SYMBIOSIS INSTITUTE OF MANAGEMENT STUDIES

HYPOTHESIS: BAD THINGS HAPPEN TO

GOOD NEW PRODUCTS.

(NEW PRODUCT LAUNCH MANAGEMENT)

UNDER THE GUIDENCE OF

PROF. V.V RAMASASTRY

SUBMITTED BY:

MAULIKA SINGH 20 B

INDEX

Things fall apart. Expect It. Plan for it.

A bunch of smart people are trying to figure out what "happened" at Toyota. The following story is starting to emerge:

Once upon a time there was a car manufacturer known for its reliable and innovative products. After years of being held as an exemplar of cultural alignment and production efficiency, the perfect storm of rapid growth, communication breakdowns, and inadequate oversight resulted in a series of product defects that has caused deaths and put many consumers at risk.

Is this the complete story?

Not even close. The complete story is too complex to be summarized in simplistic sound bites.

But stories make us feel better. If we can explain it, we can fix it. The reality is often too complex to be "fixed." Simplistic analysis of complex matters serves up a false sense of security that makes us believe we can create perfect systems.

Success in business, and in life, isn't about eliminating risks, it's about managing them. In spite of your best efforts, Murphy's Law will rule and stuff is going to hit the fan. The leader's job, in a world that is never simple or predictable, is to build safety nets so that when problems occur, they can be quickly reported and dealt with. Anticipating problems is the only prudent course in a world where every company has data issues, buggy software, and security incidents.

One of the fundamental risk management principles in IT — and other engineering disciplines — is the controls review. This process identifies potential exposures (for example, Toyota's acceleration problems) and what can be done to rapidly identify, report, and resolve them. In coping with daily pressures, controls reviews often go by the wayside. As a result, many potential unintended consequences remain unanticipated and uncontrolled.

Leaders understand that their companies are living a precarious existence. Almost two-thirds of C-level executives are convinced that their organizations are at risk from information- and technology-based disruption. As these leaders witness the Toyota story unfold, they are experiencing a strange set of emotions: relief — naturally — combined with anxiety knowing that their company may be next in line.

In the real world, bad things happen to good companies. Be sure, in every change you make, after you have designed what should happen, to take the same amount of time to plan for the unintended disruptions that, you hope, will never come to fruition.

Successful product launches are built on processes and methods that communicate your value proposition. They're designed to grow your business and, most significantly, to intentionally exceed the expectations of customers, channel partners, employees and industry analysts.

Successful product launches shape those expectations and create the internal and external excitement that drives the market adoption.

Poor Product Launches Cost You

Everyone "gets" scientific product development processes such as the Capability Maturity Model and product development life cycle.

But many organizations still approach product launches as art instead of science. Failure to commit enough people, technology, and management results from a lack of understanding of what makes up a successful product market launch.

As a result, many launches don't achieve expectations. In a world of shorter product life cycles, you can't afford months and years to recover from a

launch that falls short or misses the mark.

Why Bad Things Happen to Good New Products

It’s an all too familiar story. A significant new product is about to be introduced. It’s technologically innovative, it meets a clear market need and, best of all and it leapfrogs the competition. During the final development stages, top management becomes increasingly convinced that this could be the make-or-break product that comes along once in a generation. The whole company is geared for the launch.

Feedback from test placements is phenomenal; initial reviews in the trade press are little short of ecstatic. With all the customary hoopla and hyperbole, the product is introduced to the sales force.

During the next few weeks, everyone holds their breath waiting for reaction from customers. Salespeople report great initial enthusiasm from the marketplace and, with a sigh of relief, management begins to wonder whether the early sales projections that seemed so ambitious before the launch should now be revised upwards. Then a curious thing happens. Customer enthusiasm evaporates.

The expected sales don’t materialize. Excuses give way to panic and the dark rumors begin. Maybe it isn’t such a fine product after all; marketing hasn’t positioned it properly or the sales force is incompetent. There are plenty of candidates to take the blame but the fact is that nobody has a clue why a product with such great promise seems to be struggling for its life. What is going wrong?

