strongest position in the smartphone market, has loyal customers and a reputation for phones that, relative to other mainstream phones, are user friendly.

So what is happening?

Read the rest of this entry »

Market research for sales people

Yesterday, in part two of this three-part Post, we looked at two real-life examples of how listening to your market works.  In this concluding part we examine some practical methods for sales people.  (By sales people I also include those who run their own business because there is no better sales person than the person who runs their own enterprise!)

1. Empty your mind of all your pre-conceived ideas as to why your customers buy your product or service.
2. Start off by listening to the reasons why a recent customer bought from you.  Ideally in person but if not, then by telephone.  Never by email!  I’ll leave it to you to think how you might do that – easy in practice.  Comment if you want to explore this aspect.
3. Listen to sufficient number of customers so that you feel you have a representative view.  I guess what you are looking for is the Pareto relationship – what are the 20% of reasons/motives that generate 80% of your sales.  You should be able to end up knowing what are the differences that make the difference (between you and your competitors.)
4. Just like Guy Watson of Riverford, knowing why a customer buys MUST also include knowing what use that customer is making of your product/service.
5. Negotiate with as many customers as possible the opportunity to stay in touch – at whatever frequency makes sense to both sides. Again, think about how you stay in touch – personal visits may be unwieldy but phone usually is acceptable.  Not via email!
6. Once you know why people become customers then you need to know what their experience is when they are accustomed to using your product or service.  This is key!  Think what you felt like when you bought your last car.  Full of the thrill of a new experience and the anticipation of enjoying your ‘smart’ decision.  Now think how you regard your car today after the reality of the cost of ownership, a few unplanned service issues and when it now feels much more like the utility vehicle that it really is.  If the original sales person doesn’t know how you feel today then there is no way that the sales person’s next sales proposition can be modified to keep you as a client.
7. Staying in touch allows you to anticipate future needs of your customers – the key to all business success.
8. Understanding your customers means that you can build loyalty – and loyal customers is the key to business profitability.  If at all possible get hold of a copy of Prof. Fred Reichheld’s The Loyalty Effect.
9. Use the relationships you build with your customers to seek their ideas as to what their future needs may be, how they would like to see your products and services evolve and who, and why,  they regard as your potential competitors.
10. Finally, as in the first point, keep an open mind and never assume.  Remember the old ditty – if you assume you make an ‘ass’ out of ‘u’ and ‘me’.

By Paul Handover

Market research for sales people.

Yesterday, I started a Post on undertaking market research, from a practical point of view. It continues.

To me, there are very significant advantages in being a small business and one of the most important benefits is that it is so much easier to really know what your customers want.  Here’s a fascinating extract (p.139-140) from Malcolm Gladwell’s book Outliers.

In 1889, Louis and Regina Borgenicht boarded an ocean liner in Hamburg bound for America.  Louis was from Galacia, in what was then Poland.  Regina was from a small town in Hungary.  They had been married only a few years and had one small child and a second on the way ……

….. They had enough money to last a few weeks, at best.

…..Louis and Regina found a tiny apartment on Eldridge Street, on Manhattan’s Lower East Side, for $8 a month.  Louis took to the streets, looking for work.  He saw peddlers and fruit sellers and sidewalks crammed with pushcarts.  The noise and activity and energy dwarfed what he had known in the Old World.  He was first overwhelmed, then invigorated.  He went to his sister’s fish store on Ludlow Street and persuaded her to give him a consignment of herring on credit.  He set up shop on the sidewalk with two barrels of fish ….

….. By the end of the week, he had cleared &8.  By the second week, $13.  Those were considerable sums.  But Louise and Regina could not see how selling herring on the street would lead to a constructive business…..

….The answer came to him after five long days of walking up and down the streets of Lower East Side, just a he was about to give up hope.  He was sitting on an overturned box, eating a late lunch of the sandwiches Regina had made for him.  It was clothes. Everywhere around hi, stores were opening – suits, dresses, overalls, shirts, skirts, blouses, trousers, all made and ready to be worn.  Coming from a world where clothing was sewn at home by hand or made to order by tailors, this was a revelation.

Borgenicht took out a small notebook.  Everywhere he went, he wrote down what people were wearing and what was for sale – menswear, women’s wear, children’s wear.  He wanted to find a ‘novel’ item, something that people would wear that was not being sold in the stores.  For four more days he walked the streets.  On the evening of the final day as he walked toward home, he saw a half dozen girls playing hopscotch.  One of the girls was wearing a tiny embroidered apron over her dress, cut low in the front with a tie in the back, and it struck him, suddenly, that in his previous days of relentlessly inventorying the clothing shops of the Lower East Side, he had never seen one of those aprons for sale.

This is such a wonderful example of what understanding your market is all about. Louise was sufficiently smart to know that selling herrings, while lucrative in the short term, was not the long-term answer. He was sufficiently patient to watch and not jump to conclusions until the answer was clear. He was sufficiently tough to keep at it until he had his answer.

