Businesses need to be proactive – Your customers have limited knowledge so lead them, expert says

Listening to customers is a cardinal rule for today’s business executives. But retired MIT Professor John Donovan says they’d be better off leading customers.

"Customers are limited to what they know," said Donovan, chairman of Cambridge Executive Enterprises, a management training and consulting firm. "And when you ask them what they want, they’ll ask you to support what you’re already giving them. … That’s today’s business. It’s not going to keep your company going tomorrow."

Robert Weisman, Boston Globe

San Francisco Chronicle

http://sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/02/03/BUGJO4N6OR1.DTL&type=business

Positioning a company for the future means grasping how technology and business trends are reshuffling its industry, Donovan says. To do that, executives must understand not only the changing needs of their customers, but also those of their customers’ customers. Then they must figure out how they can meet those needs.

The most promising place to find resources is in-house. Donovan’s team advises clients, from CEOs of small companies to Navy admirals, to take inventory of their portfolios, and identify underemployed or "lazy" assets that can be tapped to send their organizations in new directions. This is not the responsibility of customers, Donovan stresses to his clients: "You’re in charge of creating the future."

Donovan, 61, a Lynn, Mass., native and veteran technology troubleshooter, was an early contributor to the concepts behind Unix, the multi-user computer operating system. He spent three decades teaching electrical engineering and management at MIT. He has also founded several companies, including Cambridge Technology Group and Cambridge Technology Partners (subsequently sold to Novell Inc.), among the first firms to evangelize Unix. In recent years, he has run Cambridge Executive Enterprises and an affiliate, CellExchange, which train business executives and other leaders on applying new strategies.

Redeploying lazy assets is one favored strategy. Companies hunting for such assets should look not only at their product rosters but also at their customer lists, software, databases, excess storage capacity, and, especially, their people, expertise, and brands. "There are lazy assets in place in all organizations," Donovan said. "Sometimes they don’t know about them. Sometimes they’re not taking advantage of them."

As an example, he cites the General Motors Corp. locomotive division, which had been struggling in a mature market. By utilizing data from its locomotive service business, which repaired cargo trains, it was able to start a new business insuring railroad customers, such as grain and personal computer distributors, against shipping delays.

Similarly, the Jacksonville Electric Authority, a Florida electric and water utility, used the approach successfully to generate new revenue by bottling and selling its tap water, trumpeting the strict environmental tests it had met. It also piggybacked on its customer database to market a service notifying absentee property owners by e-mail of power outages at homes or businesses.

Billing Concepts Inc., a company that reconciled bills for businesses that housed pay phones, was able to redeploy its expertise to offer its service to the hosts of Wi-Fi wireless hotspots — a much faster-growing business.

"You look at the growth curve of the Wi-Fi build-out, and that could become significant for us," said Donald Philbin Jr., chief operating officer for Billing Concepts in San Antonio. "If you don’t change in this world, everything’s going to change around you."

Most companies will focus intensely on "right-handed" activities, improving their existing business by extending their product lines and cutting costs, Donovan said. But to claim the future, he said, they need to also embrace "left-handed" thinking that enables them to capitalize on emerging trends and disruptive technologies.

Donovan, a lifelong New Englander, can rattle off a list of the region’s once-dominant companies that failed to do so.

"Digital Equipment would not have gone down if they went into Unix," he maintained. "But their leaders said, ‘Unix is snake oil, it’s not industrial strength.’ Polaroid could have gone into digital photography. But they said, ‘If I can’t touch it, it can’t be real film.’ … You have to be both right- handed and left-handed. You have to survive today, and you have to create tomorrow."