The Case of the Self-Important Engineer
Theo was wary
Theo felt his Sales Group’s plans to expand in the US market were over-confident. Their attitude, “With our 20 years of experience, we know what customers will buy.”
True, having a plant in Europe helped Sales dominate that market for a specialty additive. But Theo, before coming to his Managing Dir. role, had benefited from deep B2B customer research. He wouldn’t expand the US pilot plant until he understood what US customers really wanted.
Theo was familiar with my B2B customer research work. He engaged me for a project that used the Rule of 30 method (See footnote).
Often this method finds:
- An unexpected competitive advantage for a specialty additive.
- A hidden change in tactics by a competitor.
In the course of the project, the 24th elicitation respondent spilled the beans on a hidden change. Theo’s US competitor (xyz-firm) would soon make public their potential game changing move.
Customer Research Report: Executive Summary
Theo and xyz-firm produce a vital specialty additive for the paper industry. Each firms’ manufacturing process incorporate special vessels and trade secrets. They suspend the additive in a large volume of liquid before shipping the product to customers.
In Europe, Theo’s firm had the advantage in shipping costs. In the US, xyz-firm had the advantage. Theo felt the Sales group’s biased study was inadequate for a decision to built a full-scale plant in the US.
A self-important engineer spilled the beans!
The first 23 respondents saw no reason to switch to a new supplier. of the additive.
The 24th respondent said:
We will soon never need your client’s product. In partnership with (he named the xyz-firm) we’re building an on-site plant to make the additive. In operation the plant will cut the additive expense in half.”
… plant engineer in west coast paper mill
Finding permits and approvals for the on-site plant
After concluding my conversation with the plant engineer, I searched websites. One result was the mill’s location. A second result was that on its city’s website were all permits and approvals for new manufacturing plants. I requested and received a pdf file of the documents the city had approved for the on-site plant.
After receiving a pdf file of the documents, anyone could make three conclusions:
- The on-site plant would use a paper mill by-product as one component. The chemistry and equipment to do this were non-proprietary
- A paper mill’s expense to use the additive would be cut in half. No shipping cost.
- First run of the on-site plant was scheduled four months from now. Success in the US would mean, xyz-firm could attack Theo’s market in Europe.
I sent the pdf file on to Theo. One week later I flew to Europe to present the results of my project in a day -long meeting with Theo and his team.
- Two months after the meeting, Theo’s firm began building, at a paper mill in Sweden, an improved version of xyz-firm’s on-site plant
- Four months after the meeting, Theo’s on-site plant in Sweden began production.
- Fifteen months after production in Sweden, 70% of Theo’s customers had partnered with Theo’s firm to install on-site plants.
- Twenty-four months after the meeting Theo began partnering with US paper mills to install Theo’s firm’s improved version of on-site plants
Five years after the meeting, Theo’s firm maintained its market share in Europe. It was making serious dents in the US market share held by xyz-firm.
My work followed the Rule of 30 method
- Blind study
- Gathered intelligence through 30 elicitation conversations with customers in the paper industry. They were from a random sample of 220 knowledgable individuals.
- Used the Central Limit Theorem to analyze rate of adoption for an additive meeting customers needs.