Voices: the CMB Blog

Dear Dr. Jay,

We’ve been testing new concepts for years. The magic score to move forward in the new product development process is a 40% top 2 box score to purchase intent on a 5 point scale. How do I know if 40% is still a good benchmark? Are there any other measures that might be useful in predicting success?

-Normatively Challenged

Dear Norm,

I have some good news—you may have a big data mining challenge. Situations like yours are why I always ask our clients two questions: (1) what do you already know about this problem, and (2) what information do you have in-house that might shed some light on a solution? You say you’ve been testing concepts for years.  Do you have a database of concepts already set up? If not, can you easily get access to your concept scores?

Look back on all of the concepts you have ever tested, and try to understand what makes for a successful idea. In addition to all the traditional concept test measures like purchase intent, believability, and uniqueness, you can also append marketing spend, distribution measures, and perhaps even social media trend data. You might even want to include economic condition information like the rate of inflation, the prime rate of interest, and the average DOW stock index. While many of these appended variables might be outside of your control, they may serve to help you understand what might happen if you launch a new product under various market conditions.

Take heart Norm, you are most definitely not alone. In fact, I recently attended a presentation on Big Data hosted by the Association of Management Consulting Firms. There, Steve Sashihara, CEO of Princeton Consultants, suggested there are four key stages for integrating big data into practice. The first stage is to monitor the market. At CMB, we typically rely on dashboards to show what is happening. The second stage is to analyze the data. Are you improving, getting worse, or just holding your own? However, only going this far with the data doesn’t really provide any insight into what to do. To take it to the next level, you need enter the third stage: building predictive models that forecast what might happen if you make changes to any of the factors that impact the results. The true value to your organization is really in the fourth stage of the process—recommending action. The tools that build models have become increasingly powerful in the past few years. The computing power now permits you to model millions of combinations to determine the optimal outcomes from all possible executions.

In my experience, there are usually many attributes that can be improved to optimize your key performance measure. In modeling, you’re looking for the attributes with the largest impact and the cost associated with implementing those changes to your offer. It’s possible that the second best improvement plan might only cost a small percentage of the best option. If you’re in the business of providing cellular device coverage, why build more towers if fixing your customer service would improve your retention almost as much?

Got a burning research question? You can send your questions to DearDrJay@cmbinfo.com or submit anonymously here.

Dr. Jay Weiner is CMB’s senior methodologist and VP of Advanced Analytics. Jay earned his Ph.D. in Marketing/Research from the University of Texas at Arlington and regularly publishes and presents on topics, including conjoint, choice, and pricing.

Originally posted in the SMEI blog

At some point all business leaders are challenged to “innovate” in order to grow their company’s bottom line.

Done right, innovation creates value for both the company and the customer through new-to –the-world solutions to needs. It’s logical that products and services are where companies start their innovation efforts because, after all, these are very tangible sources of value. However, brand and marketing can also be powerful drivers of value and differentiation and should not be overlooked as potential anchors for innovation.Many innovation initiatives begin with a brainstorming session in which a bunch of internal folks sit around and try to generate new ideas for products or services they think customers want. For a fresh take on this process, consider “brand-storming” as the starting point for inspiration.

What is a “brand-storming” session, exactly? Well, in marketing speak, it’s generating innovative ideas for brand extensions, leveraging brand equity (a very valuable asset) to push into adjacent or even totally new product areas.

Start a successful brand-storm with  a clear articulation of your brand strategy, brand attributes and positioning. Then do creativity exercises that apply key brand attributes to new markets or to new solutions to existing customers.

Need to get the juices flowing? Look for examples in the marketplace:

• Consumer products are the easiest place to start. For example, consider Arm & Hammer Baking Soda’s extension to toothpaste (“clean” and “white”) or Duracell’s introduction of the PowerMat to recharge phones and other devices (e.g. “long lasting power”).

• Virgin is probably the poster child for brand-centered innovation, using its well-defined and unique positioning to extend into everything from airlines to cell phones.

All of this is not to say that brand should be the only source of invention. But brand-storming brings a new part of the company to the innovation table and adds another angle for sparking new, powerful ideas for growth. 

In our upcoming webinar we will look at some of the common pitfalls of innovation initiatives and explore how to use “brand” and “brand attributes” as well as innovative go-to-market strategies to unlock growth opportunities in new, unexpected directions. Hope to see you there!

Posted by J. Mark Carr, Mark is co-founder and managing partner of South Street Strategy Group.

You might not know it from the constant attention lavished on startups, but some of the most established and largest companies in the world are amongst the most innovative—they routinely out-innovate their smaller peers. Where they falter is in failing to bring these game-changers to the marketplace without diluting, complicating, or killing them.If you have doubts about what I just said, here are two of my favorite examples that illustrate the issue really well.

Ever wonder why despite inventing the concept of cellular phones and having a virtual monopoly on telephones, AT&T had to acquire McCaw Cellular Communications in 1993-94 for $11.5 billion? OR better, despite coming up with filmless photography in 1976 which dominates the world today (think of cellphone cameras, selfies, instagrams, Snapchat, Google Maps) Kodak today is a bankrupt company (the hyperlink is a great read by the way).

It’s not the lack of ideas that hurts large organizations the most. It’s not even the lack of awareness of implementation hurdles. It’s the inability to forge consensus, a constant focus on responding to immediate pressures and meeting short-term goals (both organizational goals and employee goals) and lack of sufficient communication across autonomous business units that play spoilsport. You could describe it as a lack of push to the “Strategic Intent”; a phrase popularized by the late C.K. Prahalad and Gary Hamel in 1989 (strategic intent is an ambitious and compelling dream that energizes, providing the emotional and intellectual energy for the journey to the future. It has 3 components: Direction, Discovery and Destiny). I call it a lack of push and not a lack of intent because these organizations have these 3 D's, at least on paper.

Being a strategy groupie, I've spent a lot of my time specifically focused on innovation (both because the sheer volume of content that's been published on the topic recently, and the nature of my current assignments), I’ve decided to put down some of my thoughts on paper starting with a short list of questions (by no means exhaustive) that will help people think holistically about innovation and avoid some of the pitfalls:

• Does your organization have innovation goals? What percentage of your organization’s revenue comes from breakthrough innovation, what percentage comes from incremental innovation and what percentage from existing products? How is success measured?

• How do we define problems the market faces? (Note that I consciously use the word” market” and not customer)

• How are target customers defined?

• How is the innovation execution process handled?

Innovation is hard. It takes a lot of effort and patience and failure can be costly and even catastrophic, but the upside can be rewarding beyond expectations. In the coming weeks, I will attempt to expand on each of these questions with examples and my views on why it has or has not worked for specific large companies.

Abe is a Senior Project Manager, strategy junkie, and CrossFit enthusiast. He's recently taken up snowboarding so watch out if you're headed to the slopes.