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Market Requirements = Garbage.

December 27th, 2007 @ 8:44 am

25 Comments

Categories: Blogroll, General

Tags: Operating System, Microsoft Corp., Archetype, Marketing Research, Marketing, Geoffrey James

Marketing Requirements FailingLast friday, I blogged about a marketing decision made at Microsoft about a decade ago. You may have thought that screed was a bit off-topic for this blog, but there was method in my madness. I wanted to illustrate an important point about the proper role of Marketing inside a B2B organization.

Over the past year, I’ve tried to make the point that Marketing’s sole purpose is to generate leads and that every activity that doesn’t involve generating leads simply adds to the cost of sales without any corresponding benefit. Whenever I’ve made this point, sundry Marketing folk have responded with a list of supposedly useful tasks that Marketing is supposed to perform, like “generating market requirements” and “defining new product features.”

While there may be some Marketing groups somewhere that can actually perform such functions, it’s my observation that most of the time Marketing is the least qualified to make product design decisions. The reason is simple. Marketing folk are neither close enough to the customer to understand what they really want, nor are they close enough to the technical aspects of a product to understand either what’s feasible or what’s wise to implement.

When it comes to understanding what customers want, companies should look to the Sales team. They’re the ones that hear the straight skinny every day. They know where customers are feeling pain. Conversely, when it comes to understanding what will actually work, the best resource is the Engineering team. They understand the technical issues and know what will (and won’t) create big problems later down the line.

Needless to say, there’s a natural conflict between these two perspectives, which is why Engineering teams and Sales teams frequently don’t see eye-to-eye. However, there are many ways to lessen that conflict, like getting the engineers in the same room with customers to hash things out. (Engineers love this kind of interaction, by the way.)

By contrast, because Marketing almost always has an imperfect understanding (at best) of both the customer’s perspective and the technical perspective, the kind of “product requirements” that they create are almost always off-base or confused. A stock figure in Engineering humor (like Dilbert) is the clueless Marketing geek who thinks he’s a great technologist. The archetype resonates because, unfortunately, it’s often true.

In the case of Microsoft, the decision to make the operating system permeable to outside applications was a case where I strongly suspect that a decision was made for Marketing reasons. That decision, while profitable in the short term for Microsoft, has created repercussions that are costing businesses billions of dollars every year.

Because I know, due to my background, how operating system programmers think, I have to believe that the operating system programmers at Microsoft warned Microsoft’s management that the company was creating a Frankenstein — and that those warnings were ignored. Thus the Microsoft example simply becomes a perfect example of the meddling of Marketing in an area of business (product design) where they don’t belong.

Here’s the nub: Marketing in a B2B firm has only one function, which is lead generation. Anything that lies outside that function (like defining new products) is either a waste of time or (worse) a recipe for disaster.

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  •  
    1

    ingoodcompany

    12/28/07 | Report as spam

    Market Requirements = Garbage

    Both you posts are interesting; but the underlying assumption seems to be that a business is obligated to do purely what falls within a narrowly defined concept of ?the best interest of the customer? at a given moment in time.

    Hackers were breaking in to systems before the Microsoft decision, albeit primarily to steal information as opposed to planting destructive programs. Any system that had a phone line into it was at least accessible to hackers, if not vulnerable. IS/IT folks made decisions to leap into the ?permeable O/S? environment fully aware of the risks associated with it. Of course, the mass market of non-geek computing consumers had no real idea of what the new vulnerabilities would bring, nor the risks/costs associated with system defense.

    But another way of viewing the Microsoft decision to blur the distinction between applications and the operating system is that it spawned new subsets of the computing industry, created more new companies and jobs than you can shake a stick at, generated tremendous personal wealth over time, and created levels of computing freedom that require system proficiencies merely a hair?s breadth above complete ignorance. It is primarily these consumer markets that have driven everything from a thumbnail-size gigabyte memory card for a phone to an automotive dashboard accessory that can guide a driver coast to coast.

    Realistically, its doubtful that the marketing decision for a ?permeable? O/S could have been made strictly by Microsoft?s marketing group, but could certainly have been well sold internally by the marketing group. The obligation of the software engineering team (programming) would be to point up both the benefits and the pitfalls of a new product proposal. The obligation of Marketing would be to know and grow the market with a focus on profitable growth for the company. There?s no doubt of Microsoft?s success in this case. Microsoft got the first big bite out of the apple (pun intended), but there was plenty left for myriad other businesses to nibble on.

