Don’t Think Out of the Box, Add Boxes

I’m on my way to another “let’s think out of the box meeting”. You know these meetings. A couple of senior executives sit around the room and try to brainstorm on the logical extensions to the business and products that can open up new sources of revenue. I’m sure if you are like me you’ve sat through your share of “out of the box meetings”. I surely have as a senior member of the management team and also as a consultant. Every time I sit through another one of these meetings I caution the attendants that these meetings have one thing in common no matter what industry you are in - out of the box meetings provide false hope because even if you can think out of the box the execution may be far beyond your current resources, capabilities, and budget. Out of the box meetings always end with questions of how and when and then someone stands up and tells everyone, “We’ll do it next year”. Guess what by next year it is forgotten or worse you schedule another “let’s think out of the box” meeting.

There are four product / sales / marketing problems that we see today in every business we work with. I’m not saying you have all four but you probably have at least one or two.
1) Sales, Marketing and the Customer are saying different things about your product weakening your value proposition and making it hard for the customer to determine why to switch or use your product. This may lead to aggressive pricing to win the customer.
2) The product is over-engineered, costs are high, pricing is competitive and you are close to break-even or losing money on each sale.
3) You are so busy hunting for new customers that no one is tending to existing ones. Customer retention may be next year’s problem which will drive pricing even lower.
4) You have no time to think about growth, innovation, or new products and the cycle downward continues putting stress on the business and all the resources.


Let me introduce Stages of Innovation’s 4BOX Marketing process. Why think out of the box when I can show you how to expand the boxes and make more money today, with today’s funding, resources, and capabilities. Could it be that simple? The answer is yes. SOI’s 4BOX Marketing process leverages your current customers, capabilities, resources, and budget. SOI’s 4BOX Marketing process:
- Aligns Sales, Marketing and the Customer
- Packages the optimal set of features to maximize profit
- Creates the reason for customers to switch or begin using your product versus other alternatives
- Finds the right channel, to reach the right person, so your salespeople and collateral can say the right thing.



Call or email us to learn more.
Rob Goldberg 2009
rgoldberg@stagesofinnovation.com

Using Day in the Life to Strengthen your Message

A day-in-the-life approach helps strengthen a product offerings value proposition.

Here's a real example: Remote Deposit Capture, the little desktop scanner that enables businesses to scan and deposit checks directly from their office, has started to gain popularity with small to mid-sized businesses. Most banks have an offering and non-bank solutions have begun to enter the market. The predominant message is focused on convenience. “Make a deposit from your office and never have to drive to the bank again.” Are the banks and non-banks missing the bigger picture? Maybe so. By using a day-in-the-life approach you can quickly get to the underlying need and develop the right message that works with your target market.

Let’s visit with two accountants, Mary who works for a small company and receives a few checks a week and Stan who works at a mid-sized company and receives checks every day. We hypothesize that the frequency of checks and the value of the check may drive the differences of how they handle bank deposits.

Low Volume of Checks
A couple of times a week Mary receives checks from her customers. When she gets them she opens the envelopes and immediately makes copies of the checks so she can file them with the corresponding invoice. Because Mary doesn’t have a lot of checks coming in on a daily basis she stores the checks in her draw throughout the week and makes one deposit every Friday. Some of the checks are large and Mary knows that if she could get them onto the bank sooner the money could be working for her. Mary matches the copies of the check with the right customer invoice and then manually enters the information about the check and the amount into her accounting system. On Friday Mary writes up the deposit slip, adds up the checks, enters each one separately on the slip and drives to the bank to make the deposit.

High Volume of Checks
Stan goes through a very similar process as Mary only Stan receives many checks every day. Because some of the checks are very large Stan wants to make a deposit every day. That usually doesn’t work out that way because although the bank is close by Stan can’t find time to always get there and checks sit for days before they are deposited. Also, because there are a lot of checks Stan spends hours coding and entering check information into his accounting system. Stan rechecks his work and sometimes has to reenter information due to keying errors. At different times during the week Stan writes up the deposit slip, adds up the checks, enters each one separately on the slip and drives to the bank to make the deposit.

Applying DITL (Day-In-The-Life) Approach
By visiting with Stan and Mary we observe that they both do a lot more with the checks they receive. In fact, we also now know that they think about higher value checks differently than lower value ones. Our investigation of the market with other merchants uncovers that how often checks are received and the value of the checks received drive a lot of the processes.

By plotting the information into a classic 2x2, volume and value we get the following exhibit. Notice where convenience is? It’s in the lower left box where volume and value are both at the lowest points. Is that the message you want to go out with to all of your customers?

Developing Targeted Messages
Using the same 2x2 we can develop very specific messages for the various target audiences. By using a DITL approach we are able to direct specific messages to potential customers.

You can also apply this to verticals. Where would a property manager fall, a doctor’s office, a landscaper or plumber? Plot verticals and with a DITL approach sharpen the message.

Stages of Innovation helps companies create, communicate and launch new products.

Rob Goldberg

--copyright 2009

When the past no longer predicts the future

What are managers to do when past trends no longer predict the future?


We have done our budgets for years looking at past trend lines adding in seasonality and hoping variability is similar to the past. When results are good we as managers have a tendency to push aside bottom up budgets. The question every manager needs to ask about their business is. "am I seeing a structural change in my marketplace." A structural change is defined as a long-term widespread change of the fundamental structure.


Does this describe your industry?


For those of you brave enough to tackle this or those of you are struggling right now to get a better handle on this let me provide a possible structure. This will help you streamline the budget setting process by validating the underlying assumptions in the budget, developing strategies for growth, and setting objectives to close the gap between your budgeted trend line and the forecasted trend line. Some of you might be asking yourself what does this have to do with innovation. If you have read my blog you know that I believe innovation happens in the gaps. Those gaps exist between what is actually happening and the expectation of what should happen and innovation is how you get back to the high growth.

Here's an approach that should help. For more information go to my web site.


Step 1 Determine Budget Drivers and Sensitivity
Identify and test sensitivity on each budget driver. Budget drivers are a set of key factors that drive the business. Start with the P&L. Identify which items have the biggest impact on the P&L.

Step 2 Test Assumptions

Determine if the drivers you chose are leverageable by testing them with customers and further modeling. Will it be something that we will ask respondents directly, segment later during the database work, or derive through some other means. This step requires some research. It doesn't mean you have to spend a lot of money but it does require you to go out and talk to customers. When you are testing expense assumptions it will require you to talk to internal people.

Step 3 Map Learnings

Analyze data and develop trend lines. Compare against the budget trend lines. You will need a good financial modeller to rebuild your budget models with the new forecast. After you are done try graphing the results and the gaps will be obvious.

Step 4 Action Planning (The Innovation Gap)
Determine which assumptions we want to work on. This is a prioritization exercise as much as it is a action planning exercise. I'll post a prioritization method that works for my clients in another article. By now you understand the sensitivity of the assumptions and the individual impact they have on the P&L. Remember some of the assumptions are dependent on others. For example, service revenue may be dependent on renewal and new customers. The underlying assumptions that need to be worked on then would be retention and new customer acquisition.


Step 5 Objective Setting
Each strategy is broken down into a set of activities that will be used to set specific objectives throughout the organization to close the gap between the trend lines.


Step 6 Measurement / Strategic Architecture
The final step is to put in place a measurement tool to ensure the gap is closing.

Good luck and remember you can always email us for more information on how we can help your company or check our web site.



Rob Goldberg 2009