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June 15, 2006

Do Wholesale Changes Foretell a New Brand at Intel?

I’ve always considered Intel to be one of the world’s best-managed technology brands. Last year, Interbrand ranked Intel as the fifth most valuable brand in the world. And it consistently stays in the top ten because management works hard to make sure the brand remains relevant in the fast-moving semiconductor market.

Of late, Intel has garnered a lot of press regarding the sweeping changes management intends to make in the company’s brand and product line. In many ways, these changes will send the world’s largest chipmaker into uncharted territory. Some analysts are saying that Intel’s new direction will necessitate creating a new brand. However, at its core, I believe Intel will very much remain the same company, mainly because the deeply established core values that drive the Intel brand are alive and well and working exactly as designed.

Under founder Andy Grove and successor CEO Craig Barrett, Intel thrived by concentrating on the microprocessors that power personal computers. They invested billions of dollars in plants that could crank out millions of processors, and in the process they helped give life to the age of the personal computer with ever-faster, more powerful chips. Occasionally, Grove and Barrett ventured into areas beyond microprocessors and personal computers. But from the outside, those tentative forays looked more like cautious experiments than full commitments to new markets. For the most part, Intel stuck to its very narrow focus, and in doing proceeded to bury the competition.

A New Direction

New CEO Paul Otellini appears to be steering Intel in a very different direction. Instead of remaining focused on PCs, he's pushing the company to play a key technological role in a half-dozen fields, including consumer electronics, wireless communications and health care. And rather than continuing to focus solely on microprocessors, he wants Intel to create a variety of chips and software and then meld them together into what he calls "platforms."

With Grove and Barrett at the helm, Intel first provided customers with full sets of technology ingredients, such as microprocessors, chipsets, communications chips and base software capabilities. Under Otellini, Intel will develop complete technology platforms based on Intel ingredients, an evolution best evidenced with the introduction of IntelÒ Centrino™ mobile technology. Even the “Intel Inside” logo will disappear, to be replaced by an updated Intel logo with a swirl around it to signify movement. And for the first time since the early 1990s, the company will add a tagline: "Leap ahead."

At first glance, all of this looks like a sharp departure from the company Grove and Barrett built. However, upon closer examination, these moves turn out to be very “Grovesk” at their core.

In December 2005, Grove’s photo appeared on the cover of Fortune magazine, accompanying an article entitled “How to Become a Great Leader.” Fortune stated that Grove, 69, has never lost track of the truth -- that Intel has always been one wrong move away from disaster and that a closed mind is the trap door to the abyss. During his tenure as CEO, Grove made numerous “bet-the-farm moves” could have killed the company but ended up propelling it forward. For example, his decision to get out of the now commodity memory chip business and focus solely on microprocessors. Or the decision to stick with Intel’s mainstay chip technology, CISC, rather than pursue the new, more glamorous, RISC technology. Or the decision to focus on microprocessors for PCs and invest billions of dollars in plants to manufacture them.

While it appeared that Intel was doing most of the adapting, it was really Grove himself who underwent the most radical change. Forcing himself to constantly adapt to a succession of new realities, he left a trail of discarded assumptions in his wake. Grove attacked every problem the same way, by setting aside everything he knew. Fast-forward to the present, and it looks to me like Otellini and team are doing the exact same thing in the exact same way that Grove taught them.

The Old Values Remain

In its January 9, 2005 edition, BusinessWeek ran a cover story entitled, “Intel Inside Out: How It’s Shaking Off the Andy Grove Era.” I don’t think so.

From my perspective, the legacy of Grove is very much alive and well at Intel. If fact, the article states that when asked about the sweeping changes at Intel, Grove replied in the following manner: “I want to say,” he boomed, “that this program strikes me as one of the best manifestations incorporating Intel values of risk-taking, discipline and results orientation I have ever seen here. I, for one, fully support it.”

What a leader! Grove understood that the sweeping changes at Intel were not an indictment of his and Barrett’s leadership. Rather, he recognized that times had changed and that Intel needs to -- again -- change with them.