    B2B or not, new product development is less likely to be successful when done in a vacuum by any one functional unit in an organization like Microsoft. It should be a cross functional team effort, and a lead contributor to that effort will be that of marketing, including market intelligence, segment analysis and strategy.

  •  
    2

    Geoffrey James, Sales Machine

    12/29/07 | Report as spam

    Marketing Bulls**t

    Both you posts are interesting; but the underlying assumption seems to be that a business is obligated to do purely what falls within a narrowly defined concept of ?the best interest of the customer? at a given moment in time.

    Not really. I'm saying that companies should be held to account for decisions that actively endanger customers.

    Hackers were breaking in to systems before the Microsoft decision, albeit primarily to steal information as opposed to planting destructive programs. Any system that had a phone line into it was at least accessible to hackers, if not vulnerable.

    True, but the problem was manageable. Most hacker breakins were inside jobs (where the hacker already had a password) or guessing games (where some pinhead used the "SECRET" as the password.) But even a successful breakin did not result in viruses being spread to other machines.

    IS/IT folks made decisions to leap into the ?permeable O/S? environment fully aware of the risks associated with it. Of course, the mass market of non-geek computing consumers had no real idea of what the new vulnerabilities would bring, nor the risks/costs associated with system defense.

    In point of fact, IS/IT folk fought against the introduction of the PC into business environments. A great deal of their concern was connected with system security but they were overridden by their non-technical management and by widespread purchasing habits that allowed line managers to purchase PCs without IT approval.

    But another way of viewing the Microsoft decision to blur the distinction between applications and the operating system is that it spawned new subsets of the computing industry, created more new companies and jobs than you can shake a stick at, generated tremendous personal wealth over time, and created levels of computing freedom that require system proficiencies merely a hair?s breadth above complete ignorance. It is primarily these consumer markets that have driven everything from a thumbnail-size gigabyte memory card for a phone to an automotive dashboard accessory that can guide a driver coast to coast.

    You're expressing a logical fallacy here -- confusing correlation with causation. All of this might still have happened without a permeable operating system. Or something even better could have happened. Or the exact same thing might have happened. The only causal connection between market growth in the software segment and permeable operating system is the growth of virus protection software and other after-the-fact patches.

    Realistically, its doubtful that the marketing decision for a ?permeable? O/S could have been made strictly by Microsoft?s marketing group, but could certainly have been well sold internally by the marketing group. The obligation of the software engineering team (programming) would be to point up both the benefits and the pitfalls of a new product proposal. The obligation of Marketing would be to know and grow the market with a focus on profitable growth for the company. There?s no doubt of Microsoft?s success in this case.

    Once again, you're confusing correlation with causality. It's not at all clear that having a secure operating system would have depressed Microsoft's overall revenues. In fact, it might have accelerated Microsoft penetration into data center computing. Certainly some of growth of Linux is motivated by concerns about the security holes in Microsoft's operating system. The truth is we don't know how things would have played out -- other than that we would have a computing infrastructure that was more resistant to viruses and hackers.

    Microsoft got the first big bite out of the apple (pun intended), but there was plenty left for myriad other businesses to nibble on.

    Tell that to Netscape.

    B2B or not, new product development is less likely to be successful when done in a vacuum by any one functional unit in an organization like Microsoft. It should be a cross functional team effort, and a lead contributor to that effort will be that of marketing, including market intelligence, segment analysis and strategy.

    Sorry, but most Marketing groups do a terrible job at all of these things. These are the kind of unmeasurable activities that waste money. Marketing should be responsible for one thing -- lead generation -- and only through activities where the impact can be measured. Marketing is the only organization inside corporations that's not subject to quantitative measurement and most groups have turned into bulls**t factories. "Segment analysis." WTF is that? Just more bulls**t... unless you can prove that the mental activity resulted in more sales.

  •  
    3

    Marketing VP

    01/02/08 | Report as spam

    RE: Market Requirements Garbage

    "Sorry, but most Marketing groups do a terrible job at all of these things. These are the kind of unmeasurable activities that waste money. Marketing should be responsible for one thing -- lead generation -- and only through activities where the impact can be measured. Marketing is the only organization inside corporations that's not subject to quantitative measurement and most groups have turned into bulls**t factories. "Segment analysis." WTF is that? Just more bulls**t... unless you can prove that the mental activity resulted in more sales."

