The Marketing Paradox

December 2001

A well run, market led organisation researches the needs of its customers and the trends in the market place and on the basis of this information develops appropriate products. That's why in a mature market products tend to improve in an incremental way, a few more miles to the gallon here or a lower fat content there, it's a natural consequence of defining products and services by reference to what is already on the market.

A technology driven business by contrast tends to base its products on what it knows can be done in the fond hope that people will want to pay for something they don't yet know they need. It doesn't take a genius to see that this is a rather riskier approach to life than the well trodden path of doing what they do, but in all the colours.

The problem is that without the blind arrogance or naive optimism (or both) of the technical innovator we would all still be sitting in our spotlessly clean caves admiring the very latest in stone tool design. As the then chairman of IBM famously said in 1943 'I think there is a world market for maybe five computers' and in terms of what was there then, he was right.

The development of our modern industrialised economy has taken place through occasional visionary leaps by a few individuals, followed by the painstaking efforts of many to take a new idea or technology to all of its rational, market led conclusions.

If you start from the premise that wealth is defined by how much we can consume then technology provides two key roles in generating wealth. First it creates new kinds of things to consume such as recorded music or package holidays. Secondly it provides the means to produce more, cheaper goods for consumption through automated production lines, bigger tractors, cheaper energy etc.

The I.T. revolution has undoubtedly spawned a huge variety of previously unimagined consumer products from laptop computers via photo editing software to nice little jingles you can download and use as a ringing tone on your mobile phone (to the great delight of friends, colleagues and innocent bystanders). Conversely much of the benefit of I.T. to the economy as a whole is the improved productivity it can create in the production of existing goods and services. The problem is that I.T. is still so new and so abstract that we tend not to understand the difference between that which is completely new and that which is simply doing the same thing better.

Another interesting aspect of technological economies is the development of engineering as a professional discipline to translate the potential of technological ideas into real world productivity. In other words to design the tractor that pulls the plough that allows one man to grow ten times as many potatoes. Or to build the production line that converts those potatoes into innovatively packaged, crisply reconstituted snacks with a delicate flavour of sour cream and chives.

Having been in the I.T. industry now for rather more years than I would care to admit, I am increasingly convinced that the key to the successful application of I.T. in business is to take an engineering approach. In other words to use technical expertise to provide practical and cost effective answers to business problems. Not as the industry tends to do, to present every minor twist in the way technology is applied as a huge and novel breakthrough which should be adopted by one and all just the way it is.

Imagine deciding to build a new office building on a particular site and having to choose between three of four existing designs where even the internal layout is predetermined. The business model's of the owners of these designs meanwhile have been funded on the basis that they will each capture one third of the world market for new office buildings. Consequently the price of the building must reflect the huge marketing spend required to maintain this market share. Any changes we may require to accommodate our specific requirements will be provided grudgingly, slowly and at considerable extra cost.

It all sounds rather absurd when we all know that the building we want can be designed by any reasonable firm of architects and built to suit our exact requirements at far less cost. My experience is that this analogy applies to the development of business systems far more closely than most people in the industry would care to admit. The vast majority of business systems are based on well established technology but at a detailed level they need to be designed with the specific requirements of the customer in mind.

So how does all of this relate back to marketing? The real challenge in making the most of technology is how to combine the safe but pedestrian process of incremental improvement with the riskier but potentially far more rewarding opportunities offered by new technology. To achieve the best results you must combine your knowledge of the market with the best available technical expertise on the basis that you know what you want and they know what you could have!