The product itself often becomes the first target for retribution. But the fact is that some of the best products of our time have gone through exactly this rocky start. Take three examples of fine innovative products whose initial sales were so slow that corporate executives were convinced they

had a major disaster on their hands:

Xerox 9200:

This was the first, and probably the most revolutionary, plain paper, high volume copier duplicator. In addition to producing copies twice as fast as its nearest competitor, it offered a dazzling array of bells and whistles such as limitless sorting. Extensive focus group studies had indicated a strong market need for such a product. Early indications from the initial launch showed high customer interest and the launch team had every reason to feel they had a winner on their hands.

Salespeople were bubbling with enthusiasm and groups of customers attending product demonstrations were full of praise. Trade press reviews calling the 9200 “the biggest breakthrough since Xerography itself” were pinned on every wall. Expectations were high, confidence was even higher. Three months later, it was a different story indeed.

The expected orders weren’t coming. Salespeople were subdued and seemed equally divided between blaming marketing for positioning the product to compete with offset printers and blaming the product for complexity and unnecessarily expensive features.

Honeywell TDC 2000:

The TDC 2000 was a major advance in distributed process control automation. It allowed unprecedented flexibility in the design and running of industrial processes just at a time when new methods and market demands were forcing industrial plants to become much more flexible. Its technology was good and its timing seemed perfect.

Again, initial enthusiasm was high from customers and companies alike. And again, sales were agonizingly slow to materialize.

Kodak Blood Analyzer:

When Kodak used its color chemistry expertise to enter the medical market with a new technology for blood analysis, it appeared to have come up with a winner. But the all-too-familiar story repeated itself. The high initial enthusiasm from all parties rapidly gave way to disappointing early sales and general despondency.

These are not isolated examples, although they are a little unusual in that each had a happy ending and made a miraculous recovery from near death in the marketplace just at the point where their creators were ready to give them a decent burial. Others have been less lucky. Disappointing initial sales is an epidemic, and sometimes fatal, childhood disease in the life of many new products and services. There are a lot of deserving innovative products that don’t survive into adolescence.

Technology companies are awfully fond of comparing their work to poetry and art. Unlike most poets and artists, though, techies seem incapable of leaving well enough alone.

In fact, the industry's whole business model depends on rendering last year's model obsolete and convincing customers to fork over money for something visibly different. True, that strategy often yields worthy products--but it has also been known to prompt "upgrades" that were new but hardly improved.

Herewith, a look at ten disappointing (and sometimes disastrous) updates to formerly winning hardware, software, and services. No, this list doesn't include the most legendary cruddy upgrades of them all, Windows Me and Windows Vista. (Covering them would have been like shooting operating systems in a barrel.)

Let's start with an earlier Microsoft upgrade--one whose story sounds a lot like Vista's, but which took place a couple of decades earlier.

DOS 4.0 (1988)

The product: Before the vast majority of the world's computer users ran Microsoft Windows, they used the company's MS-DOS, the operating system that Microsoft famously based on a product it had bought from a small Seattle software company for $75,000.

The bad things: Like many a lousy update, DOS 4.0--which shipped first in a version from IBM for its PCs--sounded impressive on paper (scroll to page 1 of this link for the story): It broke the 640KB memory limitation, could access hard disks larger than 32MB (woo-hoo!), and added a simple menu-based interface with mouse support. But it was incompatible with many well-known programs and was buggy as all get-out--and some of the bugs produced nasty side effects, such as a tendency to destroy users' data.

News stories of the time read like modern-day coverage of Windows Vista: "Early DOS 4.0 Users Say 'Stay Away'" (scroll to page 5 of this link for the story), for instance. As a result, many PC owners clung to DOS 3.3 with the same devotion that they and their computing successors have shown in recent years for Windows XP. (Even a year after DOS 4.0's release, retailer Egghead Software reported that 3.3 was outselling 4.0 two-to-one.)

The aftermath: By the time Microsoft released a version of the OS for non-IBM PCs, the product's version name had advanced to DOS 4.01, and most of the original kinks had been ironed out. But the damage to DOS 4.0's reputation seemed to be irreparable: Competitor DR-DOS went straight to version 5.0 just to avoid any malodorous associations. DOS finally got back on track in 1991, when Microsoft released version 5.0--which was a perfectly pleasing product except for this promotional video.

