- Email: [email protected]
How to build a benchmarking team
84
J PROD INNOV MANAG 1!394;11:76-88
and understanding the assumptions are critical responsibilities for the new products committee. Complete answers to the following questions serve this goal well. 19. How do you know that? Is your position based on fact or intuition? Do you have more than one source of substantiation? 20. What are your critical assumptions? What could critically upset your business proposition? What are the major unanswered questions? How/when will you answer? 21. What are the odds of success? Does success require exceptional cooperation to execute? Great Expectations: Why Predictions Go Awry, Herb Brody, Journul of Consumer Marketing (1993, no. l), pp. 23-27 (GPL) This article’s thesis is that predictions of technology development and technology markets usually turn out wrong due to consistent technological forecasting errors which, if recognized, can be avoided. Articles about how new technologies, their applications, and their expected markets are full of falsely optimistic predictions from company marketing officials, independent market research firms, and security analysts. The author lists many of the well-known “casualties who bet on the wrong side of the technology horse”; RCA playback-only videodisc players were overwhelmed by the popularity of VCRs, NCR failed to foresee that the era of cheap electronics would doom their mechanical cash register, and Polaroid’s instantdeveloping movie camera was blindsided by the camcorder revolution, among others. The electronics and computer fields are especially notorious for producing glittering technological promises that never quite come to pass (for example, at the time of this article we still could not talk to our computers). The author lists and discusses several causes of the systematic over-optimism in technology market predictions.
ABSTRACTS
companies that make a technology how much they expect to sell, because vendors are relatively few in number and easy to identify. However, technology companies have a missionary spirit that creates a climate of raised, and sometimes unrealistic, expectations. For example, superconductors, which would be used in levitating trains, intercontinental power transmission, and superfast electronic switches, fell far short of commercial practicality. Instead, technology’s potential buyers should be surveyed, keeping in mind that people do not buy technology, they buy value. However, the universe of customers is much larger and harder to reach than is the universe of sellers. In focusing on technology, not value, would-be technology seers consistently underestimate the possibilities for advances in an existing technology which negate the need for the new technology. For example, electronic imaging technology did not eliminate photographic film, largely because ongoing chemical refinements have continued to make film better. There is always an army of people working to improve an old technology, and only a handful to develop a new one. Journalists fan the flames. Exaggerated media coverage has helped in disseminating overblown forecasts. Once a forecast is printed in a reputable publication, it takes on a life of its own. Other publications repeatedly quote the earlier one as an authoritative source. For example, the myth of a huge robot market was spread this way.
l
Vested interests. Those with a financial stake in a new technology, such as entrepreneurs, proponents in a large organization, and academics, and government scientists dependent on public funding, understandably try to drum up support for it by publicizing rosy predictions.
Squandered opportunities. Another phenomenon is the tendency to miss the point of new technologies and thus predict for them a much smaller role than they will ultimately play. For example, when transistors were introduced by Bell Labs in the late 194Os, their main use was thought to be as a replacement for vacuum tubes in radios rather than as an important component in computers, a brand new product at that time. Experts tend to work on the assumption that present trends will continue. For example, early computer experts focused on designing ever bigger and more powerful machines.
l
The wrong people surveyed. The typical approach in evaluating a market is to ask the
Recognizing these common pitfalls is a major advantage for those who must make technology market
ABSTRACTS
J PROD INNOV MANAG 1!394;1I:7648
predictions. The following points are recommended for consideration when making forecasts: Watch developments
in related fields.
Discount predictions vested interests.
based on information
Expect existing improve.
technologies
Beware of predictions extrapolation.
from
to continue
to
based on simple trend
Do not assume that improved performance guarantee a market.
will
Give new ideas time to catch on. Truly innovative technologies typically take ten to twentyfive years to go into widespread use. Pay attention to the infrastructure on which a technology’s success depends. For example, VCRs owe much of their success to the establishment of a video rental industry. Hedge your bets. The decisions that determine which technologies will fly and which will not, are guided by forces that can seem mysterious; we just do not know what is going to happen. How To Build a Benchmarking Spendolini, Journal of Business April 1993), pp. 53-57
Team, Michael J. Strategy (March-
Benchmarking is used for many activities other than new products, but many new products people are being invited to participate. And most leading new products firms are now on either the giving or getting end of benchmarking. This author feels one might as well benefit from the experience of the veterans. Interviews were conducted with twenty-three US best-practice benchmarkers. The first issue dealt with who does the work? Individuals can benchmark, but only a team takes advantage of a set of skills. There are three types of teams: (1) Intact work group, usually a manager and a few direct reports; (2) Cross-functional team where representatives from various functions are selected to comprise a team (one new products team was made up of people from strategic planning, engineering, manufacturing, finance, and marketing); (3) FunctionaZ team, where the subject is a functional task, not a company-wide one.
