The Brand Management Concept in Manufacturing Companies

Feature

posted 1 Apr 1998 in Volume 1 Issue 5

The Brand Management Concept in Manufacturing Companies

Using examples from 3M, Tim Hewtson le Roux , Customer Research, 3M Europe looks at the role of knowledge management in new product and service development and explains how knowledge facilitation is at the heart of the brand management process.

Caught on the wrong foot?

A long time ago in the manufacturing industry, there was an assumption that “if we developed a better mouse-trap, the world would beat a path to our door”. So, we in the manufacturing industry decided that we were about…well…R&D and manufacturing. Within the framework of resource-based strategy, these were our core strategic competencies.

It therefore followed that the vast majority of our creative energies should be focused on ‘imagineering’ (to borrow a word from the Disney Corporation) new product breakthroughs which would change the whole basis of competition.

And 3M has been pretty good at this, focusing in the main on our expertise in coatings technologies to develop a whole series of new product breakthroughs: ScotchTM masking tape - which allowed Ford of America to produce two-tone cars efficiently; WetordryTM abrasives which work in the wet; ScotchgardTM protector which contains a fluorochemical to protect against staining; ScotchcalTM films which replace hand-painted vehicle liveries with printed vinyl ones; and the Post-itR notes which fill the empty void on your desk.

Of course, there was always the danger that a “me-too” competitor would copy our products, but if we patented them comprehensively, provided lifetime employment against loss of expertise, and developed inter-dependency relationships with our channels to market, our first mover advantage would usually see us through.

However, times change - and so do market dynamics. We began to be concerned by reports of shortening product life cycles, the growth of channel brands, and the belief that service is the only true differentiator. And then the CEO of Coca-Cola said that if all of his factories burnt down it wouldn’t bother him half as much as if his brand collapsed. Were we taking the fast road to the edge of the cliff by placing all our hopes on new product breakthroughs? Should we all be brand managers now?

Changing feet

There is another way of seeing the situation, and we can start by recognising that 80% of new product ideas come from customers, not from that lone engineer toiling away in a laboratory - although there obviously are such cases, as the James Dyson story attests. Indeed, ivory tower scientists, unstoppable in their determination to get their invention to market, can easily cost their companies hundreds of millions of dollars developing fascinating products to meet customer needs that were never articulated because they were never there. The divide between those who are ahead of their time and those who are living in an irrelevant parallel universe is often indiscernible to the naked eye of management.

We can also recognise that new product breakthroughs usually coincide with significant shifts in the way people operate. In other words, it’s not just the product. Functionally, Post-itR notes are useful little products, but still basically comprise a piece of paper and a strip of glue. Culturally, they transform the working environment, allowing people to do things they have never done before. Many years ago, 3M invited users to give up Post-itR notes for a week - only a few made it through to the bitter weekend without snapping open a new pack! Similarly, FloorMindersTM graphics are not just high technology vinyl which manufacturers can stick on retailers’ floors and see their sales go up - they also solve the perennial retail problem of how to get revenues per square meter from aisle space. The most successful innovations not only impact the way customers operate but also alter their day-to-day lives in some way. All of which makes significant innovation a risky business - we are gambling on being able to bring about a market paradigm shift, something that cannot be achieved by product alone.

Conversely, it is also the case that new service innovations are best supported and exemplified by new products, which is the history of the service industry. The story that “you can now deal with the Midland Bank over the phone”, is not as powerful as “we have just launched First Direct”. It is also worth noting that service innovations can be every bit as radical as new product developments - self-service stores, out-of-town shopping, direct marketing, package holidays, and ice creams served before the film on Virgin Atlantic flights. Most of these have resulted from a small group of people sitting down and completely rethinking the customer’s experience, changing our landscapes forever. In other words, they have treated new service initiatives as if they were new product development projects, but this approach is relatively rare.

New product development processes provide creativity; customer loyalty management processes provide knowledge of the customer

Regaining the balance through knowledge management

So what is the point? The point is that new product and service developments converge within brand management, and to split these two areas is to fragment essential knowledge and expertise.

Brand management is about developing lifetime relationships with a preferred customer grouping based upon an authoritative, relevant and differentiated promise that captures their hearts and a suitable share of their wallets. New product developments attract new customers; compelling service entices them to stay. However, this virtuous circle can only be achieved in a sustainable way by encouraging and enabling teams to build imaginatively upon an infrastructure of knowledge and expertise relating to customers, technologies, and processes. Knowledge facilitation is at the heart of the brand management process.
If we examine the components of brand management - new product development and customer loyalty management - it is clear that they are not only complementary but also synergistic. What new product development processes are usually good at is engineering radical solutions and providing a robust process that brings them to market. What they are less good at is understanding what the customer wants in the first place. However, customer loyalty management processes are often very good at providing a detailed map of what customers want - information that can be used to generate new product concepts. What customer loyalty management processes are less good at is imagineering radical solutions that will delight the customer.

