Many years ago, the head of R&D at an international consumer electronics company asked me to look at the implications of them being asked to continually develop/launch new products and brands.
Without going into too much detail, what I saw shocked me.
In essence, the senior guys at the company were demanding their R&D guys cut development time by upto 50% ensuring that there was a constant stream of new news to drive communication, sales and profit.
Whilst I understood the economic possibilities of this strategy … especially given their increasing competition … I couldn’t help but feel the implications on the brand were alarming, leading me to write a paper to the organisations board entitled:
Why The Quest For Every Possible Cent Of Profit Will Lead To Loss.
The basic premise was that the way this company looked at their market was ‘how many products can we sell them’ … and whilst that was all very well and good … the reality was they had failed to take into account a number of issues from igniting customer dissatisfaction [basically the fact people will get pissed off when a product they’ve just bought is superseded within 3 months] through to a total disregard for the economics of people’s budgets [in essence they ‘forgot’ that people have many commitments and activities that need to be satisfied so it would be impossible – not to mention ridiculous – to assume they would spend every pound/dollar/cent of their budget/income/credit card on their products each and every month]
However the bit that really scared me was the speed of development they wanted to embrace.
By cutting get-to-market times by upto 50% [without dramatically increasing the R&D budget/staff] I couldn’t help but feel corners would have to be cut, resulting in mistakes and problems that very quickly would affect people’s view and trust of the brand, ultimately encouraging them to choose or seek out alternative manufactures – regardless of price-point, distribution and/or features.
Worse.
The R&D investment that was being made was focused more on product evolution rather than innovation – a trait this brand had been built on – so not only were they going to be cutting corners, it was going to be on products/brands that were no longer breaking new ground, ultimately making brands with a lot of good-will, worse.
Despite the full backing of the R&D department, my paper was brushed aside with one of the most condescending rationales from the global head of marketing … and you know what, he was right, because for 3 years they enjoyed record share and profits.
Then it all fell apart.
Badly.
Products that were once seen as the backbone of the company’s reputation were now seen as expensive and unreliable … and when they did release fundamentally new products, they were lacklustre, making you feel they were developed for the sake of development rather than answering a real market opportunity/need.
Fortunately the decline in innovation, quality, reputation and – most importantly – sales, resulted in a change of approach and attitude however even today, they are still fighting the demons of those mad few years of trying to vacuum up every possible penny from people’s wallets and whilst they still were able to make a profit [but only just], it was a real lesson for me both in the arrogance of brands and the power planners have to get to the core issues, not just the communication elements.
The reason I write this is that over the last few weeks we’ve seen major recalls by Toyota, GM and Nissan and I can’t help but feel I’m seeing history revisited, except instead of greed driving the corporations pressure on R&D development times – it’s survival … and whilst I can sort-of understand why that would happen, the thing is as soon as you forget your reputation is only as good as your latest work, you’re investing in your destruction.
Whilst progress and ambition are fantastic – and to a certain extent, vital – attributes to have, it would be pretty useful and beneficial if companies remembered the importance of what Harrison Ford calls the value of value.