peter drucker

Why the Question “Is Your Product a Vitamin or a Painkiller?” is a False Choice

I recently read an article posing the well-known sales question, Is Your Product a Vitamin or a Painkiller? by George Deeb. It’s a good reminder that it’s better to be selling a “painkiller” technology product that relieves acutely-felt, pervasive business problems, rather than a “vitamin” product that offers some lesser, more specialized value.

I agree with Deeb that it’s much harder to build a large, scalable business around vitamin products than painkiller products, but a product-as-painkiller is not the ultimate or best product offering either.

In other words, the question “Is your product a vitamin or a painkiller?” is a false choice – and businesses that rely on painkiller product revenue are at more risk than they might realize.

The issues of trying to sell a vitamin product are described quite well in Deeb’s article. But painkiller products have their own issues. For example, one of the most frequent and frustrating “competitors” to a painkiller product sale is “none of the above”. Much to many a sales manager’s chagrin, prospects often decide that while the business pain is real, alleviating it simply isn’t worth the effort, like Norm in this classic scene from Cheers:

Meanwhile, new enabling technologies march on: painkiller products that once upon a time required a huge capex for on-premise enterprise software, servers and services (CRM, marketing automation, legacy BI) are now offered inexpensively on a SaaS basis (SFDC, Marketo, GoodData). More and more painkiller products are becoming available at lower “vitamin-level” cost and simplicity!

Another issue with painkiller products is they implicitly assume a business status quo. Consider Polaroid in the mid 90’s. Like so many other large companies, Polaroid jumped in with both feet into ERP, the ultimate painkiller technology of its time. Polaroid even won major awards for its SAP implementation. While Polaroid’s ERP no doubt lightened many operational pains by optimizing inventory, purchasing, quality control and such, meanwhile the company was failing miserably with new products and all but ignoring the deterioration of its instant photography market to digital cameras.

I recall reading a Polaroid executive praising the company’s new operational efficiency of its instant photography “core business.” Not long after, in 2001, Polaroid filed for bankruptcy, with most of that “core business” long gone.

Clearly, while reducing business “pain” is important, such efforts are no substitute for the ultimate purpose of a business, as memorably described by Peter Drucker:

There is only one valid definition of a business purpose: to create a customer… Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation.

And for decades, business technology has focused on operational efficiencies instead of serving as new platforms for innovation. Again, quoting Peter Drucker:

For top management, information technology has been a producer of data [for operational tasks]… Business success is based on something totally different: the creation of value and wealth.

This requires risk-taking decisions… on business strategy, on abandoning the old and innovating the new… the balance between the short term and the long term… These decisions are the true top management tasks.

The technology products that will reap the greatest financial rewards will be those that address those “true top management tasks”: innovation that creates new business value and wealth; such as

  • Advanced analytic platforms that reveal all-new insights into markets, products, customers and competitors
  • Gamefication platforms that motivate employees, customers and partners to want to take actions that mutually benefit the organization, themselves and other stakeholders
  • Customer/prospect engagement technologies that personalize and optimize every experience with your organization, whether online or in-person, across all channels (particularly mobile)

Artwork by: BTimony (click to see original)These and other new technologies designed to enable innovation make up a third category of products that go far beyond painkiller or vitamin products.

So what should we call this third product category? Maybe… “steroids”? Nah, don’t think so…

Perhaps “miracle drug”? No…

What about… “Popeye’s Spinach”?!

What do you think?

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Business Managers Can Learn a Lot from Data Scientists

Source: HikingArtist.com (CC)

In a recent thought-provoking TDWI article, David Champagne informed readers of The Rise of Data Science: a discipline of emulating the scientific method when analyzing data, in a conscious and laudable effort to ensure objectivity and avoid poor analytical practices.

As I had just recently blogged on the Texas Sharpshooter Fallacy, a type of flawed analytical logic business intelligence users might fall into, David Champagne’s article caught my attention.

 

From David Champagne’s article:

Back in the “good old days,” data was the stuff generated by scientific experiments. Remember the scientific method? First you ask a question, then you construct a hypothesis, and you design an experiment. You run your experiment, collect and analyze the data, and draw conclusions. Finally, you communicate your results and let other people throw rocks at them.

Nowadays, thanks largely to all of the newer tools and techniques available for handling ever-larger sets of data, we often start with the data, build models around the data, run the models, and see what happens.  This is less like science and more like panning for gold…Perhaps the term “data scientist” reflects a desire to see data analysis return to its scientific roots…

Barry Devlin, in his business-focused commentary on David Champagne’s article, noted the worlds of science and business have rather different goals and visions, which I interpreted as data science might offer limited benefit to business managers.  But perhaps the best practices of data scientists have a lot more in common with those of business managers after all, in light of some commentary I came across on effective business decision-making.  That commentary gave high praise to the manager who utilizes the scientific method in the decision-making process. The author was not a technologist, but rather: Peter Drucker, the father of modern business management.

Revisiting Peter Drucker’s writings on effective decision-making process will show surprising similarities to the best practices of data science, and yield beneficial insights for business managers seeking to make more effective, data-informed decisions.

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