Ashton-Tate dBase IV (1988)

The product: In the 1980s, the database universe revolved around Ashton-Tate's dBase.

The package inspired a bevy of add-ons and clones; countless companies dedicated themselves to performing dBase development and consulting.

The bad things: In 1988, Ashton-Tate released dBase IV (scroll to page 69 of this link for the story), the successor to dBase III Plus. Like many a major upgrade, the new version was sluggish and buggy. On top of those problems, it lacked one key feature dBase devotees craved: the ability to compile stand-alone applications that could run without a copy of dBase installed. Nor did Ashton-Tate dseem particularly interested in improving the product. Two agonizing years limped by before the company found time in its busy schedule to release dBase IV 1.1.

The aftermath: Despite its dominance, dBase faced serious competition: products such as FoxBase and Clipper not only were dBase compatible, but also nimbly stepped in to offer the features that Ashton-Tate had failed to offer. Users defected to them in droves. Though dBase didn't vanish--actually, it's still for sale--its market share cratered. In 1991, Ashton-Tate gave up and sold out to Borland; that company that couldn't figure out how to reverse dBase's fortunes either.

Polaris Packrat 5.0 (1993)

The product: Back in the late 1980s and early 1990s, if you used a PC to stay organized, there's a good chance that you used Polaris Software's PackRat, a popular and powerful personal information manager (PIM) that was the first such product to run in Windows (scroll to page 76).

The bad things: When PackRat 5.0 shipped, InfoWorld noticed some bugs ("we crashed") but still pronounced it a winner in the magazine's roundup of PIMs (scroll to pages 72-73). PackRat customers, however, were less tolerant. Many deemed the application unusable, and members on the

company's CompuServe forums seethed with anger ("your senior managers are crooks").

Polaris's president claimed that only 20 to 30 unhappy campers were responsible for the online hatefest. But ultimately the company was forced to admit that it had shipped a product that wasn't ready for prime time.

The aftermath: Polaris moved remarkably slowly to patch up PackRat's holes, and the company's once-loyal customer base proved unforgiving. The software's market share fell from 27 percent in 1993 to less than 10 percent in 1994. Mass layoffs ensued, a merger with telephony company Octus fell through, and Polaris and PackRat faded into obscurity--except as a sobering object lesson for the rest of the software industry.

Next: Microsoft Word 6.0 for Mac, Starfish Sidekick 99, Netscape 6, Intuit TurboTax 2002, and more

Microsoft Word 6.0 for Mac (1994)

The product: Microsoft and Apple may be the tech world's most inveterate archrivals, but that hasn't stopped Microsoft from being a major developer of applications for Apple's computers. It released Word for Mac in 1985--two years after the first version of the word processor appeared for Microsoft's own MS-DOS--and it sells an updated version of the application to this day as part of Office 2008.

The bad things: Word 5.0 for Mac, which shipped in 1991, had been a well-reviewed hit. But for the next major upgrade, Microsoft decided to focus on creating a Mac version of Word that matched the features of Word for Windows. So it abandoned all the work it had done on the previous Mac edition in favor of a version that was based on Word for Windows. The result? Word 6.0 felt like a bloated, buggy invader from the Windows

world--even the keyboard shortcuts had changed. Mac fans went berserk, and version 6.01 didn't do much to calm them down (scroll to page 29).

The aftermath: Microsoft learned a lesson. Word 98, version 6.0's successor, was a strong enough app that Macworld named it and the rest of Office 98 as its Software Product of the Year. "[For] the first time in a long time," the magazine enthused, "Microsoft seems to actually understand what the elegance of the Macintosh is all about." The company also split Mac development off into its own group, the Mac Business Unit, shielding it from the unhealthy, Windows-centric influence of the rest of the Office team.

Starfish Sidekick 99 (1998)

The product: No relation to the T-Mobile smartphones--which have problems of their own--Sidekick was an early PIM. Debuting in 1983 as the first blockbuster product developed by1980s software wunderkind Borland International, it later traveled with Borland founder Philippe Kahn to his new company, Starfish Software.

