Entrepreneurs that create blockbuster companies or products do very specific things that cause them to succeed, notes an expert in the field.
A clearly articulated vision (pillars) and the right approach (process) are two of those things, says Gary S. Lynn, co-author of three books including “Blockbusters: The Five Keys to Developing Great New Products”.
Lynn – who was selected by Business 2.0 magazine as one of the nine leading management gurus in the U.S. – was in Toronto recently, where he spoke at an event organized by the Canadian Innovation Exchange (CIX).
Video clip of Gary Lynn’s presentation
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Lynn is currently senior managing director and chief innovation officer at Spencer Trask, a New York-based venture capital firm that has placed more than $1 billion, over the past decade, in 130 technology start-ups.
Lynn’s address at CIX – on How to Create a Blockbuster Company or Product – was “based on decade-long research”, during which he studied 1,000 new product and service teams, and some of the most successful products ever developed and launched.
“We placed teams we studied into three groups – Failures, Successes and Blockbusters – based on whether they had a clear and stable vision,” said Lynn.
Various criteria were used to measure the efficacy of this vision, such as: did the product or initiative exceed customer, volume, profit and management expectations.
“Blockbusters had to score a perfect 10 on all these dimensions, and had to have won an industry or company award for excellence. We had 49 companies in the Blockbuster group.”
Lynn said his study didn’t ask which factors separate the successes from the failures – as accurately responding to that question would require measuring all the 1,000 companies on 252 criteria – a mind-boggling task.
“So [instead of looking at every area] we decided to focus on the critical few…in fact on two things that clearly separate the Blockbuster products and firms from the merely successful and the failures.”
The two factors, he said, are Vision (Pillars) and Approach (Process).
A Wii secret
The team’s vision is arguably the most vital pre-requisite for creating a blockbuster product, the Spencer Trask executive said.
Teams that created blockbuster products, he said, “were three times more likely to have a clear and stable vision of the product than the failures and 1.4 times more likely than the mere successes.”
This vision, he said, should be articulated through tag lines – the project pillars, if you will – that encapsulate the essence of the new product.
The one driver of the Nintendo Wii’s success is its two very succinct and clear project pillars:
- Fun for the whole family
- Games grandmother can play
That these “pillars” served as a lodestar for those who designed and created the product is very clear when you contrast the Wii with the Sony Play Station 3 (PS3), he said.
“The PS3 has 12 buttons, while the Wii has just five. It’s really easy to play.”
A clear vision also drives focus, said Lynn. “It tells people instantly what your company is all about. I would argue it helps more internally than externally. For instance, it lets your R&D folk know what they should and shouldn’t be working on.”
The management guru cited examples of other tag lines that are successfully driving focus.
- Ritz: Ladies and gentlemen serving ladies and gentlemen.
- Girls Scouts: Where girls grow strong.
- Odwalla: All natural ingredients you can pronounce.
Lack of clarity about the vision could lead to failure, the management guru said. “So could the lack of a shared vision,” he said, citing the Apple 3 as a case in point.
The people involved in the design and creation of the Apple 3 did have a vision, Lynn said, but it wasn’t shared.
“The engineers thought they were building a super Apple 2. The marketing folk said they wanted a business computer, because a super Apple 2 would cannibalize the Apple 2. So there was all this constant bickering and they would never produce a decent product.”
Making fast food go even faster
If a shared vision is so vital, how does a company go about creating it?
“You don’t get it by hiring a market consultant,” said Lynn.
Intimate knowledge of your customers (or potential customers) is one sure-fire way to create and refine this vision, he said.
And gaining this knowledge often involves sustained and smart observation, Lynn said citing the example of Pittsburg startup HyperActive Technologies, a company in Spencer Trask’s portfolio
HyperActive makes a doohickey – dubbed Hyperactive Bob – that uses artificial intelligence and rooftop cameras to predict customer orders at a fast food drive in, then alerting kitchen how much food to prepare.
The idea for the system, he said, came from R. Coulter, a computer scientist from Carnegie Mellon, who at the time was out of a job.
Coulter’s “market research” was done while working as a cook at a MacDonald’s store. He experienced how quickly you could get squeezed trying to get enormous orders ready in a small amount of time.