The problem is that engineers do not speak the same language as sales & marketing people, so they rarely talk to each other and, even when they do, there is no guarantee that they will even begin to understand one another’s viewpoints.

Careful where you step!

So what should we do about it? The huge temptation, of course, is to start building sophisticated and ever-expanding systems to stockpile, interpret and distribute large volumes of “outed” knowledge and expertise between our sales & marketing departments and our R&D laboratories around the world. This may indeed be a viable solution for some corporate cultures in certain situations, and there is no doubt that it will become ever more critical for all companies who wish to survive in the information age to construct explicit knowledge management infrastructures, using intelligent agents (or whatever supersedes them) to provide their people with the right information at the right time in a seamless interaction of mind and technology.

However, the problem at this precise moment for most companies in most situations is a different one - it is how to motivate people to seek out knowledge and expertise and to share it both within and without the corporate boundaries to the greater benefit of the company. This is the “people issue” whose resolution is said to account for 70-80% of the success of any knowledge facilitation program.

3M have been spending a lot of time on the “people issue”. In the 1940s, we developed the McKnight Principles which declared that employees should be empowered to do their jobs in their own way without undue interference from their managers, should be encouraged to take risks because good people learn from their mistakes, and should be free to spend 15% of their time on projects of their own devising because they might lead to new commercial opportunities.

This is the basis for the knowledge facilitation process within 3M today. Employees are encouraged to build their own knowledge and expertise as they feel appropriate, and then to share it. This is especially the case within the technical community. Knowledge in 3M is a “people thing”. Within a few phone calls you can identify those people who have devoted their lives to the very topic you urgently need to know about, and they will give you all the time you want to discuss it. The only excuse for not attending one meeting is to be already booked into another one.

Next steps

So what are the practical solutions which could bridge the gap and unite the knowledge and expertise currently located in the technical and sales & marketing communities, focusing initially on people-to-people solutions but with the potential for introducing knowledge management systems as circumstances allow?

Lorien's CRP process in QFD mode

Well, firstly, technical, sales and marketing people must work alongside each other in Strategic Business Development teams to design the products and services of the future. When ScotchTM video launched the lifetime guarantee concept in the UK in the 1980s, it was because the marketing manager had appointed a cross-functional team to take the product from being an also-ran to brand leader. One day the team was watching a consumer focus group during which everyone agreed that if a company could manufacture video tapes which would last forever, they would be onto a winner. “We can, we can”, said the technical representative on the team. Within a year we had tripled our sales to gain brand leadership.

Secondly, we can promote the transplantation of processes between the technical and sales & marketing communities. New product development processes have a lot to offer other areas of brand management, from the generation of new ideas, to creating a detailed definition of the chosen idea using QFD (Quality Function Deployment), to bringing the idea to market through rigorous project management. Of course, it is not so easy to transfer these processes because sales & marketing people do not naturally think like engineers, but some new product development processes, such as 3M’s Customer Inspired Innovation, are fun and therefore will transfer, and robust process thinking does gradually migrate over time. It is no coincidence that the areas in 3M where the technical and sales & marketing communities have worked closest together are also the areas that use process thinking as a matter of course.

Thirdly, we can promote the convergence of processes. An example of this would be processes developed to understand the customers’ day-to-day problems. If we can focus on their core problems we can use the knowledge as a basis for developing breakthrough products and services. For instance, for some time now 3M has been using Lorien plc’s CRP (Customer Review Process) to understand the needs of our key accounts. The process focuses on problem areas that the customer requires us to address. This can provide some insight into new opportunities as well as raise issues which we can resolve in a more incremental way, but if we use more or less the same process to look into the future, and use it progressively in QFD mode, we can then gain a much stronger understanding of the customer’s core problems and define them in a way that all communities can understand. For everyone within the business to understand the core problem the customer is trying to solve is the basis for excellence in new products and services.

Summary - retracing our steps

Knowledge facilitation can provide an infrastructure for every aspect of a business, but a critical area of focus should be the interface between technical and sales & marketing processes where communication is difficult and yet there is a great deal of benefit to be gained through the sharing of knowledge and expertise to develop outstanding new products and services.

Having said that, it should not be assumed that the immediate solution is to build a new IT system. In the early stages there should be more focus on the semi-formal sharing of expertise in joint projects, transplantation of approaches, and convergence of processes. Only later will both communities be sufficiently motivated to switch on their computers to read what the knowledge manager is telling them.

Tim Hewtson le Roux is at 3M Europe. He can be contacted at:

thewtsonleroux@mmm.com