The Market Wants What the Market Wants

by Victor Cheng

My wife and I were talking last night about how the now former President of Egypt Mubarak must either be the most tone deaf person on the planet or the most stubborn.

This morning I wake up to discover he resigned… finally.

Geez, how much of a message from the market does one need to get the hint.

While I have been following this story for the last three weeks, I have just been stunned at the panoramic photographs of protestors such as this one.

At first glance, I wasn’t able to figure out what I was looking at in these photos. Then I realized those hundreds of thousands of little dots on the screen are people!

Lots and lots of Egyptians protesting.

Well the “market” in Egypt got what it wanted. It always does… eventually. (That’s a point worth remembering.)

I have been admiring both the determination of the Egyptians and their restraint in avoiding the use of violence to make their point. Both proved to be successful in the end.

From the outside, it is hard to imagine how a leader could be so oblivious to what his “market” wants.

Yet, before we judge too harshly, let me explain why this happens and why it might even be happening to you right now.

There are two views of any marketplace, including your market.

There is the perspective of the customer and there is your perspective.

It goes without saying that ideally the two should match. But quite often they do not, for two key reasons.

The first reason is market drift — customer needs evolve over time. The degree of change on a day-to-day basis is imperceptible, but on a year-over-year basis quite obvious.

I see this with my kids.

My girls today look pretty much the same as they did yesterday.  As hard as I look, I just do not see any difference from one day to another.

Yet when my folks visit once every few months, my mother in particular always remarks how much the girls have grown.  She sees the change in my girls, I do not.  The difference is in our perspective.

I am living in the hour-to-hour view of raising my girls, she has a snapshot-to-snapshot view.

I imagine that when Mubarak first came to power, he was probably very much admired and respected. I understand he was a war hero (though admittedly my history of modern Egypt is a bit rusty, so don’t quote me on this).

And in his mind, not much changed from one day to the next.

Fast forward 11,000 days later and he suddenly finds out he is one of the most despised people in the middle east. I’m sure he has had a few “how did this happen” moments these last few weeks.

So market drift and the lack of “big picture” perspective is the first reason why someone can easily miss changes evolving in a marketplace.

By the way — to combat this tendency in your company, it is useful to have someone involved in your strategic planning process that has some distance and perspective — someone who is not hampered by the hour-to-hour perspective that can’t help but color the perspective of you and your team.

Somewhat self-servingly, this is a role I play for my clients.  Regardless of who plays that role, it is important that someone not immersed in the hour-to-hour work of your business is involved.

The second reason that causes one to be out of touch with one’s market is denial.

At an emotional level, it is far easier to accept and embrace a market shift that favors you.

For example, if the product you are personally most proud of starts selling like crazy, this is validation of your perspective.

Of course it would sell well, it’s your best product.  Of course it would be easy to come to the conclusion of: “Geez, customers love it, lets sell them more of it!”

This kind of change is far easier to embrace and makes perfect logical sense.

But the reverse is problematic for most people.

What if the product you are most proud of, the one that you think is the best in the industry, suddenly stops selling?  If you weren’t emotionally tied to it, if you had distance and perspective, you would logically have the exact opposite reaction you had in my previous example.  You would say, “Okay, I guess customers don’t want to buy that one, let’s sell them something else.”

If you note the logic, it is the exact same logic as: “They love the product, let’s sell them more of it.”

This same logic argues: “They hate this product, let’s stop trying to sell them something they don’t want.”

Of course this is exactly the opposite of what many people do.

The first reaction is: They are stunned.

The second reaction is: They adopt the attitude that the market is wrong and if only they would come around, sales of “your baby” will recover.  Let’s just hang in there…

Dude… the market wants what the market wants.

You can convince them that your product helps them get what they want, but you can’t convince them to fundamentally want something else instead.

If you aren’t convinced of this, just ask former President Mubarak for his take on this point.

To clarify this point, it is important to look not at what products customers are asking for, but why they are asking for it.  That reveals what they are really demanding.

So why did iTunes and iPod take off many years ago?

What did consumers really want in that market?

They were not asking for an iPod before it came out, but they were very much wanting to enjoy music more conveniently.

The big breakthrough of the iTunes/iPod combination was the ability to get rid of the 90-minute roundtrip drive to the music store to by a whole CD to just get one song.

That’s a lot of work to enjoy a single song.

It’s worth noting that what consumers in the music industry have fundamentally demanded has not changed since Sony’s invention of the Walkman (the music convenience breakthrough of the 1980s).

They want music. They want music more conveniently.

The market wants what the market wants.

So logically, this all makes sense.

Sell more of what customers want, and less of what they do not.

This seems so obvious unless of course it’s your company, your products, and frankly your ego we’re talking about here.

It’s easy to see your colleagues’ marketplace denial; it is far harder to confront one’s own.

I have on several occasions stated that hands down the single largest expense on a P&L of a company that’s struggling is the CEO’s pride.

Don’t let your own pride get in the way of:

1) noticing market shifts

2) accepting that parts of your business might not be in sync with the market in today’s new normal economy

3) noticing the new (and sometimes very different) opportunities that emerge as old ones fade away

If you’re too busy clinging to the past, you often don’t notice the opportunities that can become your future.

Don’t make this mistake.

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