Home: http://www.Daxle.net
Date: April 12, 2011
Book: CoDestiny
Speakers: Brian Oates & Atlee Valentine Pope
Source: http://www.daxle.net/imprint/media/Imprint_087_Pope.mp3
Permalink: http://www.daxle.net/archive/codestiny

Brian: Welcome to Imprint: Business Author Interviews, from Daxle.net. Today's book is Co-Destiny: Overcome Your Growth Challenges By Helping Your Customers Over Come Theirs. Atlee Valentine Pope. Atlee, thank you so much for hanging out.

Atlee: Thank you. It's a great opportunity to talk with you. Thank you very much for including me.

Brian: Well, your book is about suppliers who sell products to other businesses. It's B2B. Let me just start with your tagline; you want to help your customers overcome theirs. Depending on the relationship, I would imagine that what you would hear a lot is, "Atlee, if my product passes QA then it's all about price-per-unit and how low you can get your widgets. So can I get out of this bidding war that I just feel like I'm constantly in. I'm just not getting a seat at the table. I don't feel like I'm adding anything, just saving them money."

Atlee: Yeah, we get that question quite a bit and over the years, as we've studied business-to-business markets and have helped our clients here at our company, Blue Canyon Partners, we've learned that's generally the case, where organizations start. They're fighting a pricing battle and they're trying to understand what they can do to move the spotlight from price and really focus in on other capabilities that they have, maybe quality improvements or services that they want to bring to the customer, and that's a tricky issue because, very often, what happens is arguing over the last nickel never gets anyone anywhere. It comes down to our observation and our strong philosophy that if you really want to overcome your growth challenges then you need to figure out a way to help your customer get more out of what you're providing them. Your customers need to understand how to get more value from you and really make sure they're rewarded much more effectively than what they've been doing in the past. That's the secret, we think, to really making sure that you're really moving away from this price battle ad into a much more fruitful and constructive conversation.

Brian: Is there an example of someone you saw that was able to make the shift from price to a value proposition?

Atlee: Sure! In the book we go through a case study. In fact, it's with one of the world's largest manufacturers, Emerson. We share a story about how Emerson came to work with us around a multiplicity of different product lines. One in particular was some components that they provided inside water heaters. What we worked with them on was to spend some time walking down the customer chainā as we call it, walking and talking to the water heater and appliance manufacturers. Talking to the contractors that are installing the water heater, talking to the end-customers who are putting the water heaters down in their basements. What we found was that at every stage of this customer chain there was real problems that some of these organizations were having.

For example, when we went to the retailer, the big-box retailer who would actually sell the water heater to the contractor to install it in the home, the home center would tell us about how sometimes there would be faulty installations and they would have returns and they would set the returns out to the graveyard, as they called it, and in doing so these returns would be a cost of doing business. When we would talk to contractors who were actually installing the water heaters, very often, something would go wrong and they wouldn't install it correctly and the components were often hard to get to, to get into the home in certain areas, certain basements. They were looking for ways to make installation fast and easy and not have to come back and work on something that failed the day before. Then, when we would talk to end-customers, what we learned was that these end-customers were, quite honestly, in some respects, concerned about whether or not the water heater would have a fault in it and flood across the floor and would result in some damage to the home.

What Emerson ended up doing was putting some components inside the water heater for their customers, some idiot-proof components I would call it, to make it easier for the contractors to hook up the units without damage them and make sure that the reliability and safety issues that the home owners had, they were there to address those issues. So these components and sensors and re-design controls that Emerson put in really allowed the contractors and the end customers to be more comfortable with the water heater and fewer returns were going back to the big box. As a result of this, Emerson was able to convince the water heater manufacturers that these quality improvements really made a difference. Their prices went up and the water heater manufacturers were willing to pay extra for these capabilities and, subsequently, sales increased.

Brian: That's great! In the book you introduce a tool that you call The Market Map and I'm assuming people listening haven't picked up your book. So what is The Market Map and how do you use it and how is it useful?

Atlee: The market map is a very pivotal tool that we use in this work, to help organizations understand how to grow more profitably and more effectively. The Market Map, simply put, is a way to determine how all of the customer chain participants are looking at the products that you're selling to them, or the ingredients that are going into the product that they're finally getting. What we do is lay out the market map based on purchase decisions. So no longer are we segmenting the market based on whether the customers are big or small or medium sized or whether the customers are in one vertical industry versus another or whether the customers have certain demographics or SIC codes.

Instead what we're doing is segmenting the market based on purchase decisions. When you're able to do that then The Market Map is a great tool to determine whether or not the customers that you're selling into, your direct customers who you may be supplying to directly, such as the water heater manufacturers in the example I shared with you about Emerson, or the end customers, the contractors who are installing along with the consumers who are buying the water heater. You can tell very quickly if what you need to do is based on whether or not these customers are very focused on prices or very focused on other elements, such as building a strong alliance with you, or whether they're looking for differentiated products or some kinds of new break-out services or systems. So what we've done with The Market Map is work through a systematic approach that allows organizations to really read the marketplace in such a way that they can, then, take action and make some changes in their growth strategies.

So, for example, if The Market Map says that this particular customer chain is really looking for price-only and only price then the only thing you can do, quite honestly, is to reduce your costs and pass them along to the direct customer. On the other hand, if The Market Map is saying, "Boy, I will pay for something if you bring something to me that will allow me to sell on to my customers and help me to differentiate my products," then there's other things you can do, as a supplier to those customers, to make sure that you're bringing your best innovations and your strong relationship skills to the table.