The bad things: By the late 1990s, many PC users were ticked off over bloatware--software that bulged with nonessential features and gobbled up excessive disk space. Kahn responded with the appealing-sounding concept of "slimware." But Sidekick 99 wasn't just slim; it was positively emaciated. Aside from some new PDA syncing features, almost all of its changes involved removing features. Though the program was a trim 6MB in size, it had lost the earlier Sidekick's phone dialer, many of its importing and exporting features, its ability to output HTML calendars, and even its spelling checker. No wonder the predecessor, Sidekick 98, felt like the upgrade.

The aftermath: Six weeks before Sidekick 99 shipped, Kahn sold Starfish to Motorola, which said it would use the new acquisition's mobile-synching technologies to "create a new generation of wireless devices that exchange

information with each other as well as with a wide array of information sources, including PCs, the Internet and wireless service providers." Instead, it didn't do much of anything with Starfish. And poor Sidekick got lost in the shuffle: The dumbed-down Sidekick 99 was the sad final version of a venerable PC mainstay.

Netscape 6 (2000)

The product: Before the rise of Microsoft's Internet Explorer, Netscape Navigator was the king of browsers and had introduced most of the computing public to the World Wide Web. And once Microsoft began pouring resources into IE, Navigator stood as its fiercest, most formidable competitor.

The bad things: Somewhere along the way, Netscape got so distracted by side issues--such as its enterprise software efforts and its purchase in 1998 by AOL--that it forgot to pay attention to its namesake browser. Engineers worked on Netscape 6 (which dropped the "Navigator" from its name) for a ridiculous 32 months before releasing it in November 2000. The first version of the browser built on the open-source Mozilla code base, Netscape 6 looked attractive and loaded pages quickly, but it was plagued by bugs and slow load times, prompting even long-time Navigator loyalists to abandon ship. Netscape eventually polished up the browser, but it was too late: By then, Internet Explorer's market share surpassed 90 percent.

The aftermath: Netscape 6 eventually bequeathed its flagship status to Netscape 7, which in turn gave way to Netscape 8. In 2007, AOL released Netscape Navigator 9--yes, the "Navigator" returned--but announced later that year that it was killing the browser. Still, the story of Netscape has a happy ending, in a roundabout way: The hugely popular Firefox is based on a modern version of the same open-source Mozilla code that powered the underwhelming Netscape 6.

Intuit TurboTax 2002 (2002)

The product: Taxes are unavoidably...taxing. But Intuit's TurboTax has long been the best-seller among applications designed to make paying Uncle Sam a little less arduous.

The bad things: By its very definition, tax software tends to be something that people pay for and then use only once. In 2002, Intuit decided that too many folks were skipping the "pay for" part, so it hobbled TurboTax with a product-activation scheme designed to defeat piracy. The security process required users to run a second program--one that prevented them from installing TurboTax on more than one computer and that sometimes failed to grant paying customers access to the software, period. The hassles prompted a class-action suit, and rival H&R Block ran ads touting the lack of copy protection its competing TaxCut software.

The aftermath: Despite the controversy, Intuit insisted that it was merely defending its intellectual-property rights, and refused to back down. But only for awhile: In May 2003, it announced that it was dumping product activation. The company apologized to users for having inconvenienced them, but it also conceded that the anticopying technology hadn't generated increased sales as anticipated. TurboTax remains DRM-free to this day, though more and more users pay for the piracy-proof Web-based version rather than for the boxed software.

PalmOne Treo 650 (2004)

The product: The Treo--the telephonic scion of the pioneering PalmPilot PDA--wasn't the first smartphone. It was, however, the first on that nailed the concept, starting with the Treo 180 in 2002 and continuing through a series of increasingly powerful and refined models manufactured by Handspring, and then PalmOne (which later reverted to its original name, Palm).