    Oh dear, oh dear...

    Although I do find it amusing to hear a sales Pro accuse any other function of "bulls**t".

    That said, I couldn't agree more with the two key comments made by the author. Firstly, that no major investment should be made within any business without a direct link to revenues and / or profitability (as appropriate) and yes, of course that includes Marketing! Secondly, multi-functional teams close to both the customer and the process/products should indeed contribute to a company's success.

    I might suggest, however a few things for the author to consider:

    1) Think about the issues of interaction between sales teams and the rest of the business and be honest with yourself in reflecting on why sales teams seldom offer input proactively that can actually be used long-term ("reduce the price as our competitors are cheaper" does not support long term profitability!)

    2) When sales Pros make a call or knock on a door and the potential client has heard of the company, that's called branding and it makes the sales job much easier! I know; I've worked on both sides of the sales and marketing fence. And guess what, it doesn't happen by accident! In high-end technology sales, undoubtedly relationship sales and marketing is key but B2B represents so much more; from stationery to water coolers and cars to phones which require a different sales and marketing approach.

    3) Try an MBA or working in a different industry; it broadens the mind somewhat from believing that the sole driving force behind a successful business is this month's sales numbers (although these are undeniably important).

    Lastly, I sense from the author's tone that aside from believing Marketing as a discipline is akin to selling children on the internet, we agree that poorly planned and executed Marketing is just worthless. Then again, is poor sales Pro or Financial Controller performance any different?

  •  
    4

    ingoodcompany

    01/04/08 | Report as spam

    Your Local Microsoft Salesman

    "When it comes to understanding what customers want, companies should look to the Sales team. They?re the ones that hear the straight skinny every day."

    The sales team has its own set of motivations. Though they may be closest to the customer up to the sale, that's not always the case after the sale. Quite a few customer assessment survey and intelligence techniques of necessity go directly to the customer, bypassing the filter of sales input and opinions. The sales person is driven to sell, often legitimately goal and performance management driven, but will even sell below cost to make the sale. Few sales folk are willing to forego quota attainment for the sake of margin. Getting regular and routine customer input through sales is warranted and important. But leaving it at that is dangerous. Sales folk tend to want one thing: sales. There are a raft of other issues in an organization like Microsoft. And for the vast majority of Microsoft sales, I wonder how many of us have ever actually seen a Microsoft Salesman? Have you?

  •  
    5

    Geoffrey James, Sales Machine

    01/07/08 | Report as spam

    Microsoft

    Microsoft has several thousand salespeople who work with the company's channel partners, OEMs and ISVs.

    Do you understand the basics of the software business?

  •  
    6

    ingoodcompany

    01/04/08 | Report as spam

    Accountability

    "I'm saying that companies should be held to account for decisions that actively endanger customers."

    To be sure, the term "Tobacco Settlement" should have some meaning for you here. There are mechanisms for creating accountability both within markets and outside of them. Where consumers/businesses can demonstrate that they have been damaged in some way, they can stop using the product and/or seek legal recourse. Interestingly, the arguments relative to to Microsoft's ostensible abuse of monopoly power are well documented and established in law. The courts did not decide that Microsoft was a legitimate monopoly, and therefore the courts mandated no body to regulate and/or monitor the empire, leaving it up to the powers inherent in competitive markets.

  •  
    7

    ingoodcompany

    01/04/08 | Report as spam

    Mischaracterization

    "In point of fact, IS/IT folk fought against the introduction of the PC into business environments. A great deal of their concern was connected with system security but they were overridden by their non-technical management and by widespread purchasing habits that allowed line managers to purchase PCs without IT approval."

    I think you've painted with a broad brush here, and mischaracterized the concerns that may have been expressed at that time. My experience during that period of time was that although IS/IT was entrenched in the IBM OS/2 & TSO environment, it was also in the lead researching and testing the developing PC environment, and in fact drove the change to the PC/Network environment from the top down. Granted, they were not "bleeding edge" innovators, were cautious and prudent regarding the shift. But the IS/IT group with which I was associated at the time, and the industry professional groups throughout the region, took a measured and highly professional approach to the market shift away from centralized systems.

  •  
    8

    ingoodcompany

    01/04/08 | Report as spam

    Segment Analysis

    "Segment analysis." WTF is that? Just more bulls**t... unless you can prove that the mental activity resulted in more sales."