Brian: At least for me, and I don't know how many others, but I didn't get very far and the "Intel Inside" campaign came to my mind. Before that nobody knew or cared what was in their desktop or laptop, and still today I wonder how many people actually would even know what a CPU really is and what it really does, but they sure want the little Intel sticker on the thing they buy. I don't see that a whole lot in the marketplace and I was wondering, is there a reason for that, that someone doesn't jump and go right to the consumer to make them more valuable?

Atlee: That's a great question and the answer is that sometimes it happens and sometimes it doesn't and it's really a fundamental issue around some brand strategy, questions that people tend to ask us. There is, often, just to go back to The Market Map for a minute, there is an environment in business-to-business where, if you as a supplier are able to convince your customer that what you're bringing to the table is cost-justifiable and improves the product or gives better services, that's a place where the Intel Inside strategy can often work.

For example, Intel went to a Dell or IBM or computer manufacturers and said, "With my CPU your computer will run faster." That was the original Intel Inside campaign. In doing that, they were able to talk to the end customers with their advertising saying, "I've got something that's inside the computer and it will go faster," and they were also talking directly to their direct customers, explaining that this is an ingredient that goes into the computer that will make it go faster. What happened in that evolution was that the Intel marketing and advertising campaign endorsed and reinforced the element of speed and quick computation. So IBM and other computer manufacturers adopted the Intel brand, and brought that along with their own brand.

Now, sometimes you would see that in other business-to-business markets. Often times you'll see that in car manufacturing, where a car manufacturer, like Ford or GM or Honda or Toyota, or others, will very much allow some well-known components to be visibly branded to their customers; Bose speakers, for example, or any other kind of entertainment brand that is well-known in the consumer market. It will be brought into the car and that's going to be very well-evidenced, but if you think about it, very few of us who are buying cars really knows who the seat manufacturer is, or who the airbag manufacturer is, just as two examples. One of the reasons that happens is that the seat manufacturer and the airbag manufacturer don't actually bring their capabilities to the consumer and they don't spend time advertising there, but they certainly do bring their value propositions and their know-how and it's well-known by the car manufacturers, so the branding stops effectively, the seat manufacturers branding, often stops with the car manufacturers and any other ingredient manufacturers just end up saying, "My brand really only matters to my direct customer," but it doesn't mean that the value proposition is any less valuable to all of the participants down the customer chain.

Brian: No, but I wonder if Ford or GM would lean towards a supplier if they had brand recognition. For instance, Bose has done something right already, and so is it worthwhile for someone who is upstream and normally invisible to the end customer? I don't know what screws are in my dresser, or I look at my water heater, like you mentioned, and I have no idea what components are in there but would it have been of value for the manufacturer who makes those to somehow get to me so that my water heater manufacturer would say, "Well, we need to choose this company over here because we'll get more sales out of it?"

Atlee: I think the answer is; it depends. Very often, if the labeling is visible, the packaging is visible, if the ingredient inside that equipment really matters then there can be some dual work. I mean, I think of the engine manufacturer Briggs and Stratton, for example. Many people know that the Briggs and Stratton engine is in the lawn mower and the lawn mower might be a brand of lawn mower by John Deere or others. So it just depends on whether or not it can be visible, but sensors and small components inside a big water heater generally don't have a lot of play in that regard.

Brian: Just overall, would you slice the book up and tell us what's in there, how it would help someone who picks it up and reads it?

Atlee: Sure, I would be delighted to. The book is fundamentally about how organizations can really think more effectively about putting together sustainable, profitable growth strategies. What we've done over the years is recognize that in the business-to-business arena firms often face very complex markets with all sorts of varying needs and demands and economic drivers. In many cases, organizations are always facing issues such as commoditization or industry consolidation or price-based competition, as we started our conversation with, complicated channel networks. What we've done over the years, in working with many industry-leading B2B organizations, is try to help them understand how they can solve some of these most pressing and perplexing problems.

In this book what we've done is put together an approach that we've used, and a method that allows businesses to successfully understand what unmet needs their customers had, and how they can help their customers overcome these unmet needs and, in doing so, have the customers become successful and have their own firm extract value from those capabilities. What this book is all about is that we are very specific around how to go through a systematic approach of learning about what your customer's needs are and what answers you might be able to bring to the table. We hoped that we put in a lot of examples of our work over the many years so that a reader can say, "Aha! I see an example here that I might be able to import into my world."

Finally, I should mention that we present the book in three sections. The first section is really talking about customer chains, learning how to segment on purchase behaviors, talking about The Market Map and what we call "Value Levers" that you can pull to convert your ideas into actions that your customers will reward you for. In the second section what we've done is go through very specific elements of building a growth strategy; everything from products and services to prices. We address acquisitions and market expansions across the globe and how to build some very important external relationships. Then, in the final section, what we do is go through what's important about implementation. How do you really translate these strategies into some very important actions to make sure they get real and they move into making sure that you increase your own shareholder value.

Brian: The book is Co-Destiny and my guest has been Atlee Valentine Pope. Atlee, I appreciate you being on the program today, so much. Thank you.

Atlee: Thank you so much, I appreciate it as well.

Brian: More about the book at www.codestinybook.com and for more business author interviews visit www.daxle.net.