85
Most teams employ simple divisions of labor across the tasks of information gathering, mentor, data analyst, compiler, and others. If the team consists of peers, a leader may be selected or the team may lead itself. Team size should be about six, enough to represent the needed skills and perspectives, but not so many that communication becomes impossible. Team member characteristics vary tremendously, but five stood out in the interviews. Functional expertise: “the best and the brightest,” to ask good questions and catch the interest of top people in the firm being benchmarked. Internal credibility: the results have to be sold around the firm. Communication skills: effective speaking, good listening, and good note-taking. Efective group interaction skills: the project may go on for months. Motivation: it’s hard work, and if interest lags, the output will also. Successful benchmarkers stress that the whole process should have a base in strategic planning and action, not just concern the details of business. There is often a need for a champion, since benchmarking is a technology that can be easily resisted. Publicity should clearly show how the benchmarking process is integrated with other programs (such as quality) and with on-going operations, not as a competitor for funds and people. It is nice to have lots of volunteers in the beginning, if quality people are willing to volunteer. One IBM’er said to preselect a pool of candidates and then let those persons self-select. There is usually a need for mentors, especially those with experience. Learning from the successful benchmarking of others is important, particularly how to keep the work moving, how to find value that motivates team members, and how to master the complexity of schedules, information, and the like. Urgent Memo! Judy Martin, Sales Management (March 1993), pp. 7 1-73
& Marketing
This brief article reminds us that sessions where new products managers and marketing managers introduce new items to the sales force are much less effective than they can be. The trouble begins with a natural view from the developer’s desk. You are excited, you know the new item will sell, you’ve got tons of market research that tells you so, you’ve seen the great ideas in the advertising and promotion material, you know the sales force will clamor for the new item (they always want great new items that are easy to sell), they love to
J PROD INNOV MANAG 1!394;11:76-88
and understanding the assumptions are critical responsibilities for the new products committee. Complete answers to the following questions serve this goal well. 19. How do you know that? Is your position based on fact or intuition? Do you have more than one source of substantiation? 20. What are your critical assumptions? What could critically upset your business proposition? What are the major unanswered questions? How/when will you answer? 21. What are the odds of success? Does success require exceptional cooperation to execute? Great Expectations: Why Predictions Go Awry, Herb Brody, Journul of Consumer Marketing (1993, no. l), pp. 23-27 (GPL) This article’s thesis is that predictions of technology development and technology markets usually turn out wrong due to consistent technological forecasting errors which, if recognized, can be avoided. Articles about how new technologies, their applications, and their expected markets are full of falsely optimistic predictions from company marketing officials, independent market research firms, and security analysts. The author lists many of the well-known “casualties who bet on the wrong side of the technology horse”; RCA playback-only videodisc players were overwhelmed by the popularity of VCRs, NCR failed to foresee that the era of cheap electronics would doom their mechanical cash register, and Polaroid’s instantdeveloping movie camera was blindsided by the camcorder revolution, among others. The electronics and computer fields are especially notorious for producing glittering technological promises that never quite come to pass (for example, at the time of this article we still could not talk to our computers). The author lists and discusses several causes of the systematic over-optimism in technology market predictions.
ABSTRACTS
companies that make a technology how much they expect to sell, because vendors are relatively few in number and easy to identify. However, technology companies have a missionary spirit that creates a climate of raised, and sometimes unrealistic, expectations. For example, superconductors, which would be used in levitating trains, intercontinental power transmission, and superfast electronic switches, fell far short of commercial practicality. Instead, technology’s potential buyers should be surveyed, keeping in mind that people do not buy technology, they buy value. However, the universe of customers is much larger and harder to reach than is the universe of sellers. In focusing on technology, not value, would-be technology seers consistently underestimate the possibilities for advances in an existing technology which negate the need for the new technology. For example, electronic imaging technology did not eliminate photographic film, largely because ongoing chemical refinements have continued to make film better. There is always an army of people working to improve an old technology, and only a handful to develop a new one. Journalists fan the flames. Exaggerated media coverage has helped in disseminating overblown forecasts. Once a forecast is printed in a reputable publication, it takes on a life of its own. Other publications repeatedly quote the earlier one as an authoritative source. For example, the myth of a huge robot market was spread this way.
l
Vested interests. Those with a financial stake in a new technology, such as entrepreneurs, proponents in a large organization, and academics, and government scientists dependent on public funding, understandably try to drum up support for it by publicizing rosy predictions.