“So he thought of creating an artificial “vision system” that would recognize the kind of car coming into drive through restaurants, associate that with the likely number of people in it,” said Lynn.
Coulter’s system, he said, would figure out that: “this kind of car is likely to have two kids in it – so that’s going to be two cheese burgers, three fries and a coke. And that causes a signal to be sent to this board.
Speed of service is enhanced, and workers no longer get stressed out trying to keep up with customer orders.
Lynn said Spencer Trask managed to raise $13 million for HyperActive’s Vision System in two weeks. “That’s all because they had intimate customer knowledge. They knew exactly what they were trying to go after.”
Living with the customer
Successful companies have adopted all kinds of creative strategies to get this intimate customer knowledge, Lynn said.
For instance, he recalled that many years ago General Electric Company got into the CT Scan business after one of its veteran scientists spent two weeks at a state-of-the-art hospital.
“He [the GE scientist] strolled around with his brother-in-law who was a radiologist there. They had just brought in a new CT Scanner from Europe, and he thought it was great. That’s how they got in.”
In Nintendo’s case, he said, before coming out with the Wii, they got customer feedback by putting a 1-800 number at the bottom of their game console.
“Most companies try to hide the service number in the binding of the manual hoping customers won’t find it – because they view it an expense.”
He said by actually publicizing the customer service number Nintendo received around 700,000 calls in a year – and used all that feedback to create the Wii.
Lickety Split improvisation
Just as a clear, stable and shared vision is a key pillar of a blockbuster innovation – lickety split improvisation” is a critical process.
“Blockbuster teams don’t wait till they create the perfect product before launching it in the market,” Lynn said.
When they come out a fantastic innovation they put it out there quickly – and refine as the go along.
The launch and eventual success of Microsoft’s Windows operating system, he said, is a case in point.
He said Microsoft put out the Windows OS in the market before they had got the formula completely right.
“So Windows 1, 2 and 3 were failures. It was the success of Windows 3.1 that finally put Windows OS on most of our computers.”
Microsoft’s strongest suit, he said, is not that they offer the best product in the category (“they don’t”) or even that they’re the first product in the category (“they aren’t”) but that they learn quickly.
Another great example of “lickety stick” improvisation, he said, is the PowerShot stapler, with its forward-action design.
(Customer reviews say the design makes the act of stapling more natural and accurate, by placing the weight of the user over, rather than behind, the staple).
The creators of the PowerShot, Lynn said, didn’t spend an inordinate amount of time refining and perfecting the product.
“In three weeks they had a sample. They took it to the local lumber yard, and set up a table with their own stapler and the Arrow T50 side by side. They gave people a drill chuck for trying the two.”
As a result of this impromptu market research, he said, the PowerShot folk learned 64 out of 65 people preferred their product. “And they also learned ways they could tweak their product to make it better.”
After the initial launch, Lynn said, they put the product through several iterations before they got it just right – but the moot point is they launched and then refined, not vise-versa.
The PowerShot stapler, he said was eventually licensed it to Black & Decker, and in 18 months the latter’s marketshare went from 0 to 18 per cent in this market – because of this product.
Lynn contrasted “lickety-stick improvisation” with the very different Stage-Gate System developed in 1986 by Robert Cooper, professor of Industrial Marketing at McMaster University’s Business School, in Hamilton, Ont.
The Stage-Gate model – which describes how a firm should structure its product development process – is based on 60 case studies on efficient product innovation processes. The case studies originate from the first half of the 1980s when for the North-American industry time-to-market was the competitive challenge in light of the fast growth of Japanese competitors.
While Cooper’s model is used by hundreds of North American companies, it doesn’t impress Lynn.
“After a lot of bigger companies tried the Stage-Gate process for five years they called me,” he said. “That’s because what they found [by using the State-Gate approach] they became really good at the process and really bad at innovation.”
He said while engineers would love Stage-Gate because of its focus on process, this sophisticated system of project phases and milestones, is not used by Blockbuster teams.
“The StageGate system is more like the toll system. The Blockbuster process is more like the EasyPass. You’re just flying down the highway, not looking back.”