Three Liabilities that will Set you Behind in your Market

When you Invest in Information rather than Building a Learning Organization   

 

Here is what struck me after my many years of working with associations, universities and other types of bureaucratic organizations, structured around processes and products rather than people. They are much more likely to invest in things like market research campaigns, scientific-sounding methodologies, new software or glossy website re-designs than in their organizations’ capacity to learn about and connect with their customers in new ways.

Why should you care about something as abstract-sounding as learning?  Because competitive advantage today is achieved by discerning the nuances of what makes a customer “tick” in an environment of continuous change and before they become obvious to everyone else. This requires the ability to learn and think quickly, strategically and in depth---dig beneath the surface, extrapolate, interpret, prioritize, put disparate pieces together and determine priorities--which, in turn requires investment in people and capabilities rather than magic bullets.

This is why market leading organizations today are learning organizations in which learning is simply the way it thinks and does business—arrives at decisions, develops new products, relates to customers and plans for the future. Competitive advantage today is achieved by leveraging intangible—relationships, culture, knowledge, innovation—rather than by producing goods and services. So guess what!   Without shifting from process-driven to learning-based ways of doing business, you are entering the market at a disadvantage, with liabilities that increase your possibilities for: 

  1. Missing the target:  Are you exasperated when you finally launch the new programs that your members asked for in surveys but have to cancel them because of low registration?  The thing is that direct answers to questions do not capture the thoughts, motivations, circumstances, competing choices or underlying needs that influence decisions and determine the value of a product or service to a customer.  Suppose your members, who are scientists, identified “latest research” as their top priority for benefits. Stocking your library with cutting-edge data or reporting research results in your monthly journal will not be of much use to them if they mostly work out on the field or constantly travel to remote regions of the world to help with natural disasters and need in time, up-to-the moment and targeted information that can be access anytime anywhere.  To hit the target, you need to understand how the customer will use the product, in what context and to what end. 

  2. Drawing the wrong conclusions because you ignore the context: The bulk of the information product and process-driven organizations gather through surveys and questionnaires is in the context of members’ relationship to the organization, such as their opinions of existing benefits and program categories. Now how effective is this when, like it or not, your association is a blip on your members’ radar; just a small piece of a much larger complex of relationships, sources of value and meaning.   

 What if your members tell you that they “love” your goals, mission or products but don’t tell you that, while loving them, they will spend their money on another association or consulting firm that offers the practical solutions they need?   Sometimes organizations become stuck in place because they cannot shake off the assumptions they mentally repeat like mantras: “members cannot afford to pay more that their current dues;” “people today just do not join;”  “our greatest asset is that we are the largest association in the industry.”  While, looking at members in their context, we may learn that members may pay more for comparable services elsewhere; join LinkedIn and online peer networks and prefer intimacy and customization than size, the association’s picture is based  on a narrow frame of reference, in which the association is at the center.   

 In the late 90’s I worked with a major Think Tank  that capped the fee of corporate membership at $2,000 per company, in spite of the financial challenges it was facing.   The thinking was that businesses would not pay that much for membership in a very academic-type think tank.  In talking to corporate executives about their major business challenges and how they addressed them, we discovered that most of their companies happily paid fees between $40,000 and $100,000 a year for membership in much smaller think tanks with less valuable resources than our Think Tank. This was because, instead of offering generic benefits like affiliation with a prestigious institution, lectures and gift shop discounts, they customized access to their assets and helped members create individualized, integrated service packages that allowed them to use research and expertise to solve specific strategic problems.  Our discussions with executives confirmed that they would indeed be willing to pay a premium for the ability to identify and apply the right mix of the right research resources.  By looking at its customers through a narrow lens, our Think Tank was not only leaving money on the table, but the opportunity to learn how to best leverage its assets to provide more value to these customers. 

 

 3. Poor return on your investment:   Shallow, sporadic  and a-contextual customer knowledge is the reason why, in spite of large investments and major research and planning undertakings, announced with much fanfare and aplomb, much of the information gathered is not useful for getting new results. Experience management consultant Lewis P. Carbonetalks about the fallacy of companies attempting to become customer-centric without changing the way they learn about and connect with customers. Such firms make decisions on the basis of asking customers directly what they think about their products, services or experiences. The assumption, he says, is that “customers will accurately report their thoughts and desires. Yet time and time again, companies engage in painstaking and expensive research to guide new initiatives only to find that consumer behavior in the market place bears no resemblance to what their research indicated.” The example he cites is that of the New Coke. While the company’s research indicated that consumers were very willing to welcome and buy the new product, their actions demonstrated that they preferred to drink classic coke.   

 Perhaps, most importantly, investing in information-gathering rather than organizational capabilities for continuous understanding and connection with your customers depletes your capacity to compete and increases your vulnerability gaps over time.  In a project with a professional association two years ago, we succeeded in establishing trust with a few key corporate donors and beginning to shift deteriorating, tactical relationships into strategic partnerships. Yet, the Development Office staff was unable to continue the effort once the project was completed. They were skilled in managing processes and events but not in building relationships and discerning market opportunities.  Investments in expertise, information or resources will have poor return unless an organization also invests in learning and developing new capabilities. 

 To develop organizations capable of constantly creating new, transient competitive advantage the challenge for leaders today is no longer how to acquire the right strategic intelligence but how to become learning organizations-- constantly attuned to the pulse of its markets.



 

 

 

 

 


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