Now let’s jump back to Riverford Organics. Here are the words of Guy Watson.

a cooking odyssey Monday 26th October 2009

As you may have guessed, I am a vegetable bore. Twenty five years ago when I sowed my first leek I was fairly well adjusted but now my wife reckons I can turn any conversation to growing, cooking or eating veg within seconds. The box scheme was founded on the invigorating but dangerous assumption that my obsession was, at least partially, shared by customers.

This year I set out on a cooking odyssey to understand how others use or don’t use our vegetables. I cooked in village halls, in my bus, on the beach, in tents in Wales, on stage at WOMAD [World of Music, Arts and Dance, Ed] but most of all in customers’ homes. The experience has been fascinating (for a veg bore), frustrating (you are all so different) and humbling (there is life after vegetables).

My abiding impression is that most of you do share an enthusiasm for our veg, but that we need to make it easier for you to incorporate them into often busy lives. According to our customer survey last year only 5% of you find it really easy to use your box and 32% struggle. However fresh and tasty, local and minimally packaged, fairly traded and sustainably grown those carrots and beans are, if you are struggling to use them we will lose you in the end. (My underlining)

Our mission for the coming months is to make life with a box easier. There will be a few minor changes like less clods of mud but mostly we want to do this by cooking with you; both virtually and in person. We plan to team up with around 100 like-minded professional cooks who are inspired by our veg and on a par with our chef, Jane Baxter, when it comes to cooking them. They will work part-time with us and our customers, inspiring, teaching, demonstrating, creating recipes. We plan to run initiatives including affordable cookery classes and demos in homes, workplaces and community venues; lunch clubs, supper clubs and cooking clubs and a recipe exchange for customers. We have already run some pilot events and now we really want to get going.

get involved

Would you like to improve your cooking, help others improve theirs or do you know a cook who might want to work with us? If you’d like to get involved, email riverfordcooks@riverford.co.uk with your name, contact details, postcode and what you are interested in and we’ll let you know what is going on in your area.

The underlined sentence is the key. Without this insight, Guy would have had no way of knowing what was influencing his sales figures. And if sales were continuing to grow then this potential loss of business would have remained deeply hidden from sight. Only getting out there and mixing it with your customers revealed this problem, potentially a serious problem.

Tomorrow the concluding part of this three-part Post in which we examine some very practical ways of listening to the market.

By Paul Handover

Market research for sales people.

John’s Post yesterday on Riverford Organics nudged me into writing this Post, something that has been in the back of my mind for ages.  My topic is understanding your customers or more properly described, understanding your market, because the word ‘market’ feels a better description of the objective: knowing why your present customers bought, what they like and dislike so you have a better idea of the buying intentions of your potential customers.

The term ‘Market Research’ is not a difficult or uncommon phrase (a Google search returns 132 million links!) but, in practice, it is one of those terms that is very tough to pin down as to what it means as a set of practical tasks.  Let’s try a few quotations from a Google search (this time only 6.6 million links!).

…. research that gathers and analyzes information about the moving of good or services from producer to consumer …
The systematic collection and evaluation of data regarding customer’s preferences for actual and potential products and services …
A study of consumer groups and business competition used to define a projected market.
The collection and analysis of data obtained from a sample of individuals or businesses relating to their characteristics, behaviour, attitudes …
…the activities undertaken by an organization to determine the nature of its customers and competitors, as well as the demand for its products or services along with the features that customers prefer in similar products or services. …

ad nauseum …

For something that is a critically important component of business strategy, such a wide variation in definitions is totally unacceptable.

Now it’s important that you know where I am coming from.  Since 1966, I have been working as a business-to-business salesman.  Since 1978, I have run my own companies but have still seen my only competence as that of a salesman.  (Technically I ‘retired’ in 2007 but still keep my hand in through mentoring and coaching.)

In the early 80s, as my first company, Dataview Ltd, was growing rapidly, I became a chartered member of the Chartered Institute of Marketing. I thought that marketing was a skill I needed to know more of. But, to be frank, apart from a nice certificate and a glossy monthly magazine, it’s difficult to recall any life-changing experiences from that relationship.  Marketing seemed to be about medium to large businesses – not correct but that was the impression given.

Back to the theme of this Post. Read more about market research for sales people

Another quick look at Riverford Organics and a lesson for all.

Further to my post on Guy Watson of Riverford Organics, in the mini-series on remarkable people:

A couple of Saturdays ago (October 24), we had a great time out at Wash Farm, the home of Riverford Organics.

Our five year old son enjoys eating sweetcorn. Recently, having carried the weekly veg box from our doorstep to the kitchen calling “Riverford coming through!”, he was then delighted to report: “there are three sweetcorns”, there having been two in previous weeks!