The bad things: In 2004, the Treo 650--successor to 2003's Treo 600--added a higher-resolution screen, Bluetooth, a better camera, and a removable

battery. The new device sold well and received good reviews. But it also presented users with an unappetizing platter of hassles. For one thing, the new nonvolatile file system allocated space less efficiently than the previous file system had, leaving the phone with only 23MB of available memory--a fact that some purchasers discovered only when they learned that the data they tried to transfer from their Treo 600 wouldn't all fit in the new model. Treo 650 owners wound up receiving free 128MB SD Cards by way of compensation, but many still complained of crashes. And some found that defective SIM trays on the 650 caused spontaneous rebooting.

The aftermath: Palm continued to sell Treos (including both Palm OS and Windows Mobile models), but the brand had lost most of its luster. Today, Palm quietly offers one last Treo model, but it has bet the future of the company on the WebOS-equpped Pre and Pixi. May they age more gracefully than the once-beloved Treo did.

Hotmail (2007)

The product: Founded in 1996 and owned by Microsoft since 1997, Hotmail is the original free Webmail service, and it remains one of the world's most popular ways to send and receive e-mail.

The bad things: In 2005, Microsoft began beta-testing an all-new version of its e-mail service, initially code-named "Kahuna." The service's look and feel were reminiscent of the company's Outlook e-mail client, and Microsoft announced that it would retire the Hotmail name in favor of Windows Live Mail. Unfortunately, many users found the new interface cumbersome and liked the old Hotmail--including its moniker--just fine. In short, they were far less enthusiastic about the changes than Microsoft was.

The aftermath: One benefit of lengthy beta-testing periods is that companies have more time to undo unpopular decisions--even ones they've been proudly trumpeting. In February 2007, Microsoft announced that Hotmail would be changing its name to...Windows Live Hotmail. And by the

time the company began rolling out the official version in May, it had also decided to leave the old Hotmail interface in place as the default. The new interface it had been toiling on for so long became strictly optional.

iMovie '08 (2007)

The product: Apple's decade-old video-editing package is one of the stalwarts of the company's iLife suite, whose excellence is one of the most compelling arguments for buying a Mac. Over the years, iMovie has also influenced plenty of video editors for Windows.

The bad things: To hear Steve Jobs tell it, iMovie '08 started out as a side project by an unnamed brilliant Apple engineer but was so impressive that it became iMovie '08. It was less an upgrade from iMovie HD 6 than a new product that happened to be called "iMovie." It had a different interface and omitted scads of iMovie HD 6 features--you didn't even get a timeline of your movie. David Pogue of the New York Times called it "a step backward" and an "utter bafflement." And his assessment was polite compared to the response of some iMovie enthusiasts.

The aftermath: The chorus of disapproval over iMovie '08 was so deafening that Apple did something most unusual: It made the old version of the app available as a free download for disgruntled users. More important, the "brilliant engineer" (video-editing genius Randy Ubillos, we later learned) went back to the drawing board and came up with iMovie '09--an upgrade that earned positive reviews.

Some Possible Explanations

Why should promising products from highly respected companies fail despite clear evidence of market need, strong marketing support, and real enthusiasm and energy from salespeople? It’s a question that has puzzled generations of product managers whose meteoric rise to corporate fame has been temporarily blocked by slow sales of their latest offerings. There’s

no shortage of opinions to account for slow sales but very little hard data to explain the cause. Two of the most commonly held hypotheses are:

Customer Resistance to Change

Most customers, so the argument goes, are intrinsically conservative and resist innovation. Apart from the few early adopters, whose enthusiasm for new products knows no bounds, the broad mass of customers sees innovation as risky and finds new unproven products less attractive than tried and tested alternatives. Consequently, any innovative product, particularly if it has a high technological component, will meet resistance and will sell slowly until it is perceived as safe by potential customers. How plausible is this explanation in the three examples we’ve quoted? Frankly, it just doesn’t ring true.

An investigation into the elements of all three products was conducted. More than two hundred potential customers were contacted and their discussions with salespeople were watched. Few of the initial prospects for these products behaved like cautious customers timid in the face of innovation. On the contrary, the majority were welcoming of the innovative aspects of the products. Even more telling, their behavior was opposite that of classic resistant customers. A resistant buyer usually begins with a high level of skepticism and becomes progressively more accepting with repeated exposure to the product. That’s not what was happening here. During initial exposure to the products, the majority of these customers expressed enthusiasm and acceptance. As the sales discussions progressed, however, this enthusiasm began to fade. It was the apparent initial acceptance of innovation that gave the product creators such hope for success and, when customer enthusiasm evaporated, made the sales results all the more disappointing. It became clear that these companies needed to look elsewhere for an explanation of what was wrong.

