February 2004
Maintaining Market Leadership through Customer Focus
Speaker: Susan Wheeler, Principal, Pathfinder Solutions

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Susan Wheeler presented at the February 4th event of the SVPMA on Maintaining Market Leadership through Customer Focus. Susan presented her strategies to ensure you remain focused on your customers and markets. This is a particularly pertinent topic as product managers deal with a number of corporate directives, such as growing revenue, cutting costs, retiring products and launching new products.

Susan founded Pathfinder Consulting Solutions in 2000 to focus on process improvement in software, engineering, hardware, and non-profits. She has over 20 years experience of senior level marketing and product management positions at start-ups and established companies such as General Electric, AT&T, Interliant and Pandesic. Susan also teaches business classes at University of California, Davis.

Susan stepped the audience through four main topics: understanding what customers value, defining types of market leadership, identifying customer-driven market anchors, and achieving market leadership by delivering value. Additionally Susan focused the critical role that product managers play in ensuring companies stay on track.

Companies lose focus for many reasons; sometimes they lose touch with the marketplace, try and achieve conflicting goals, and become opportunity driven rather than market driven. One of the biggest culprits is trying to be all things to all customers. Gateway is an example of a company that lost its way, having entered, existed, and even re-entered markets such as high-end systems, consumer electronics, and recently acquired eMachines. Sometimes you have to have the courage to fire a customer. Susan related a story of how when the CEO of Southwest Airlines received a letter from a customer complaining that they would no longer fly Southwest as long as they continued to add levity to the safety briefing, the CEO wrote back “We’ll miss you.”

Understanding and defining customer value is a real challenge. The basic value equation is benefit realized minus cost. Some companies like to look at total cost of ownership as one method, but this is difficult because everyone sees it differently. Susan recommends going back to product management basics and following the customer around. While at AT&T she once spent six weeks at a customer site understanding how AT&T’s systems fit into the larger whole of the customers operations.

Companies achieve leadership on one of three dimensions, operational excellence, customer intimacy, and product innovation. Examples of operationally excellent companies are Dell and Starbucks, while Nordstoms focuses on customer intimacy, and Intel is a product innovator. To win, a company must master one of these value dimensions and be proficient in two.

The third step is identifying market-anchors. Having this lens enables employee teams to retain focus and act autonomously. Starbucks, for example, excels in a number of areas, including branding, merchandising, and atmosphere, to list a few. But its anchors are convenience (location and ordering) and quality/consistency. Starbucks has redefined the living room.

Market anchors can then be used to move towards market leadership. This starts by identifying where you are now and where you are relative to your competition. Next starts a value chain analysis. Pulling from Michael Porter, Susan defined the primary activities as Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, and Service. The support activities are Procurement, Technology Development, Human Resource Management, and Infrastructure. Product managers can have a significant influence over the primary activities.

Susan ended by asking everyone to consider what the one area on which their company should really focus.