I was recently trying to convey to a colleague why we find it so hard to build a successful business even for great products. It is typical for a technology company to study existing products in any space and come up with a better gizmo. This is true not only for gadgets and medical devices and such systems. It is true for business software, service solutions of all kinds, offshore tech. services, consumer products and even businesses like restaurants.
The problem starts with thinking that a better gizmo creates instant demand. Come on, after all, customers aren't stupid, right? The moment they see a better box, they would know it. They are EXPECTED to know what's good for them, after all.
Well, my response to this hypothesis is, SORRY, IT'S PLAIN WRONG. You see, even the customer is a human being. He thinks and acts based on emotions, felt needs, changing priorities, circumstances, pride, prestige, insecurity, fear, doubt, and peer pressure. Therefore the way he perceives your product is a very complex emotional mind-scape and very very few marketers get it right. Remember that the Bollywood moghul, Raj Kapoor, famously said that he didn't understand why Bobby succeeded, and why Mera Naam Joker flopped. He had the best sense what the public wanted, and yet he failed.
The great businesses do not hesitate to engage with customers. This is true before we make a product, and even more important on an ongoing basis after we launch products. This is not just advertising and publicity but serious voice of the customer and mind of the customer thing. Even Steve Jobs, who went with his instinct for what the customer wants and didn't believe in focus groups and such, conceded it was the most important thing for a business to live in the immersive world of its customer to understand his psychology intuitively.
The best products in any space are not the most feature-rich or most elaborately engineered. The value proposition is not a simple price-benefit equation but a complex dance between the seller and buyer that is multi-layered.
I could illustrate this with the example of the iPhone, of which I was one of the earliest customers in 2007. The iPhone addressed the customer's need for consuming the benefits of the connected digital world without the hassle of a clunky box called the PC. It met the need for a reliable and efficient hand held device that was wireless phone, music player, camera and browser with email. The result was that at $800, a pricey little device put in your hands did so many things so well and cost as a replacement much less than the cost of a number of boxes you would have used otherwise. Add to it convenience and pride of ownership.
All the modern e-commerce we talk of, social media, You Tube, everything we take for granted today stemmed from that one successful mapping of a consumer psychology. This is called in Hinduism काम.
Once we have a grip on the psychology, we move on to firmer ground. This is the technology piece. So if I want to make a sugarless sweet drink for example, or the most comfortable uncrumple-able cotton shirt or the best mobile phone experience, I can go to the design board and work on the science and technology of how to make the features and specifications tick. I can measure what it needs to be. This is hard. But this technology piece seems at least a predictable thing. So it is like कर्म Karma theory. Cause-effect, input-output.
But it can be a complex equation too, and getting it right, doing failure analysis, and stacking the quality function deployment equation for most competitive positioning, is a scientific game and we need to play here smartly. Here also, customer-driven measurements like conjoint analysis are needed. I have seen big and small businesses fail here, in their hurry to get to the market, showing a lack of fortitude to work the harder details like safety and reliability, and a rush to impress investors and please salesmen.
So OK, we understood the customer psychology, we designed with the best technology, and our product is ready. Does it guarantee success in terms of market share, profits and growth? This is economics. This economics bit is called अर्थ.
Economics is the tricky piece. The reason for the failure of economics world over is that people are thrilled to be unpredictable and don't care for the economist's predictions. Ask any lady who goes to a saree shop and sees about 25 sarees just for a lark and walks out without buying anything.
In the '90s, Steve Jobs failed. His ideas were well before his time. I know someone who had invested all his savings in Apple stock and lost everything in mid '90s. He came back to India to start from scratch. Imagine if he had held on to Apple stock till today.
Every attractive advertisement for mutual funds begins by saying one should be smart and invest in mutual funds. But the last bit says, "please note past performance is no indicator of future results and all risks are the investor's alone." This should show us how unpredictable market success is.
The fact that market success is not a direct function of either technology or psychology as we understood it in the first instance makes for the world of business we are in. So many experts and economists make a living explaining why you went wrong, all with a perfect 20/20 vision of the past. All their glib talk stops when you ask them, "tell me, what will succeed next? Can you tell me what is the winning formula for the next business success?" Their humming and hawing starts and they hastily collect their cheque and walk out.
The wheel of all business activity or business धर्म goes round these three - psychology= काम, technology= कर्म, and economics=अर्थ. I have quoted the traditional Hindu terms for these three aspects, and used the nearest equivalents in English. Economics is a word associated with micro and macro behaviour and does not exactly represent business uncertainties I am talking of. Maybe one can come up with a better word.
So in summary, what I am saying here is that unless we do a good job of understanding psychology, we won't get technology right. And even after we get psychology and technology right, the vagaries of the market place may stop us from achieving the business or economic success we planned for. We have to be humble enough to accept this, and focus on what we can do right = engage with customers constantly and understand them. And use all the technology to come up with the best product or service. And keep engaged, and not give up easily. May be that will give us better economics. But the wheel moves on.
Post-edit: There can be a question. Even if this model works for businesses like milk biscuits and soaps, which are B2C, i.e. we address the consumer and meet his needs, does it apply to B2B or a business to business situation? Like selling advertising space to a tyre manufacturer who supplies tyres to car manufacturers? Where does psychology come in there?
Ask any seasoned campaigner in this space. Buyer or Seller. He will tell you how much psychology played a role in choices and decisions. It may be a simple price game or spec game sometimes. But the relationship built over time and the projected success or failure of the relationship or business alliance will be a clincher. That is the logic behind giving freebies, inducements and such. I don't mean this in a corrupt way. Eventually, in a Dharmic way, we can conduct our transactions by focussing on the psychology and architecting the technology. Communication is the current that runs through all this, and one cannot emphasise too much this: how well we communicate will determine the positive momentum in any B2B relationship also.