    I'm sure you had tongue-in-cheek writing that. But for a sample of legit "Segment Analysis" see:

    http://www.hotel-online.com/News/PressReleases2000_1st/Jan00_Manhattan99_EY.html#MARKET

    Ernst & Young is a pretty reputable firm.

  •  
    9

    ingoodcompany

    01/04/08 | Report as spam

    Logical Fallacy?

    "You're expressing a logical fallacy here -- confusing correlation with causation."

    All due respect, that dog won't hunt. There was no attempt on my part to opine as to what might have happened under other Microsoft choice scenarios. Its just a statement of fact that industries and markets sprung from the decision that Microsoft did make. If problem-solving is a way to make money, then by default, so is creating problems. Microsoft never claimed to have an altruistic business model designed to bring problem-free computing to the masses. We have all come to recognize it to be the exact opposite...one in which it deliberately markets what amounts to beta versions and it blesses the buyer/user with the task of doing the field testing and reporting the bugs. While Microsoft wasn't the first company to think of that, they certainly elevated it to a artform. Many like you are bitter over Microsoft's success in a "right enough" coding environment, including vulnerabilities. But you can't begrudge Microsoft the fact that they won the market, fought to keep it, and they've got the courtroom battle scars to prove it. That's not prognostication. Its just a fact -- one that's apparently caught your attention of late.

  •  
    10

    ingoodcompany

    01/04/08 | Report as spam

    "More Manageable" -- Circular Logic

    "True, but the problem was manageable. Most hacker breakins were inside jobs (where the hacker already had a password) or guessing games (where some pinhead used the "SECRET" as the password.) But even a successful breakin did not result in viruses being spread to other machines."

    Ummm---"logical fallacy", maybe? Of course the problem was more manageable then. There were no PCs, no "permeable O/S", the virus was a new phenomenon, and access to the necessary computing power was limited to folks 'on the inside' since almost no one outside of mainframe environments had anything like a PC, and it was mostly elite white-jacketed programmers who could master the complexities of code interpretation and hacking. Your argument is circling in on itself.

  •  
    11

    arlinwall

    01/04/08 | Report as spam

    Garbage In, Garbage Out

    Marketing is really a catch-all word/phrase for; "using market knowledge to predict what the market will want now and into the future." These predictions should be based on solid market analysis of relevant data. Marketing is not for the faint of heart, nor the weak of mind. [Marketing] is less understood by hard charging Sales people or Tech geeks than by Philosophers and Theologians. Meaning that the thought behind marketing is intuitive in nature. When it works (only through objective wisdom through emperical and theoretical application, by those qualified to do such) it's the best thing since the wheel, when it doesn't it's blamed for all failures. Marketing is the idea, the implementation is the representation. Note: If none of this makes since to you, you're probably not marketing material

  •  
    12

    Geoffrey James, Sales Machine

    01/07/08 | Report as spam

    The Truth About Marketing

    This line is brilliant:

    [Marketing] is less understood by hard charging Sales people or Tech geeks than by Philosophers and Theologians.

    The truth revealed.

  •  
    13

    Geoffrey James, Sales Machine

    01/08/08 | Report as spam

    Apologies

    Some people complained about my spelling out "BS" with asterisks. Apparently it was a violation of the terms of service. My apologies.

    I have to admit, though, that it's a bit odd that people would object, considering that profanity is the lingua franca of nearly every business meeting I've ever attended.

  •  
    14

    Geoffrey James, Sales Machine

    12/29/07 | Report as spam

    And not BS

    To clarify, the things that some Marketing groups are BS, not original comment from "ingoodcompany," which was well reasoned and thoughtful. I was afraid someone might think that I was calling the comment BS, which was not the case.

  •  
    15

    ingoodcompany

    01/04/08 | Report as spam

    Marketing BS

    Thanks for the clarification. But I knew your title referred to your own post, and not mine.

  •  
    16

    Roberth1o

    12/28/07 | Report as spam

    RE: Market Requirements = Garbage.

    Geoffry nails this on the head. Microsoft suffers from software code bloat, and it is unlikely it will be able to shed the extraneous dependent code without crashing a number of 3rd party applications which depend on that code.

  •  
    17

    arlinwall

    01/04/08 | Report as spam

    MS-DOS

    Microsoft is still working from the foundation of MS-DOS. They were supposed to do a complete overhaul for Vista. But why do that when your dope is still selling?

  •  
    18

    chriskoerber

    12/28/07 | Report as spam

    RE: Market Requirements = Garbage.

