The timing of this book couldn't be better.
How To Grow When Markets Don't
By Adrian Slywotzky and Richard Wise with Karl Weber
Warner Business Books, April 2003
272 pages, $22
The timing of this book couldn't be better. The economy is as sluggish as a severely clogged drain; world markets aren't doing much better, which eliminates one option for spurring growth; and picking up easy revenue gains from yet more line extensions has pretty much run its course. Just about everything that could be extended has been (Pepsi Blue? Terminator 3?). The result: Incremental sales and earnings are harder to come by.
What's an executive to do? Create more demand by pointing out to customers that they have needs they didn't know they had. Your innovation (on your customer's behalf) will spur demand for what you have to sell.
That's the central idea offered by the authors, both consultants at Mercer Management. Using numerous case studies, they point out a variety of ways companies have created what they call "demand innovation":
• For General Motors Corp., the quest for new revenue led it to try selling services along with its cars and trucks. One result: OnStar convenience, safety and security services—everything from hands-free phone dialing to automatic notification to authorities if your airbags deploy—became a multibillion-dollar business.
• Air Liquide, which sells basic industrial materials, let its customers access its huge R&D staff. The goal: To have customers help design new products Air Liquide can then sell them; several are now in development.
• Cardinal Health Inc., one of the pharmaceutical industry's largest distributors, worked with hospitals to create numerous products to cut costs and increase efficiency. (One example: An ATM-like machine that dispenses drugs, tracks every withdrawal and bills the drug to the appropriate patient, assuring that all the prescriptions are correct and minimizing a potential source of lawsuits.)
The benefits of demand innovation are twofold. It increases your company's sales and earnings at a time when growth is hard to come by. And it ties you more closely to your customers, making it less likely they will switch to a rival.
Granted, this idea is more incremental than revolutionary. The notion of getting closer to your customer was the mantra of the 1980s, and manufacturers of cyclical products began expanding into related services way back in the 1990s in an attempt to smooth out earnings. And everything from the book's copyright (held by Mercer Consulting) to the authors' referrals to the Mercer Web site makes clear that one goal of the book is to drum up business for Mercer.
All that said, the authors' efforts to suggest avenues for growth in a no-growth environment are helpful, as is their decision to offer seven specific tactics they suggest employing as you move from the way you are currently doing business to focusing on innovation for the customer's sake. Among them: re-sorting your customer base into new groups in an effort to find more needs (traveling salesmen need one level of service from GM's OnStar, for example, while retirees need another) and bundling more services into your product offering.
More important, the authors provide a useful series of ideas you can try in order to jump-start your company, at a time when the economy shows no signs of coming back to life soon.
Reviewed by Paul B. Brown, the author of 13 business books, including Customers for Life: How To Turn That One-time Buyer into a Lifetime Customer (written with Carl Sewell). A revised and expanded version was recently published by Doubleday. Please send comments on this review to firstname.lastname@example.org.
This article was originally published on 04-01-2003