What was left undiscussed in these years is the way in which this type of approach – not just to manufacturing, but to all areas of business – actually helps the customer. Obviously, the point is not to try to do more with less for customers by shutting down the call center a half hour earlier everyday because fewer customers call in that last half hour. Quite the opposite. It is about recognizing that additional resources are created through lean processes, and those resources can be devoted to improving the customer experience, either through new product development or even through keeping call center open another half hour later every day.

Thinking lean simply means thinking about optimal leverage, in all your processes, with the idea in mind that ultimately, you are in business to serve customers.

In some respects, of course, this is a positive development. More consumers have been able to afford more goods than ever before. On the negative side, though, the result has meant increasing pressure on profit margin growth for companies. Price competition inevitably reaches a point at which it no longer contributes to the ongoing health of the company.

Where companies have been able to successfully combat this trend, they have done so by getting off the price competition treadmill and on to a path toward innovative new product development. These companies, thus, have changed the conversation with consumers from “hey, I’ll give it to you for 10% less than the other guy will give it to you,” to one that sound much more like, “look at this great new product that will solve real-life problems for you and make your life better. I am the only one who can give it to you, and it’s going to cost you, but it’s worth it.”

Which conversation would you rather be having?

With this in mind, when A.G. Lafley took over the helm as CEO in 2000, he saw that the way out of the struggles the company had at the time was through the portal of innovation. The process he took to do that is well documented in the book, The Game Changer, which was written with Ram Charan. A review of the book can be found in the April 14, 2008 issue of Businessweek, p. 73, “How P&G Pampers New Thinking.

As the article highlights, the distinctive feature of this book is the way in which it provides granular look at P&G’s process, elevating it above the typical philosophizing on the subject of innovation so popular in the press today.

That stipulated, there are things that companies can do. They can learn to think a couple of moves ahead where it concerns consumer wants and needs. The most powerful new concept in product development is “anticipate.” And there is immediate sense to this. Companies must be able to look forward and anticipate demand; they must know their consumers well enough to think ahead on their behalf.

However, by its nature, anticipation requires waiting; which is a pretty passive posture for an organization that must produce positive results every three months of the year, or suffer the consequences. So there is this place where the tenants of great product development hit up against the practicalities of running a modern public business. (Or even a private business; success cannot be deferred indefinitely, even if you don’t have deliver quarterly results).

So companies must learn to develop the process and systems that not only allow them to anticipate consumer demands, but also anticipate how they will account for that process to shareholders and stakeholders.

Creativity Index: While few people would argue against the desirability of placing creative people in new product development project analysis positions, the question of how a firm can accurately identify creative people has been less clear. One answer is to use personality testing to assess the creativity of a firm’s personnel. One such assessment tool found to be particularly useful is the MBTI Creativity Index, or MBTI-CI .

Rainmaker index: Applying Keirsey’s theory of Temperaments resulted in developing a new “Rainmaker Index” specifically tuned to profitability from the “fuzzy front end” of new product development. According to research conducted by Greg A. Stevens, James Burley, Ph.D. and Richard Devine presented to the 1998 Research Conference at the Annual International Conference of the Product Development and Management Association (PDMA), analysts with MBTI preferences for intuition (“N”) and thinking (“T”) score highest on this index. Analysts in this grouping represented the top third of the “Rainmaker Index” and generated 95 times more profit than those in the bottom third. This compares to 11 times more profit for the analysts in the top third of the MBTI-Creativity Index which included the MBTI preferences of intuition (“N”) and feeling (“F”) in addition to the previous named grouping.

Hence, the “Rainmaker Index” further improves the identification of analysts who will identify profitable opportunities in the “fuzzy front end” of NPD by a factor of 8.6 times compared to the previously reported MBTI-CI.

From academia to large companies, from consultants to advertising and public relations agencies, from businesspeople to sociologists, psychiatrists and even neuroscientists, there has been a determined march forward to discover the mysteries of why people buy the products they do.

The guesswork of the distant past has been replaced with high-quality research and well documented field experiments. It may not be physics, but important principles have emerged from this collective effort, validated time and again through decades of application.

New Product Development is now more a science than an art.

1. Product Innovation businesses
2. Customer Relationship businesses
3. Infrastructure Management businesses

Osterwalder and Pigneur characterize each strategy by its economic, competitive and cultural imperatives:

These generic strategies were first documented by Michael Porter in his book Competitive Strategy: Techniques for Analysing Industries and Competitors, 1980, where he referred to the generic strategies as differentiation, segmentation, and cost leadership, respectively. These strategies where updated a decade later by Treacy and Wiersema in their book, The Discipline of Market Leaders, 1993, where they referred to the strategies as product leadership, customer intimacy, and operational excellence, respectively. Michael Porter and Treacy and Wiersema believed selection of one strategy was imperative to ensure a succinct, successful strategy. As illustrated in the figure below. The three parties believed failure to do so would result in a “stuck in the middle” scenario and ultimate failure of the firm.