On Saturday, he marched into a field of sweetcorn and, as if he had done it for years, went straight to a plant and, explaining what he was doing, tested the crop for size and ripeness and picked it by breaking it off like an expert. He then handed it to me and proceeded to pick many more of them. When I asked him how he knew what to do, all was revealed: “I saw it on the telly!”.

As luck would have it, I encountered Guy Watson at the event and it was great to shake his hand and offer a few words of congratulation on what he has done. Of course, he has no idea who I am!

Their customer service is great; and now they are embarking on more market research to understand better how their customers use their products! [See the relevant edition of their newsletter here!] [The subject of a Post on Market Research coming out soon. Ed.]

Although I am not an expert, I know enough to know that this is remarkable. To think about how customers are using the product, to measure it, to go into customers homes and find out what they are really doing with your products: this is at the pinnacle of good customer research!

No doubt there are others, but I have only ever heard of one other company who paid so much attention to customers in their homes. It was Intuit, the highly regarded US software vendor which, for decades, has consistently beaten Microsoft at providing accounting software. Their representatives would wait in a shop for a customer to buy their product and then request permission to travel with them to their home to record exactly what experience they had with installing and using it!

Final report from the day at Riverford: the event on Saturday was “Pumpkin Day”, its primary purpose being to buy (and have carved) your pumpkin for Hallowe’en. There was a competition to guess the weight of a (largish) pumpkin; I guessed by comparative lifting of the pumpkin and of said five-year-old son, and based my estimate on information from his mother about his most recent weight! Guess what? I have just heard that I won! So a case of (organic, of course) red wine is now expected to materialise alongside this weeks box of vegetables!

By John Lewis

P.S. The Riverford Blog is a good read

A Post published today by John Lewis raises the question of why not consumer protection for financial ‘products.

Sherry’s reply.

A great question, John: why do we not have a threshold level of safety for financial products, as we do with cars and toys?

Well, for one, if a financial product “fails,” the consequence is purely financial – it is not injury or death.  A financial product simply represents a financial investment today in exchange for financial payoffs tomorrow.

The less certain those payoffs, the higher the minimum required return on that investment. If the returns were certified or regulated in some way, risk would be reduced, and the required return would also fall.  Limiting risk exposure throws out the baby with the bath water:  less risk means lower returns on the investment.  Look at the real returns to U.S. Treasury Bills – they are almost zero!

There is a role for regulation in financial products and that is for disclosure of relevant information.  When we invest in a financial product, we are putting our money at risk in exchange for future expected cash flows.  We forecast those cash flows on the basis of material information about the firm, its products or services, and its management and strategy.

Even here there is a fine line between the right to know and proprietary information that enables a firm to invest its own funds in the hope of generating a large return in exchange for taking risks.

The Securities and Exchange Commission’s requirement for a 20-day window between the time a bidder makes a tender offer for a target and the time the target shareholders must decide whether to accept the offer or not is an example of a regulation that crosses the line, in my view.

In a misguided attempt to protect shareholders from fly-by-night tender offers, the SEC has created an environment where multiple competing bids can arise, driving down the return to the original bidder and limiting the incentives for firms to productively redeploy assets through tender offers.

By Sherry Jarrell

Are we missing a lesson that has been applied for years?

I have resisted any temptation to comment on the economic situation on Learning from Dogs. The contributions from others are based on far more knowledge and understanding of the subject then I will ever have.

However, I feel obliged to ask humbly for some clarification about something that bothers me. Are we putting the cart before the horse? Are we ignoring the relationship between provider and consumer in finance?

The regulatory regime applied to the vast majority of products which are allowed to be sold to the public is such that there are probably more stringent safety standards for an electric toaster than for most, if not all, financial products!

Much of the talk of regulation and restraint, in the current climate, seems to relate to remuneration of people working for financial organisations. But, why does it matter what they receive? In other fields, success is rewarded and the shareholders, admittedly fairly indirectly, have some say on the policy in that area. Why should they not pay what they wish?

On the other hand (to coin an economic phrase!),  the minimum standards of the products are set by regulators.

In other fields, if a supplier cannot demonstrate, to the satisfaction of the regulators, that its product meets specified safety standards, then that product is not allowed to be offered.

It is very simple! I am not referring to contracts, customer service, compensation and so on; I am referring to a threshold level of safety below which the product is not allowed to be sold or operated. Think: “cars”, “aeroplanes”, “electrical appliances”, “children’s toys”, and … well anything else!

To be even clearer, this is not about “perfect safety” which is, of course, not available at any price. This is not about blame. This is not about guarantees. It IS about inspection, testing, certification, regulation … oh and policing!

Can anyone explain why this approach cannot be applied to financial products? (Sherry attempts to here.)

By John Lewis

p.s. as chance would have it the image of the toaster at the head of this Post was taken from an article talking about a recall of the Viking Toaster – point made rather well, don’t you think?