Perhaps Grove’s greatest legacy is the strength with which he built in the values that drive Intel’s brand. If the new management team remains true to those values, and I believe they will, Intel will continue to make the right moves in a market where change is not only constant but is accelerating all the time.

Posted by Rod Whitson at 5:09 PM | Permalink | Comments (0) | TrackBacks (0)

June 10, 2006

What Customers Want

Several years ago I came across one of the most useful and practical articles on market research I have ever read -- “How To Turn Customer Input into Innovation” by Anthony Ulwick.

Published in the January 2002 Harvard Business Review, the article briefly outlined a methodology and set of tools for gathering customer input in a way that actually drives product innovation. In addition, the article illustrated how Cordis -- a medical device manufacturer specializing in products for interventional vascular medicine -- used Ulwick’s approach to innovate the heart stent and gain market leadership in the angioplasty balloon market. As a result, Cordis’ stock went from $20 to $109 per share when it was acquired by Johnson and Johnson.

Now, Ulwick has updated his tools and provided a more comprehensive look at his methodology in his recently released book, What Customers Want (McGraw Hill). This book should be required readying for anyone involved in product development and marketing. Partly because it offers a comprehensive, step-by-step approach for converting innovation from a random hit-or-miss process into a more methodical approach, but also because it greatly reduces the risk of new product failure and substantially increases the odds of success.

In a world where some 80 to 90 percent of new products fail, the ROI for using Ulwick’s methods is substantial.

New Solution to an Old Problem

According to Ulwick, most customer research provides little real value to the companies conducting it. Worse, it often misinforms their decisions and steers them in the wrong direction.

Why? Because the methods most companies use to gather customer input are inherently flawed. In fact, Ulwick argues that faulty research methods represent both the source and the cause of most new product failures. Based on my own experience, I tend to agree.

Traditional qualitative research methods ask customers to define their needs, benefits, specifications and solutions. However, the most frequent responses to questions about product improvements focus mainly on “better quality” and “lower price.” Besides indicating that the product category under question might be perceived as a commodity, these generic answers leave little room for new product developers to devise truly innovative new products.

The reality is that customers have a hard time articulating why they do what they do and what will motivate them to buy a new product. Therefore, traditional research methods -- such as talking to customers about the solutions they want or can envision -- essentially ask them to act as product developers and marketers, and that’s a job most customers are ill equipped to do.

How do you gather customer input in a way that supports innovation?

Start by silencing the literal voice of your customers. In other words, suggests Ulwick, stop asking customers to tell you how and what to innovate. Instead:

· Focus on the jobs your customers need to get done
· Work to uncover measurable outcomes your customers hope to achieve
· Isolate important customer constraints

By directing your research towards these key areas, you will make more appropriate and better-informed decisions about what represents meaningful innovation for your customers.

A Good Investment

For me, the best and most practical part of the book lies in Ulwick’s eight-step approach, which dramatically improves every aspect of the innovation process from segmenting markets and identifying opportunities to creating, evaluating and marketing breakthrough product ideas.

Drawing on more than 200 complete studies, Ulwick loads his book with real life examples that bring meaning and insight to the process and make it easy to translate his principles to companies of all shapes and sizes.

For less than $20 and a few hours of reading time, What Customers Want delivers a remarkable return on investment. A can’t-miss formula that delivers real innovation that your customers will value, it just might ensure that your next new product introduction hits the target in regards to the jobs your customers need help with and delivers measurable improvements to their most important outcomes.

Posted by Rod Whitson at 3:22 PM | Permalink | Comments (1) | TrackBacks (0)

June 5, 2006

Ring Those Wedding Bells: Building a Strong Brand Marriage

If brands are about relationships, why not build a strong brand marriage?

I’m not suggesting you actually walk down the aisle with your customers. But maybe the time has come to look at brand relationships in a different way?

We all know that the best brands make strong emotional connections with their customers. Recent research suggests, however, that the best brands don’t stop there. Instead, they leverage those emotional connections to such an extent that their customers feel “married” to the brand.

