CEO Advisor Newsletter March 2015
Top Reasons High-Tech Companies Fail
When you evaluate the management practices of hundreds of high tech companies, here are the primary reasons they fail. Evaluate your own management decisions and practices and seek help from a business advisor to address yourspecific needs.
1. Lack of Market Focus
Emerging high-tech companies often do anything possible to generate revenue and in the process try to be all things to all people. Worried about losing business they avoid segmenting the market and refuse to focus on one to three key vertical markets. As a result, the company is unable to effectively serve any market segments effectively and management is suddenly swamped with support problems and competitors.
2. Undifferentiated Products
Most high-tech products and services that fail do so because of a lack of differentiation. Successful companies differentiate their product from all other products on the market. Differentiation is possible on the bases of five fundamental factors: function, time utility, problem solved, price and positioning. These five elements are critical to uniquely positioning your products and services to achieve success and profits.
3. Poor Market Research
Many companies routinely perform the wrong type of market research. Statistical surveys of customers alone do not provide the qualitative information that is needed. Because your target audience often relies as much on perceptions as on facts, qualitative research intended to identify existing needs has equal or greater value in assessing, planning and executing a company's marketing strategy.
4. Excessive Product Improvement
High-tech products and services are generally used over an extended period of time, are integrated with complementary products and impose learning costs on customers. Customers require time to implement and recover their investment in high-tech products. The rapid introduction of new and improved versions can make a customer regret a previous purchase, delay all new purchases, and agonize over similar purchases in the future. Additionally, the time and costs related to excessive product development can delay product launches and delay sales opportunities and revenues.
5. Incomplete Products
Customers view products very differently than the technology companies that create or supply them. Technology companies tend to try to sell products on the basis of price, special features and technical specifications. These technical factors are often favored by the engineers who typically run high-tech companies. The problem is that most customers consider factors such as product support and company reputation to be more important. So the feature rich products created by techies are seen as incomplete or complicated in the minds of customers. Rather than competing on features alone, a company should focus on the "intangible" factors that are particularly attractive to most customers.
6. Failure to Establish the Right Competitive Barriers
Traditional barriers to competition are of little value in high-tech. Patents can be effective but are very expensive, divulge trade secrets and take years to come to fruition. Conventional techniques are mostly designed to prevent market entry and tend not to work in technology-based businesses. The most effective competitive barriers in high-tech are the perceptions held by customers and prospects of product differentiation and first to market with a specialization in a market segment.
7. Using Price Alone to Drive Market Transformation
It is easy to misinterpret the role price plays in the market. And it is a mistake to believe that a high-tech product or service would be widely used and purchased if its cost was low enough. Price is a function of value and utility, and products and services should be positioned and marketed accordingly.
8. Improper Marketing
Marketing is both an art and a science. Positioning, pricing, sales strategy, target vertical markets and other factors contribute to the success or failure of your products and services and the corresponding sales. A well-crafted marketing plan is critical to success. Improper marketing or lack of marketing can be a product killer or cripple your company as a whole.
9. Sales Mismanagement
There's more to sales management than most companies realize. Specific skills are required to effectively manage each type of sales channel and those skills must be developed internally starting with an effective direct sales force. Unique management challenges exist for each primary type of sales channel: direct selling, online sales, dealers, manufactures "reps" or agents, OEMs, alliance partners and value-added resellers (VARs). Seek the needed expertise to assist you in optimizing your sales strategy as a critical factor in your success.
10. Misinterpretation of the Technology Adoption Lifecycle Model
There are two primary versions of the technology adoption lifecycle model. The original version describes the market acceptance of new products in terms of Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. The process of adoption over time is illustrated as a classic normal distribution or "bell curve".
The second version is an adaptation of the original that includes a gap in the bell curve, between Early Adopters and Early Majority. This essentially splits the adoption process into three distinct phases, an Early Market and a Mainstream Market, separated by a period of time called the Valley of Death.
Because both technology adoption models are expressed in terms of a standard bell curve, it means statistically, a random sample of any given market or population must contain: 2.5% Innovators, 13.5% Early Adopters, 34% Early Majority, 34% Late Majority, and 16.0% Laggards. So no matter what industry you tend to be in, there will always be a sequence of adoption by different types of buyers. To further evaluate your management decisions, grow your business to the next level and increase your success, sales, margins, profits and value of your company, contact Mark Hartsell, MBA, CEO of CEO Advisor, Inc. at (949) 629-2520, by email at mhartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
KPMG Study: CEOs to Step Up Customer Focus
- In the KPMG study of 400 U.S. based chief executives the CEOs were asked to rank their top organizational priorities. "Interacting more with clients and customers" was identified as top priority, followed by "promoting and advancing their brand," and "fostering innovation."
- In this era of digitally savvy customers and clients, the idea of being more customer-centric has taken on a new meaning. Today's consumer is more informed than ever as a result of the Internet.
- Thus, they have higher expectations for the entire customer experience including product features and performance as well as post-sales service and support. Companies will need to work harder than ever to make the customer feel special.
- Nineteen percent of the CEOs surveyed said they personally plan to spend significantly more face time with customers, and 44 percent have charged their senior leadership to invest more time with customers. Furthermore, 55 percent said they intend to train staff earlier so they will be better-equipped to interact more with clients and customers.
- Concerns About Long-Term Relevancy
- Disruptive and constantly evolving technologies and changing customer expectations continue to challenge chief executives across a range of industries and sectors. A key KPMG study revealed that 72 percent of U.S. CEOs are concerned about whether their products and services will be relevant three years from now. In addition, 90 percent expressed concern about their competitors' ability to take business away from them.
- "New technologies are changing the way all companies go to market," Alton Adams of KPMG added. "To sustain and increase relevancy of their company's product and services, CEOs need to shepherd the adoption of technologies to better understand customer needs (data and analytics) and the implementation of technologies (digital and mobile) to meet those needs."
- Source: KPMG LLP
- CEO Advisor, Inc. specializes in keeping companies relevant and driving sales and profits during constantly changing competitive environments. Call Mark Hartsell, MBA, CEO today for a no cost, no obligation discussion on how to increase your sales, margins, profits and the value of your company at (949) 629-2520, by email at MHartsell@CEOAdvisor.com, or visit us at www.CEOAdvisor.com for more information.