Figure 1: Michael Porter's Generic Strategies

Several prominent practitioners have criticized the “struck in the middle” assertion and Osterwalder and Pigneur observe it is possible to combine all three strategies into a single brand, as long as each of the strategies [core competencies] are divided into separate entities in order to avoid conflicts or undesirable trade-offs. As illustrated in the figure below. This unbundling is revolutionary in allowing creative brand combinations to emerge by mixing the different strategies into a collective brand.

The roadmap for unbundling is provided in the treatise of W. Chan Kim and Renee Mauborgne titled “Creating New Market Space,” published in the Harvard Business Review, and detailed in their book Blue Ocean Strategy. In both works, Kim and Mauborgne explain the principles and methods used to eliminate the choice between “create greater value to customers at a high cost or create reasonable value at a lower cost.” They called these principles and methods “Value Innovation.” An excellent example of value innovation as an unbundled brand at work is the Apple iPhone.

Figure 2: Unbundled Core Competencies

Although there are other complexities at work, at the strategic level the iPhone represents each of the generic strategies in a single brand: product innovation with the iPhone hardware and software, customer relationship management through the Apps and iTunes Stores, and infrastructure management through the use of wireless telecommunication carriers.

Aristotle posed influential rhetoric is comprised of three principles or persuasive appeals:

• Ethos => credibility;
• Pathos => emotion; and,
• Logos => logic.

The most important of these, in my opinion, is Ethos => credibility. Without credibility with others, anything you do or say is not relevant – You lack authority. According to Colleen Jones, author of Clout, the art and science of influential web content, credibility is achieved using one or more of the following seven categories:

• Experience – you have a lot of general or highly specialized experience;
• Success – your past or current success is relevant or appealing to the audience;
• Reputation – your known as having a certain characteristic or offering;
• Endorsement/Association – drawing credibility from a well respected organization or person;
• Certification – recognized level of professional or academic achievement
• Longevity – you survived for a long time, the credibility of wisdom from age; and,
• Similarity – you are someone just like your audience.

According to the Edelman Trust Barometer, in the United States, endorsement of peers and similarity are the most powerful of these categories. You are more likely to trust your peers and people “like you” than government officials, corporate executives, and the media. So, the strongest endorsement is from the peers of your target audience. Second best, is to appear to be “just like” your target audience.

After ethos is the persuasive appeal of Pathos => emotions. Unless your communication relates to the audience such that they are touched, moved or inspired, you can expect little participation and action. Your appeal must represent a value proposition – making life better or easier for the audience, or someone or something they care about. And, it is important the communication of the value proposition use the language and social conventions of the target audience. Otherwise, you don’t have their attention.

There are many names for the emerging age, one of which is “The Attention Age.” We are constantly bombarded with noise and others wanting our attention. Unless you touch, move or inspire (TMI) your target audience, they cannot hear you. Remember TMI.

Finally, the third persuasive appeal is Logos => logic. Logic is comprised of three elements:

• The conclusion;
• The premises supporting the conclusion; and,
• The warrants justifying why the premises are valid.

Without this strong foundation your arguments lack demonstrable credibility – you are selling snake oil.

Summary
You have the persuasive appeals of ethos, pathos, and logos dating from the 4^th century B.C. and Aristotle as the most effective methods of developing influence. In the United States, the most important elements of these appeals are:

• Emphasize why you are “just like” your audience;
• Speak to the audience’s listening and touch, move and inspire (TMI); and,
• Always maintain a solid logical foundation in your appeals.

Source: Central Intelligence Agency

There is a new renaissance brewing in the Southern Hemisphere. Known for years as the third world and mired with corruption and poverty, much of Africa, Asia, and South America have economies growing faster than their G8 counterparts.

A word of caution, this acceleration of economic growth is evident at the total GDP level. The other telltale, GDP per capita, is not so impressive. But, GDP per capita can be misleading. Even in the United States, where the GDP per capita is one of the largest in the world, 2% of the population controls 50% of the wealth… and, yet, it remains a vibrant and highly desirable market.

To be sure, there are still political and economic infrastructure issues to resolve, but the growing economies provide opportunity. With the growth, they will need the goods and services to satisfy the infrastructure requirements that enable a more sustainable lifestyle. In essence, this economic growth is growing the size of the pie to be distributed globally.

So when developing or expanding the market for your goods and services, consider the Southern Hemisphere as a growth opportunity.

One exception to note, Sweden is growing at a fast clip as well… what’s happening there?