On Oct. 5, capitalists and consumers alike took time out from their busy lives to mourn the passing of Steven Paul Jobs. “It’s like the day Princess Diana died,” one Apple fan told CBC.
Pretty much everybody knows Jobs took a maker of niche computers and transformed it into a global consumer electronics powerhouse. Apple even recently managed to give Exxon a real run for its money as the most valuable business on the planet. But the wealth that Jobs created isn’t what made him an industry legend. It is how he created it that set him apart.
Demand for Exxon oil exists despite the fact that using it makes many consumers feel guilty. Apple products are needed by nobody. They sell like hotcakes because Jobs manufactured stuff people think they can’t live without. The ability to produce “must have” products is the subject of Demand: Creating What People Love Before They Know They Want It (Crown Business) by Adrian Slywotzky—a partner at global management consulting firm Oliver Wyman—and co-writer Karl Weber.
When Jobs resigned from the top post at Apple in August, Slywotzky blogged that he was seen as an inspired savant who took big risks on personal hunches. But that’s “way off the mark.” Though Apple appears to pull exquisite new products fully formed from the minds of a few geniuses in turtlenecks, that’s what the company’s “magicians want us to see.” What we don’t see, he added, is the number of prototypes that Apple throws out during product development or the months of negotiating with part suppliers and music companies. According to Slywotzky, trying to replicate Apple’s success without knowing the backstory to its devices would be like designing a sports car by examining a Ferrari with no engine. You can see the beauty, but you are “going nowhere.”
Slywotzky’s book takes readers under the hood of companies that fire on all pistons, at least as far as exciting consumers is concerned. Unfortunately, like Jim Collins’s Good to Great, the book is billed as a short-cut-to-business-greatness guide. Good to Great is one of the bestselling business tomes of all time, but even it doesn’t really deliver the promised magical management framework that allows “almost any organization” to “substantially improve its stature and performance.” In Demand, Slywotzky sets expectations equally high, offering six principles “for creating what people can’t resist and competitors can’t copy.”
Business books also have to stimulate demand, which is why they tend to ignore the fact that plenty of people think entrepreneurial greatness is genetic, not something that can be reverse-engineered. As The Economist pointed out in 2006, when you look at the cream of capitalism’s self-made crop, you are hard-pressed to find anyone who has “done more than deliver a speech at a business school.”
Nevertheless, if you are simply looking for a decent education in know-how, rather than a short cut to mega success, then Slywotzky’s book, like Good to Great, is worth the required investment.
Slywotzky does eventually admit (in the book’s coda) that “there is no formula for demand any more than there is a formula for human creativity.” But if there’s no magic bullet for making a killer product, it’s at least possible to study how others have done so.
While delivering his list of product principles, which range from the development of a “hassle map” of consumer frustration to the need for a steep rate of improvement after a product launch to provide “trajectory,” Slywotzky serves up a series of relatively unknown entrepreneurial trials and tribulations that show sweat and tears are more important than bloodlines when it comes to blowing consumers away.
Ambitious ventures like Netflix and Zipcar may never become the most valuable enterprise on the planet. But they both introduced products that eventually scared the heck out of major players in their respective industries. And yet, as Slywotzky points out, Netflix had a real struggle gaining critical mass outside the Bay Area, while Zipcar got off the ground like a rocket but had a hard time reaching escape velocity. “Time and time again,” Slywotzky writes, “it had stalled and fallen back to earth, grounded by the powerful gravitational force that causes more than 80% of new businesses and new product launches to sputter and fail.”
The key to opening “spigots of demand” in both these cases involved relatively simple tweaks to their respective offerings.
Netflix eventually realized it was doing better in the region where its distribution centre was housed, because that was where its movies-by-mail business was a next-day service. Decentralized distribution, and a more widely available next-day service, triggered more demand. Zipcar, ironically, discovered that even people who forgo car ownership don’t like to walk very far when they need to rent one, so it adjusted resources to increase its density in key markets.
The key message in Slywotzky’s book is the need to respect customer feedback, as does British food chain Pret A Manger, which has revised its carrot cake recipe at least 50 times. Pret managers review suggestions for improving food and service with staff before opening every day, and then they act upon what they learn. After all, any business that uses customer data strictly as a tool to develop marketing messages, instead of mining it to discover where the demand engine is misfiring, will never bridge the gap between offering what people really want and what the market will settle for until something more magnetic comes along.
Most entrepreneurs who leave their mark on the world have a certain amount of natural vision. You can’t teach that. But anyone can have a eureka moment that leads to a successful business. And you can educate people on what it takes to create sustainable demand, which is why books like Slywotzky’s—not to mention business schools—aren’t a waste of time.