Sales Conservatism

The second, equally plausible argument suggests that salespeople are resistant to change and are unwilling to sell innovative products that lie outside their comfort zone. Had that been the case here, we would have predicted that:

1. A significant proportion of salespeople would be unenthusiastic about these new products;2. Those who had greater enthusiasm for the products would have better sales results than those whose enthusiasm was lower.

Neither of these predictions proved correct. Strangely enough, there was a slight negative correlation between salespeople’s enthusiasm and sales results. That’s a surprising enough finding to deserve repeating. It was found that the salespeople with the best results showed less enthusiasm for the new products than those whose results were mediocre. It was first thought was that they had loaded the data backwards. Given the commonly held view that belief in the product is essential for effective sales — especially for a new product that doesn’t have a track record to create its own belief from customers, While at first they had no way to explain this strange finding, one thing was for sure; it didn’t seem that the poor sales could be blamed on salespeople’s resistance to new products.

An Alternative Explanation

Watching salespeople talk to their customers, it became clear that there was another explanation for slow sales. A set of observation tools for measuring the behavior of salespeople during calls was developed. Using these behavior analysis tools, it was found that salespeople behaved in a fundamentally different, and less effective, way when selling new products. First, let’s give an example of how behavior analysis observation worked in practice.

Trained researchers watched actual calls and recorded how often the buyer or seller used certain behaviors. These observations were correlated with the outcome of the call to build a profile of how successful calls differed from those that failed. Researchers found that a strong positive correlation existed between the number of questions asked in sales calls and whether the calls succeeded. Product features, on the other hand, were negatively correlated with success—during failed calls, salespeople described more than twice as many features as they did during calls that succeeded.

Compositing the data from these three product launches, we counted the number of questions asked by salespeople during those calls where they were selling the new products compared with the number of questions they asked customers during calls when selling existing products. Questions are highly correlated with sales success, so calls with more questions would be statistically more likely to succeed. We had expected to find that the base rate of asking questions during the sale of the new products would be higher just because of the nature of the sale. Each of these products was complex and required a higher than usual number of questions to understand the sophisticated customer problems that each product was designed to solve. We were surprised to find that the number of questions asked when selling the new products was almost 40% lower than the number asked with existing products:

The average call length when selling the new products was slightly longer than for existing products, so if salespeople were not spending their time asking questions, what were they doing to occupy the call time? We found that they were spending the time talking about product capabilities:

These results, which have since been replicated in studies of several other product launches, point to a fundamental problem in selling innovative products. The more innovative the product, (and the richer it is in bells and whistles), the more likely salespeople will sell it through features rather than through questions.

In other words, a powerful new product is likely to make salespeople product-centered instead of customer-centered. There’s overwhelming evidence (Rackham, 1987 [1]; Rackham, 1988 [2]; Rackham and Wilson, 1990 [3] ) that sales calls having a high number of product features and a low number of questions are likely to be unsuccessful. What’s more, the negative impact of giving product capabilities becomes greater as the selling cycle progresses. So, product capabilities can have a positive initial impact on the customer early in the sales cycle, but this rapidly falls off as the cycle continues (see Figure 3).

During the first meeting with the customer, there is a positive correlation between the number of times salespeople describe product advantages and whether or not the customer agrees to a future meeting. The relationship is no longer positive by the second call on the customer. By the third call, the relationship has become negative, so that the more salespeople “pitch the product,” the less likely the customer will be to take actions that move the sale forward. The relationship between product advantages and successful call outcome continues to be negative in the fourth and subsequent calls.