    I agree with Mr. James - feedback from Sales will be the most accurate.

    Of course, this collides with Marketing's inner belief that the Sales people are a bunch of hacks.

    "If we had enough money for Marketing, the customers would call in and order" and therefore, no need for Sales...

  •  
    19

    jackiebarnett

    01/02/08 | Report as spam

    RE: Market Requirements = Garbage.

    Honestly, I think this sales-only mindset shows an incredible lack of partnership and understanding of what marketing truly is by sales staff, who are terrific sales people, but who do not have the ability to fulfill the gamut of marketing, which is a strategic, complex function which defines performance and tactics for achieving the business plan - including product design, pricing decisions, integrated communications to all channels and through all media, and leading and managing distribution and sales strategies and performance. A smart organization will understand and utilize marketing for all it can be, and get marketing people who can do this. http://findingtheupside.blogspot.com/2007/07/what-is-marketing.html

  •  
    20

    jslocum1@...

    01/02/08 | Report as spam

    RE: Market Requirements = Garbage.

    Indicating marketing is essentially worthless shows Mr. James lack of knowledge of what marketing's role in a company is/should be. Marketing is more than promotion activity. The function includes competitive positioning and priority setting of activities across the company to ensure the company meets the promise being set forth by the company to the market.

    Sales is without question a key function in a company and one that has significant knowledge of customer desires. At the same time, sales people are commission driven and will try to sell to almost anybody, instead of focusing on the market segment the product/service is intended to serve. This leads to the sales force looking for the company to develop product capabilities, which will be useful to only a few potential customers at best and often cost the company more to implement and support than the revenue collected.

    Truth is ... the most successful companies are those that have both quality marketing and sales functions.

  •  
    21

    wemmers

    01/02/08 | Report as spam

    RE: Market Requirements = Garbage.

    Over 28 years of marketing and sales experience with clients from the Fortune 50 to startups has taught me that marketing can have a much larger role in a company's success ---if supported by the CEO. Without this support, the sales department takes over.

  •  
    22

    twanless@...

    01/02/08 | Report as spam

    RE: Market Requirements = Garbage.

    Mr James:
    Your premise seems to be let's eliminate marketing and let the sales people handle it all. Obviously, you're trying to provoke by being more than a little outlandish.

    Perhaps this premise holds true in mass production product sales situations, but most B2B situations aren't of that type. Instead, they're far more targeted and often involve some expertise and knowledge. So, if they're to avoid contrasting messages to the customer, Sales and Marketing better work together.

    Marketing has to figure out generally what the target customers' biggest problems are, and sales has to go in and explain how the product or service will fix that problem and provide value to the customer.
    That means, of course, the sales people have to help prospects identify their individual problems. But too many sales people just go in and browbeat the prospect with the features of their "solution", without ever listening to the customer in order to identify what the problem is.

    That's where marketing comes in. In an extremely targeted world, they perform research that identifies possible problems and pass that knowledge on to the sales people.

    Without each other, no one performs very well.
    Tony Wanless

  •  
    23

    arlinwall

    01/04/08 | Report as spam

    RE: Market Requirements = Garbage.

    The scenario you are describing is an old business paradigm, where a company has operational silos. In an integrated company, Sales, Marketing and Engineering are well connected with OPEN communication. Marketing decisions are informed by Sales and vetted at the Engineering level. In this better scenario the results should be quantifiably better. Every department is involved, doing it's share to increase bottom line, as well as sustainable company growth.

  •  
    24

    ingoodcompany

    01/08/08 | Report as spam

    Vulgarities, Expletives

    "...profanity is the lingua franca of nearly every business meeting I've ever attended."

    When I became AVP of the marketing & sales team at a company earlier in my career, at times, I was taken aback at their generous use of profanity. It was not a company norm. It was primarily the sales team that engaged in that type of unrefined banter, but since the Marketing VP did as well, it soon impacted much of the team. Though a number of these folk had graduated from excellent schools, including Princeton and CMU, it was shocking to me to see inability of sales staff to express themselves to their own satisfaction without the use of vulgarities, expletives. Perhaps its an occupational affliction. Of course, perhaps it was excessive exposure to golf that caused it, as opposed to being a direct result of the of selling itself.

  •  
    25

    Geoffrey James, Sales Machine

    01/10/08 | Report as spam

    Golf.

    ROFL. Love it. Just love it.

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