In general, customers come to strong emotional connections with a brand in two ways. First, they personify the product (or the company) so that they have a relationship with it just like they would with a real person. They sometimes experience a full range of emotions when they interact with the brand, and occasionally even talk about the brand like they would a good friend. Apple Mac users fall into this group.

Second, customers can become part of a group that shares a common bond around the brand. Harley Davidson and BMW motorcycle customers fall into this group, as do the user groups of many software companies.

For most technologists and scientists, however, this emotional model of branding is just too warm and fuzzy, especially with products that mostly satisfy functional needs. Most technology companies find it very difficult to methodically and systematically build emotional engagements. They also find it challenging, if not impossible, to measure and monitor these emotional connections when they do occur.

As a result, when trying to build a strong brand marriage, many technology companies are left standing at the altar.

Engaged Customers

Thanks to some groundbreaking work conducted by the Gallup Organization around the topic of brand engagement, brand bachelorhood may soon become a thing of the past.

In their insightful book, Married to the Brand, Gallup draws on worldwide research and development efforts completed between 2000 and 2004 to define the emotional attachment necessary to bond a customer to a brand. More important, they illustrate the basic principles involved in creating the ultimate brand relationship -- passion for the brand -- and moving customers to the point where they feel that no other brand will do.

Fortunately for technology companies, the research doesn’t stop with luxury retail brands like BMW cars, Armani suits, or Louis Vitton handbags. It also includes those difficult to brand relationships between IT managers and their software providers or between physicians and pharmaceutical firms.

Highlights from the research include:

·There are crucial differences between a customer and an engaged customer. Don’t settle for merely gaining a customer. Instead, strive for customer engagement.

·What it takes to initially attract a first-time buyer is quite different from what it takes to convert that buyer into a fully engaged customer.

·It’s the total brand experience, and not just a few isolated elements, that determines the health of a brand marriage.

·It takes more than trust to build a long-term brand relationship. You must also have brand passion.

·Emotions are powerful, profitable and measurable.

·Every time a customer touches a company, the brand relationship can be enhanced. Or it can be diminished.

·Successful brand marriages can be achieved only by company-wide commitment and aligned, integrated efforts.

Why Customers Say “I Do”

The best of the Gallup research involves a series of questions that measure and monitor the strength of relationship that exists between a company or a brand and its customers. As part of its findings, Gallup discovered that strong responses to these questions are directly linked to increased market share, revenues, profits and customer retention -- just the kind of research and validation that emotionless CFOs can sink their teeth into.

The questions fall into two basic categories. The first three questions measure customer satisfaction; the last eight measure the strength of the customer’s engagement with the brand.

On a 5-point scale from “extremely” (5) to “not at all” (1):

·Overall, how satisfied are you with [Brand]?
·How likely are you to continue to choose/repurchase/repeat (if needed) [Brand]?
·How likely are you to recommend [Brand] to a friend/associate?

On a 5-point scale from “Strongly Agree” (5) to “Strongly Disagree” (1):

·[Brand] is a name I can always trust.
·[Brand] always delivers on what they promise.
·[Brand] always treats me fairly.
·If a problem arises, I can always count on [Brand] to reach a fair and satisfactory resolution.
·I feel proud to be a [Brand] [customer/shopper/user/owner].
·[Brand] always treats me with respect.
·[Brand] is the perfect [company/product/brand/store] for people like me.
·I can’t imagine a world without [Brand].

According to the Gallup research, the answers to these questions indicate with remarkable accuracy whether your customers consider you a life-long partner or a one-night stand. More important, they point out areas where companies can take focused action to build the relationship and strengthen the brand.

The reality is that your customers are eager to tell you the state of your brand relationships. Moreover, they would love to help you make those relationships even better. Wedding bells can chime for your brand, but only if you ask the right questions, listen closely to what your customers are saying, and take appropriate action based on what you hear.

Posted by Rod Whitson at 12:29 PM | Permalink | Comments (0) | TrackBacks (0)