Cultivating Distrust

As strategists and marketers one of our more complex tasks is to listen to customer feedback, probe market dynamics, understand competitive intent, divine replacement or disruptive technology and synthesize the varied inputs into actionable information for the business.  My experience has been, however, that even the least xenophobic teams trust too completely in their own data and their own framing of market and customer dynamics, which leads to numerous strategic and marketing errors of omission and commission.

Take for example the dutiful front-line marketing team which shares at company meetings first-hand accounts of deals they won and lost.  The stories are captivating and no doubt provide insight into operations, science/engineering and other teams who rarely have the chance to directly observe the real-world dynamics of their product deals.  We know, however, that there is bias in the selection of which deals to present to the audience and that a few instances of competitive dynamics is not data but mere anecdote, no matter how well intentioned.

What about the team that does more systematic sampling of wins and losses, convincing the sales force to document the final disposition of all deals from their funnel on a quarterly basis.  Can we trust this information?  While having more data points and in theory, not being selective which deals to include, is clearly moving in the right direction, the source of bias is the sales rep making the observations.  Anyone who has been through this exercise make recognize the top 3 reasons why “we” lose from this type of analysis:

  1. Customer relationship with the competitive account manager
  2. Lack of product performance/features
  3. Price

It’s not that the sales team is intentionally trying to skew the data, nor that marketing teams believe that this is necessarily the best method to collect deal dynamics.  Nevertheless, our not wanting to rock the boat by putting an objective, market research firm at the helm of collecting information directly from the customer trumps our own instincts to distrust the information we’re gathering.  Worse, folks further from strategy and marketing may end up feeling good about the collected data and be even less suspicious of their own plans and strategies which align with the “data”.

I am always mindful of the elementary school biology example of the frog placed in a shallow pan of water on the stove.  The frog does not jump to safety when gradual heat is applied to the pan.  So how do ensure we can take the mental leap out of our own business to think objectively about the opportunities and issues facing the company?

It’s a slight shift in focus, from trying to find the right data and answers to finding the right questions.  The right questions are always more valuable than answers.  Remember your inner three-year-old and follow your why!  A few other tips to cultivate healthy distrust:

    1. Seek out customers who purchased in the past but haven’t bought recently.  Ask them why they’ve stopped buying and if there’s anything the company can do to earn their business in the future.
    2. Stay close to technical support and customer service.  Repetitive issues, even at low levels, are the smoke that can sometimes lead to fire.  Remember that the customers that reach out to you are just a portion of your dissatisfied customers.
    3. Use 3rd party market research firms to conduct win/loss studies, surveys and focus groups.  Try to understand if your value proposition is still relevant, credible, distinct and positively impacts purchase intent.  Watch the win/loss trend line over the year.  Seek out unaided impressions of your firm vs. the competition.  Try using QFD to understand what the customers values most when selecting your product vs. the competition.
    4. Travel with sales on customer visits.  See if you can bring you to an unhappy customer, not just the best and brightest account.  Even better:  have them bring you to the customer who is a die-hard fan of the competition!

If you can sit with objective data and resist drawing conclusions for as long as possible, ask a lot of questions, listen and observe deeply, cultivating an outsiders mindset, you will always find new opportunities for improvement and growth….that you can believe it.

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Medtech Innovation: Everything but the prototype. Answer these 5 questions first.

So you’ve got an idea for a new medical device. What’s the first thing you want to do?

If get money to make prototypes is your response, perhaps you might want to think again.

Sure, SBIRs (Small Business Innovation Research grants from the US government) are out there specifically to support such work. The urge to get hands on and make something is tough to resist, especially if you’re an engineer by training. But if your goal is to build a business and solve a problem, I recommend holding off on the proof of concepts, bench-top testing, and rapid prototypes.

I know, if you have a working prototype you can get customer feedback and use it to get funding for your company. But those funders, whether angel investors or venture capitalists, will ask you these types of questions before giving you one red cent:

  • What’s your “killer app”? (I know, you’d think they wouldn’t say that in healthcare!). By killer app they mean what is the critical problem you solve with your idea? In today’s healthcare environment that boils down to can you make care faster, better or cheaper…and ideally all of the above.
  • What is the evidence (data) that validates your idea that you can improve patient outcomes, improve safety/quality of care, or reduce the cost of care? You may be thinking how am I going to get evidence without a working device, but at the early stages you need a rationale and then a plan to validate your rationale.
  • Who are the 5 KOL (key opinion leader) clinicians that will attest to the fact that your idea (a) will do what you claim (assuming the technology works out) and (b) will buy it when it’s approved for sale.
  • What is your reimbursement strategy? It’s hard to get hospitals/physicians to purchase and clinicians to adopt new technology unless there’s an economic incentive to do so. If “new code” comes out of your mouth, you’re in trouble because it’s unpredictable and takes a long time to get a new code. So, if you can get approval for reimbursement using an existing code, all the better.
  • What is your regulatory pathway? To investors, the FDA is an unpredictable, time-sucking hurdle. The fact that current approval processes are under review and changing creates uncertainty, the enemy of VCs and Angels. Ideally you have a number of recent predicates that will enable a 510k submission. And if you were thinking of going the CE route and enter the U.S. market after a European entry, be prepared to reduce the early sales in your revenue model as the healthcare markets are smaller and adopt more slowly than the U.S. market.