All three product launches in this case started with high customer enthusiasm that rapidly evaporated. This would be consistent with the increasingly negative impact of a product-centered approach wherein salespeople continue to “pitch the product.” At least in the case of the three products quoted here, this provides a plausible initial explanation for the slow growth in sales.Anecdotal Evidence

There’s another way to test the hypothesis that sales growth of new products is impeded by a product-centered approach. If it’s true that salespeople who are product-focused are more likely to fail, then we would

predict that successful salespeople would care less about their products and more about their customers. In turn, this would cause them to be less excited over the new products.

As we saw earlier, we found that the salespeople with the best results showed less enthusiasm for the new products than those whose results were poor. This would be consistent with the hypothesis that product-focused enthusiasm damages early sales. Like many others who have experienced the launch of innovative products, we have a wealth of anecdotes to support this view. The most successful Xerox salesperson in the 9200 launch described the product as “only a big copier,” while his less effective colleagues were using terms like “breakthrough” and “quantum leap.” Clearly he wasn’t going to let the product come between himself and the needs of his customers. One of Honeywell’s most effective salespeople told us, “The TDC 2000 is a great product, but all that technology doesn’t mean a thing unless it helps my customers run their processes better.” Again, the salesperson didn’t allow the new product to interfere with a customer focus.

Similarly, at an American Express product launch we attended in Acapulco, there was a tremendous excitement among the sales force about a hot new product that was being introduced. Everyone was talking about the product except for a couple of the most experienced and successful salespeople. One of them told us, “It’s just another product. When the fuss dies down I’ll figure out which customers need it.” — yet another example of how highly successful people never let new products distract them from the needs of customers. Unfortunately, most organizations have few salespeople with such fortitude.

The majority of people selling are all too easily seduced by innovative products and they willingly fall into the “pitch the product” trap that almost killed the three fine products we researched.

Good News and Bad News

There is a crumb of comfort. Even product-obsessed salespeople become less enthusiastic when sales don’t materialize and, ultimately, they will regain interest in customers. There’s a pattern here. Many product managers have described how their launch went through a four-step process that sounds something like this:

We launched a great new product; press, customers and salespeople were all enthusiastic. We expected great initial sales but they didn’t happen. We became disillusioned and began to lose faith in the product. Inexplicably, just when we’d started to give up, sales began to improve.

We’ve heard this so many times that it has become for us a generic description of the launch steps for any innovative product. When sales don’t happen, the sales force loses their enthusiasm; all the new bells and whistles lose their luster, the product becomes just another product and attention swings back to customers. Salespeople stop talking and start asking. For the first time they develop customer needs for the product and sales consequently begin to climb. Management can’t understand why the product should start to succeed at a point where the sales force is losing enthusiasm. Our evidence suggests that success comes because the sales force is losing enthusiasm.

In post-mortem sessions, people talk about the long learning curve for selling new products as though this painfully slow start is inevitable. As David Montanaro of NEC told us, “The secret is to have deep enough pockets to ride out the learning curve until your sales force finally gets up to speed. It usually takes longer than you think.” For smaller companies, who may be betting their future on a single innovative product, the luxury of waiting for the sales force to learn isn’t a realistic option. Even for larger and richer companies, especially those in fast moving and competitive

markets, precious competitive lead time can be frittered away while the sales force comes to terms with how to sell the product. There has to be a better way. The good news is that neither the product focus, nor the long learning curve that results from it is inevitable. It’s relatively easy to bring about a dramatic acceleration in sales force learning and to achieve much faster early sales results.

The remedy lies in a better understanding of the cause. Why should sales forces, heavily trained to sell through questions, suddenly abandon their training and inundate customers with product details? The reason is simple: salespeople communicate product capabilities and details to customers because that’s exactly how the product has been communicated to them. Figure 4 illustrates the typical process used by most organizations for communicating a new product to their sales force and, through them, to their customers.

We Have Seen the Enemy and He is Us

Most product launch events, with their associated collateral materials, focus exclusively on product capabilities. They explain how this product is different and better; they lovingly dwell on each new bell and whistle. The launch is designed to sound exciting. Some very smart people put long hours into preparing a great product pitch. So it’s small wonder that the sales force is impressed and behaves in exactly the same way when they go out to talk with customers. How the product was communicated to them serves as their model when they communicate with their customers.

