Raising Buyer Performance

For the last decade I have focused most of my professional life on Network Based Learning, where web-based technologies are used to facilitate problem-solving. The technologies available for this purpose are enticing. There is an ongoing temptation to enhance the performance of web-based learning products far beyond what the buyer values.

Several potential competitors have disappeared as they have invested heavily in gee-whiz technology that has clearly increased the potential performance of their product, but in ways that have little or no impact on the buyers’ performance. Just as we tend to focus on our own internal costs, there is a tendency to focus on our own performance. Porter pushes us, instead, to seek strategic advantage by focusing on our buyers’ performance.

Raising buyer performance will depend on understanding what is desirable performance from the buyer’s viewpoint… For industrial, commercial and institutional buyers… the needs of the buyer’s buyer must be understood, requiring the same analysis as the analysis of buyer value… Raising performance of industrial, commercial, or institutional buyers can also be based on helping them meet their noneconomic goals such as status, image, or prestige… For products sold to consumers, raising performance will be a function of better satisfying needs.

From its earliest days Intel has tended to define performance in terms of speed and power. But in recent years the company has begun to make what insiders call a sharp “right hand turn.”

In 2004 Intel focused on a new chip whose principal feature is to extend the range of wireless connections. According to the New York Times Paul S. Otellini, President and COO realized, and persuaded the company, that “producing a chip that could process data at, say, 3.6 megahertz rather than 3.4, was not nearly as important as making chips with built-in WiFi, thereby saving consumers from having to add hardware to the PC’s…Through most of Intel’s history, every new product followed a simple pattern: the engineers figured out what was possible and then told the marketing department what to sell. The company understood the importance of consumer focus groups, and employed ethnographers to study how people use computers, but their influence was minimal before Mr. Otellini took charge of the chip-making division. ‘We turned the process on its head,’ he said.”

Intel is beginning to redefine performance as a marketing issue rather than an engineering issue. Performance is being defined by buyers and in the process Intel is extending its strategic advantage.

Seven weeks after leaving Egypt the descendents of Jacob arrive at Mt. Sinai. Moses works to prepare the whole people to be meet God. We read:

On the morning of the third day there was thunder and lightning, as well as a thick cloud on the mountain, and a blast of a trumpet so loud that all the people who were in the camp trembled. Moses brought the people out of camp to meet God. They took their stand at the foot of the mountain. Now Mount Sinai was wrapped in smoke, because the Lord had descended upon it in fire; he smoke went up like the smoke a of a kiln, while the whole mountain shook violently. As the blast of the trumpet grew louder and louder, Moses would speak and God would answer him in thunder. When the Lord summoned Moses to the top of the mountain, and Moses went up. Then the Lord said to Moses, “Go down and warn the people not to break through to the Lord to look; otherwise many of them will perish.” (Exodus 19:16-21)

The Lord need not have worried. According to tradition by the time the second commandment was announced the people were pleading to leave and asking Moses to serve as their intermediary. “When all the people witnessed the thunder and lightning, the sound of the trumpet and the mountain smoking, they were afraid and trembled and stood at a distance, and said to Moses, ‘You speak to us, and we will listen; but do not let God speak to us, or we will die.” (Exodus 20: 18-19)

The target market was given the chance for direct access to full value and enormous power. Clearly God and Moses anticipated the market would benefit from and appreciate the high performance opportunity. But no, the market was intimidated. The market did not know what to do with the full power made available to it. The market preferred to have the power filtered through a kind of middleware. God and Moses adapted their product to reflect the kind of performance the buyers valued and were prepared to engage.

The old saying, “the buyer is always right,” is misleading. Buyers are often lazy, self-indulgent, reluctant to change, and unable to recognize high quality even when it is delivered to them on a silver platter. Designers, engineers, and other professionals who have committed their lives to a product-line are often right about what has innate value and the buyer is often wrong. But it is not an issue of right and wrong. It is an issue of readiness, acceptance, and willingness to buy.

Even Moses – even God – adapted his offering to the kind of performance that the buyer was ready to value.