Bottom line: Investors will be thinking up front how they are going to get their money out of your company up front. The first step in building that case is getting really solid answers to the above questions. Following that you can begin to think about your team, technology and testing plans…and your company’s exit strategy. But before you put money and time into prototypes, think about building your healthcare business case. If you do, you may find a way to bootstrap your business as good ideas attract money and people.

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5 Things to Avoid When Pitching to a Marketing Leader

In various marketing leadership roles over the years I’ve had the opportunity to meet with a broad range of service providers, from market research firms, public relations and advertising agencies, to reimbursement and regulatory specialists (and everything in-between).  Many of the initial meetings that I and team members had with these prospective service providers were awkward attempts to sell their services to our business.

Here are some of the most problematic issues to avoid when pitching your services to a VP of Marketing or CMO:

  1. The firm didn’t do their homework on our business.  While they may have spent enough time on our public website to understand what our products and services were, they hadn’t dug deep enough to understand what challenges our business might be facing and how their services might help us deal with those challenges.
  2. The agency had a standard pitch and they stuck with it.  Okay, so you have our logo in your pitch and maybe you’ve even included some industry specific examples that are relevant but the whole time your presenting I’m listening for how is this going to help my business.  Ideally, prior to the in-person you’ve had a conversation with someone in the organization to understand what keeps us up at night, how we are defining success, what kinds of help we’re looking for…why we said yes to meeting with you.  If that kind of pre-meeting discussion isn’t possible, and it often isn’t, start the meeting by getting the VP of Marketing or CMO to talk about his or her business and what’s working well or what’s not working well enough.  Then tailor what you speak to, the examples you use, the points you emphasize according to what you’ve heard (This may require a bit of forethought on how to structure a pitch that allows for this kind of real-time customization.  But it’s better to jump around in a deck than to have a perfect polished off-pitch presentation.).  The worst possible thing to do is ask for the input in a perfunctory way and then give the same pitch you were going to give anyway (active not-listening is a killer).
  3. It wasn’t clear what kind of engagement the agency had in mind or how they would execute it.  Sometimes the agency offering is vague or too complex for me to have a  clear sense of what an initial engagement would look like.  Do I have a clear sense of what an initial engagement would look like, from kick-off to project recap?  And if the VP of Marketing/CMOs initial thinking centers around are you addressing my compelling needs, the next phase focuses on credibility and confidence:  Can you and your agency reliably execute the program your pitching?  If I don’t have a crystal clear sense of the ways in which your firm works, that your thinking is logical and uncluttered and that your processes are effective and streamlined, it’s a killer.
  4. The agency didn’t convey compelling competitive differentiation.  A VP of Marketing or CMO worth his or her salt has a clear sense of why their customers buy from them vs. the competition.  Differentiation is fundamental to how the company and it’s products and services are positioned.  By constitution and training they are listening for compelling value propositions as you speak.  They are trying to answer the question, “I don’t have a track record with your agency.  Why should I take a chance with you?”.  Your crisp articulation of why your agency is uniquely qualified to deliver value to your potential client is the counter-weight to the uncertainty of working with a new agency.  I have had the odd experience of bringing in an agency that I have worked with in the past to a new company or client and listened to their pitch and thought to myself, that’s not why these guys are worth working with…they don’t know their own strategic value.  I’ve have had to chime in to anchor the agency’s value proposition in terms that are relevant to the audience.  That the agency then cheerfully stated that I sold them better than they did is cold comfort.
  5. I was looking for a strategic partner and they wanted to be told what to do.  I believe that a really good agency becomes an extension of the marketing staff, by understanding the company’s strategy, goals and stresses.  If they are grounded in that understanding, bring their expertise to the table, and can offer insight and advice, even if it challenges convention, that is immeasurably valuable.  I’m not talking about getting free consulting;  I’m talking about having a strategic underpinning to the services you offer.  Whether it’s PR or media mix decisions, if the agency is solely soliciting input and then feeding back an aligned programmatic response, then the agency is dwelling at a certain level of value.  If on the other hand, the agency has an understanding of the company’s strategy, strengths and challenges, and provides not what was asked for but what is needed, with clear thinking on why the program will deliver on the CMOs objectives, then your agency value will rise to a new, higher standing.  Your value will be measure not simply on program execution but your contribution to evolution of the marketing organization and its ability to advance the company’s strategy.
I recommend circling back with customers you win and customers your don’t win to get a sense of what’s resonating and what’s falling flat.  Your clients are doing that all the time with their customers (Net Promoter Score (NPS) has gained traction, though I’m not a huge fan of this technique).  Nothing pleases a marketing leader more than being treated with the same care they are showing to their own customers.
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Habits of Mind: 4 Ways to Avoid Becoming a Maze-Running Rat

There was a fascinating article published in this Sunday’s NYT magazine titled “How Companies Learn Your Secrets” but it could have easily had at least three other titles that centered your focus differently, including “Habits of Mind” and “How Not to Become a Marketing Rat” (my friends at HubSpot would tell me that none of these titles are highly effective because I don’t have a number in the title, as in 4 Ways to Avoid Becoming a Marketing Rat, but I haven’t adopted that habit just yet).