The trouble is that customers have only a transitory interest in product capabilities. Unless the product solves a problem, or unless it meets a need, then there’s no basis for a sale. It takes skillful selling, based on questioning to uncover problems, develop needs and link those needs to the new product. As we’ve seen from the way questions decrease and features increase when selling new products, salespeople often fail to develop

adequate needs and the sales cycle flounders.

Product managers have only themselves to blame. The enemy, unfortunately, is us. I recall working with a major telecommunications company helping develop better questioning skills in their salespeople. The fundamental message we gave salespeople—not at all unlike the message taught to most successful business-to-business sales forces—was to sell through questions. “Don’t focus on product capabilities,” we urged them. “Research shows that if you do, you’ll lose sales.” The following month, the company launched an innovative new product at its national sales meeting. I cringed in the audience as capability after capability was described and the launch manager gave just the kind of product pitch that we had been training her salespeople to avoid. We weren’t surprised when initial sales were slower than expected.

A Better Mousetrap

There’s a simple acid test of the proposition that the way products are launched is to blame for slow initial sales. If this is true, then by altering the way products are introduced to the sales force, we should be able to positively influence early sales. We had an opportunity to put this to a practical test. When the early results from Kodak’s pilot region Blood Analyzer launch looked unpromising, we were invited to experiment with a different way of introducing the product. We took a group of 12 randomly chosen salespeople from the Mid-Atlantic Region who had not been exposed to the new product. We designed for them an alternative product launch that was very different from the capabilities-based launch that was used with the rest of the organization. Essentially, our launch consisted of the following steps:

We told salespeople how the product solved different problems for various types of customers, such as doctors, clinicians, medical technicians and administrators. However, we did not describe the product’s bells and

whistles, warning that these product capabilities could easily get in the way of effective selling. To dramatize our point, we covered the demonstration analyzer with a tarpaulin so that the salespeople couldn’t see it.

We took each customer type and looked in detail at the work problems they were facing and how the new product could help solve or reduce each of these problems.

We asked salespeople to identify which of their existing or potential customers had these problems that the product was designed to solve.

Salespeople then listed the questions they could ask to discover whether these problems existed and how severely the problems were affecting that customer.

Each salesperson then chose a customer whose problems were particularly severe and practiced role-playing a call on that customer. They were coached to sell using questions that developed problems and needs, avoiding discussion of the product’s capabilities.

Finally, each salesperson planned three customer calls for selling the new product. Each call plan was based on the questions that the salesperson intended to ask. We hoped that by introducing the Blood Analyzer in this way, salespeople would be more effective in the early stages of the new product sales cycle. We tracked their progress for a year, comparing their performance with a control group chosen from the sales force who had gone through the standard “bells and whistles” product introduction. We found that the dollar sales volume generated by our new-style launch group was 54% higher than the control group. This was convincing enough evidence for us to create a template for introducing new products to a sales force Several companies have used this template to help them introduce innovative products to their sales forces. Canon used it to launch the CLC 300 color copier as an alternative to the usual capabilities-based

introduction. Microsoft introduced Office to their sales force at a National Sales Meeting using a version of this template. During the meeting, everyone, including Bill Gates, planned sales calls to uncover corporate problems that the Office suite of products could solve. By the end of the meeting salespeople had planned and practiced more than 1,000 sales calls. Unfortunately, lack of control groups in each case made it impossible to measure the impact of this new method. Nobody wanted to be left out of the main launch just to provide us with validation.

Although we can’t show definitive results from these two examples, we believe there is a good case to be made that launching products using this method constitutes a proverbially better mousetrap. It communicates the product in a way that helps sell it and speeds the learning curve along in the process. As one of the Kodak people told us, “This is the first time I’ve come away from a product introduction with a clear idea of how I’m going to sell it.”

References

Rackham, Neil. SPIN® Selling. (New York : McGraw-Hill, 1987). Rackham, Neil. Major Account Sales Strategy. (New York : McGraw-Hill, 1988).

Rackham, Neil and Wilson, John, “Sales Training in the 90’s”, Journal of the American Society for Training and Development 44(2):48-52 (August 1990).