Alvin must change the technology group’s non-collaboration attitude
The technology group disrupts his team’s efforts to develop new paint thickeners. The group judges the value of a new product by whether they like it … not by customer research.
An example of this attitude occurred in a recent sales call. The participating techie’s job was to support Alvin’s new product platform. Instead, he dissed it and spent time describing an untested product concept.
In Alvin’s firm an engineering culture rules. “We know what is best for the customer.” Alvin’s VP, Marketing is an engineer. He is not eager to push back on R&D’s hockey-stick projections for the untested product concept.
Alvin discovered that, in his firm there is no consensus on: 1. Market dynamics of the paint thickener industry, 2. What customers want, without doubt, and why.
He needs to come up to speed on these issues. He plans to go through the engineering culture minefield to ensure collaboration.
Alvin engaged me for a project to help him through the minefield.
Understanding Paint Thickener Industry and Customer Needs: Executive Summary
First, I built a list of 270 knowledgable individuals in the paint thickener industry. Then, for statistical significance, I followed the Rule of 30 method1 and called people on the list. Each heard that the client had a concept for an effective thickener.
(Most respondents queried me about the process’ features. I replied with features identical to the those favored by the non-collaborating engineers.)
No interest by respondents in the engineers’ untested concept
“Cost to us to qualify a new thickener — assuming it’s completely compatible with our formulations — is at least $150,000. We have ten development projects that would give us a return on investment 10x more than a new thickener.”
Dr., New Technology … The Sherwin-Williams Co.
Large endusers prefer to work with vendors such as Alvin’s firm
“If your client could change thickeners so we could drop the pigment grind step in our paint production it would remove an energy intensive and time-consuming step.”
Chief Chemist … Benjamin Moore
Growth of thickener industry prompts entrance of new, smaller vendors.
In large endusers minds, such vendors do not have the technical capabilities of Alvin’s firm. In endusers’ long term strategy, these vendors are not viable.
Alvin’s firm occupies #2 position in enduser’s mindshare
“(Competitor #1) has real service problems and we threw them out of our shop.”
Dir. R&D. … H-I-S Paint Mfg. Co.
Respondents surprised at (Alvin’s firm’s) lack of interest in alliances for co-development of new thickeners
Alvin shared the project summary with the VP, Marketing. The VP had a few words with the R&D VP. The R&D representative on Alvin’s team began full collaboration with the team.
Alvin’s group changed the way they were doing business
- Understood and solved customers’ problems
- Concentrated on a few key accounts
- Developed a new thickener system which dropped out the pigment grind step in paint production
Four years after the business model change.
- Raised their thickener platform’s product margin to 85%
- Became # 1 in customers’ mindshare.
My work followed the Rule of 30 method
- Blind study
In a blind study the respondent does not know who commissioned the study.
- Gathered intelligence through 30 conversations with experts in the paint thickener industry. They were from a random sample of 270 knowledgeable individuals.
- Analyzed data gathered in the conversations, using the Central Limit Theorem for statistical significance.