This article is fascinating for a number of reasons:

  1. It is instructive to think about the amount of data that companies are collecting about our purchases and the accompanying “predictive analytics” that attempts to presage our buying behaviors.  It gives me pause as a marketer when I think about the dearth of customer insight that B2B customers have.  Oh sure, we look at market size, competition, unmet needs, and even deep research around specific solutions.  But the point-of-purchase data-collection that loyalty programs enable (you know, that little dongle that’s on your key ring that you fork over to get a “discount”, is an act of self-identification that enables purchase tracking) is generally missing from B2B.  While Customer Relationship Management (CRM) software has been broadly available for decades, the most successful ones piggy-back onto enterprise systems tailored to support order efficiency, inventory management, and production forecasting and fulfillment – not generating deep insight into buyer behavior.
  2. Repeated tasks become automatic (read: habits) and when this occurs – neurological activity, thinking, and discernment are reduced.  We know this to be true not only because of the sensors that were stuck in maze-running rats over at MIT in the brain and cognitive science department, but also because of our own experience.  Driving to work, reaching for your smartphone to check a message, taking a shower…from mundane to complex, we are attentive at the beginning and end of these tasks but in the middle, we too run the maze on autopilot.  Or in the words of the Times author, “once the loop is established and a habit emerges, your brain stops fully participating in decision-making”.  Putting my marketing hat back on, I wonder how many habits we and our companies have learned about marketing.  Take for instance New Product Introductions (NPIs), where over time a well-worn path has been established to create a data sheet, brochure, print ad and a press release.  In regulated industries, a company’s quality system may have even enshrined some of these deliverables.  But what if the formative “three step loop” of habit creation, cue (new product), routine (traditional NPI deliverables) and reward (product intro), is no longer providing the expected results?  Can we break the habit and move to a marketing mix that blends inbound marketing with outbound marketing?
  3.  Focusing on customer habits as opportunities to insert your product or service may miss the mark as it doesn’t necessarily identify customer motivation or high-level needs.  The Febreze story in the article is a great cautionary tale.  It shows that while P & G was focused on neutralizing odors and  getting Febreze adopted into the cue (bad smell)-routine (spray Febreze)-reward (bad smell bye-bye) cycle, that’s not necessarily how people are wired.  First, odor habituation is working against this model.  Secondly, if I love Fluffy, might I have a stake, either consciously or subconsciously, in minimizing the negative smell?  Finally, it’s really hard to create a new or replace a existing habit in your customers.  Think about how long it’s taking to replace paper medical records or film-based x-rays.  Again, if the focus of inquiry is close to the product or service, you may miss the dominating higher-level needs or motivations.  Check out how Febreze ended up changing their marketing approach to become a billion-dollar franchise.
  4. Finally, and to the motivation for this article:  Research has demonstrated that “simply understanding how habits work makes then easier to control”.  Awareness is key and emboldened by the research at Columbia University and U of Alberta, we can revise our personal habits, corporate/marketing habits, and habits of minds.
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An Unbalanced Skewering of the Medical Device Industry in the NYT

While I think this article may help sell papers, I am surprised with how unbalanced the reporting is. The article advances the notion that venture capital firms are politicizing the repeal of the device tax and that medical devices are potentially harmful, with no balancing data (which is broadly available) that FDA uncertainty has had a crushing impact on medical device innovation as measured by seed capital invested, medical device IPOs, and the flight of medtech to foreign shores. Nor does the article discuss that while any medical device has the potential to do harm, healthcare has been transformed over the last 50 years, where we live with disease (chronic care) instead of dying from acute events (heart attacks being the number one killer), and that medical devices have played a critical role in that transformation.

The medical device industry has partnered with the clinical community, pharma/biotech and patient groups in this transformation and brought heart/lung bypass, implantable and external defibrillators, sophisticated monitoring technology, etc. that work to preserve and extend life.

By not speaking about the impact of regulatory uncertainty and the positive impact of medical innovation on this vital U.S. industry to my home state (MA) and others, the article is as tilted and unbalanced as the author suggests of the VC community.

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Wes Leonard Dies: High School Basketball Player Collapses After Game-Winning Shot

Incredibly sad tragedy. Given the reports that his death was due to cardiac arrest, it’s possible that his life could have been saved if there had been an Automated External Defibrilla­tor (AED) at the gym. Cardiac Arrest is different than a heart attack. It’s an electrical problem with the heart and the only way to revive someone is with a defibrilla­tion shock. Automated devices cost less than $2000 and have voice commands which can walk a bystander through the procedure of delivering a lifesaving shock. CPR won’t revive a SCA (Sudden Cardiac Arrest) victim…C­PR is like treading water. Some day every high school gym will have an AED, just like they have a fire extinguish­er.
Read the Article at HuffingtonPost

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