The Creation of Conscious Culture through Educational Innovation.pdf

The Secrets

of Market-

Driven Leaders:

How technolog y

company CEO s create

success (but why

most fail) By Craig

Stull, Phil Myers

and David Meerman

Scott of Pragmatic

Marketing, Inc.

Info

“Our irst product was a winner…but the rest stunk.

What happened? Did our market dry up or did we just get stupid?”

An unnamed and currently out-of-work CEO

newton was a product that many people within the company thought would reinvent personal

computing. On the heels of two huge successes (the Apple II and the Macintosh), the mission seemed

plausible. With the hype and buzz that has become a hallmark of an Apple product launch, early

newton advertising proclaimed: “the astonishing new invention that has room for your whole world

but its in your pocket. It manages your days, your names, and your numbers. It sends faxes and

replaces your pager. It makes writing readable. It can draw even if you can’t. It talks to computers

and printers. And what you don’t know, there’s a good chance it does.”

Wow. the newton claimed to do virtually everything, including things you don’t even know! the

driving force behind the newton? then Apple CeO, John Sculley.

Of course, we now know that the newton was a dismal failure. In April 2007, Computerworld

declared the Apple newton one of the 21 biggest technology lops of all time. the newton missed,

by far, its original goals to reinvent personal computing and it never met Apple’s expectations.

Critics and Apple insiders alike were quick to point to speciic reasons for failure. Pundits said it was

too expensive and that the grafiti-style writing system was too dificult to use. the unit was too

big to comfortably it into people’s pockets (too bad the urban huge pocket craze hadn’t yet started).

Contrast the launch of the Apple newton with the Apple iPod introduction. Launched in 2001, iPod

advertising was exceedingly simple: “1,000 songs in your pocket.” Apple CeO Steve Jobs, now back at

the helm of the company he co-founded, led a development effort focused on solving a problem in

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In 1993, Apple Computer (now Apple, Inc.) released the Apple newton to great fanfare. the

the marketplace—creating an elegant and simple portable digital music player that anyone could use.

Prior to the iPod, MP3 players were crammed with features and functions and buttons and sported

software that was dificult to master. now, just six short years after the iPod introduction and with

over 60% market share, the iPod is one of the world’s most popular consumer brands. Apple’s market

share is 72% and sales are 100 million units as of the end of March 2007.

What’s going on here? the same company creates two major product introductions—one a

spectacular success and the other a dismal lop.

The Diference is Outside

Why do some products fail while others succeed? that question keeps many CeOs, venture

capitalists, employees, and shareholders up at night. Customers want to know too, because after all,

they are spending their money on products.

At Pragmatic Marketing, our business is to study technology-company leadership and marketing.

We look at how companies create products, analyze the patterns, and develop best practice

methodologies for creating products people want to buy. We’ve studied the introduction of thou-

sands of products across the technology industry, including those from big, well-known companies

like Intuit, SAP, Microsoft, eMC, CA, Iron Mountain and SAS, as well as breakout products from

Blackberry, Salesforce.com and Google, and offerings from startup or niche players you may have

never heard of like WebSense, Macrovision, FeedBurner, Act!, and AccuMap. Recently, our focus has

been studying the DnA of market leaders. We’ve surveyed our 40,000 alumni at 3,000+ customers

and compiled data for the past ive years. And, in early 2007, we sat down for one-on-one discus-

sions with 30 CeOs to dig deeper into what they think it takes to be successful. Drawing from our

research and these discussions with CeOs, we looked at culture, organization, and process for

building products; strategies for optimizing go-to-market plans and measurement of best practices.

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Our research validated anecdotal information that market-driven companies are 31% more

proitable 1 , twice as fast to bring products to market, twice as likely to lead, and enjoy 20% higher

customer satisfaction rates. We also found that there is a much more fundamental reason for

product failure than features and price. By pulling this information together, we’ve learned how

to dramatically increase the likelihood of success. And while it is possible to be successful

following a path different than what we outline here, the risk factors of going down an alternative

path are much greater.

In the predictable evolution of a technology

company, the second and third products developed...

almost always fail. Why?

1 Derived from George S. Day

and Prakash nedungadi,

“Managerial Representations

of Competitive Advantage,”

Journal of Marketing 58

(April 1994).

In fact, our research has helped us uncover some startling observations about Apple that all technology

company CeOs can learn from. Based on the evidence collected, we feel that the utterly different

leadership styles (particularly the market-driven leadership habits) at Apple under John Sculley

and Steve Jobs is the difference between failure and success. We’ve been convinced that typical

technology company culture leads to the kind of inside-out thinking that creates products like the

newton. the development process becomes bloated with stuff that company insiders thought

was cool, but that people weren’t prepared to plunk down money to buy. Once a company’s leader-

ship focuses outside-in, however, and begins paying attention to the needs of the marketplace,

it results in the development of breakthrough products like the iPod (a product that addressed an

unmet market, an easy to use MP3 player, and one that people were happy to spend money on).

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We heard a lot about the paradox of growth. We also heard that all CeOs want to be market-driven,

even though so few actually are. this led us to ask why is it seems to be so challenging to become

market-driven?

there is absolutely no doubt that the evolution of technology companies follows a predictable pattern.

the success of the initial product is a rush, intoxicating for everyone involved in the company.

too often, however, it is short-lived. In the predictable evolution of a technology company, the second

and third products developed (like the Apple newton) almost always fail. Why? evidence shows it

is because the entrepreneurs who started the company and who understood buyer problems soon

become occupied with the details of running their organization. they no longer focus on buyer

problems and building products the market wants to buy, and instead become obsessed with the

details of managing an ongoing business like hiring and iring, inance, ofice space, investors,

and the like. Outside pressure forces the company to become the opposite of a market-driven

company. Becoming:

• COMPetItOR-DRIven

(creating copycat products and services and entering the same vertical markets as competitors)

• CuStOMeR-DRIven

(letting existing customers deine extensions to their products, sometimes creating a market of one).

• SALeS-DRIven

(adding channel capacity to drive volume for existing opportunities and deining direction

by the current needs of prospects).

So, how do you keep the right DnA in place as you grow? We found convergence around a set of

7 success factors—we call them secrets. these factors formed the difference between the success

of market-driven leaders and the rest of the pack.

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