Squandered opportunities. Another phenomenon is the tendency to miss the point of new technologies and thus predict for them a much smaller role than they will ultimately play. For example, when transistors were introduced by Bell Labs in the late 194Os, their main use was thought to be as a replacement for vacuum tubes in radios rather than as an important component in computers, a brand new product at that time. Experts tend to work on the assumption that present trends will continue. For example, early computer experts focused on designing ever bigger and more powerful machines.
l
The wrong people surveyed. The typical approach in evaluating a market is to ask the
Recognizing these common pitfalls is a major advantage for those who must make technology market
ABSTRACTS
J PROD INNOV MANAG 1!394;1I:7648
predictions. The following points are recommended for consideration when making forecasts: Watch developments
in related fields.
Discount predictions vested interests.
based on information
Expect existing improve.
technologies
Beware of predictions extrapolation.
from
to continue
to
based on simple trend
Do not assume that improved performance guarantee a market.
will
Give new ideas time to catch on. Truly innovative technologies typically take ten to twentyfive years to go into widespread use. Pay attention to the infrastructure on which a technology’s success depends. For example, VCRs owe much of their success to the establishment of a video rental industry. Hedge your bets. The decisions that determine which technologies will fly and which will not, are guided by forces that can seem mysterious; we just do not know what is going to happen. How To Build a Benchmarking Spendolini, Journal of Business April 1993), pp. 53-57
Team, Michael J. Strategy (March-
Benchmarking is used for many activities other than new products, but many new products people are being invited to participate. And most leading new products firms are now on either the giving or getting end of benchmarking. This author feels one might as well benefit from the experience of the veterans. Interviews were conducted with twenty-three US best-practice benchmarkers. The first issue dealt with who does the work? Individuals can benchmark, but only a team takes advantage of a set of skills. There are three types of teams: (1) Intact work group, usually a manager and a few direct reports; (2) Cross-functional team where representatives from various functions are selected to comprise a team (one new products team was made up of people from strategic planning, engineering, manufacturing, finance, and marketing); (3) FunctionaZ team, where the subject is a functional task, not a company-wide one.
85
Most teams employ simple divisions of labor across the tasks of information gathering, mentor, data analyst, compiler, and others. If the team consists of peers, a leader may be selected or the team may lead itself. Team size should be about six, enough to represent the needed skills and perspectives, but not so many that communication becomes impossible. Team member characteristics vary tremendously, but five stood out in the interviews. Functional expertise: “the best and the brightest,” to ask good questions and catch the interest of top people in the firm being benchmarked. Internal credibility: the results have to be sold around the firm. Communication skills: effective speaking, good listening, and good note-taking. Efective group interaction skills: the project may go on for months. Motivation: it’s hard work, and if interest lags, the output will also. Successful benchmarkers stress that the whole process should have a base in strategic planning and action, not just concern the details of business. There is often a need for a champion, since benchmarking is a technology that can be easily resisted. Publicity should clearly show how the benchmarking process is integrated with other programs (such as quality) and with on-going operations, not as a competitor for funds and people. It is nice to have lots of volunteers in the beginning, if quality people are willing to volunteer. One IBM’er said to preselect a pool of candidates and then let those persons self-select. There is usually a need for mentors, especially those with experience. Learning from the successful benchmarking of others is important, particularly how to keep the work moving, how to find value that motivates team members, and how to master the complexity of schedules, information, and the like. Urgent Memo! Judy Martin, Sales Management (March 1993), pp. 7 1-73
& Marketing
This brief article reminds us that sessions where new products managers and marketing managers introduce new items to the sales force are much less effective than they can be. The trouble begins with a natural view from the developer’s desk. You are excited, you know the new item will sell, you’ve got tons of market research that tells you so, you’ve seen the great ideas in the advertising and promotion material, you know the sales force will clamor for the new item (they always want great new items that are easy to sell), they love to