Daily Archives: May 24, 2007

Demand-Side Innovation Requires Supply Innovation

Earlier this year, Optimize Magazine ran the article Demand-Side Innovation: Where IT Meets Marketing that noted that How companies market their offerings – online and offline – has as much to do with their success as the products themselves and that unless consumers can find our brands, share them with one another, and make our brands their own, we may wind up with the wrong markets, the wrong buzz, and the wrong mousetrap. Furthermore, they state that technology, not marketing, has created this new reality and that it’s technology executives, in conjunction with their marketing counterparts, who can effectively address the new market requirements.

I disagree. I do not believe that technology and marketing alone can fully address the new reality. But before I discuss why, let’s review the article in more detail.

The article indicates that a variety of forces are contributing to this new reality where a better mousetrap without a better marketing plan is like a tree falling in a forest, and highlights the following six:

  • Social Media is Increasingly Predominant
  • Online Connectivity is Critical to Offline Community
  • Online Transactions are Small, but Their Influence is Big
  • Social Networks are Critical New Channels of Media Distribution
  • Broadband is Making Online Media More Engaging
  • Immense Virtual Environments are Taking Hold

The article also discusses three business activities whose continual transformation has profound implications for businesses today.

  • Product Location

    Amazon.com may not be viewed as a community site, but much of its value derives from collaborative filtering (through user reviews and ratings).

  • Product Shaping and Branding

    Major brands are not having much luck tapping the power of social networking – word-of-mouth marketing is still the most effective promotional medium that money can’t buy.

  • Product Development

    Consumer co-creation and peer-production of products and services is becoming more common.

When you consider these three activities, the common theme is really product (or service) management, not the underlying technology. Good Product Management is at the intersection of all of the business functions, right where supply management lives. Furthermore, in some organizations, a best-of-class supply management organization is likely to have the most experience with collaboration and networking solutions, even if they don’t know it. Current sourcing, procurement, and supply chain management is built on visibility and collaboration. Thus, supply management is very likely to understand these concepts. Furthermore, the best demand-side management is worthless if the organization cannot meet the needs of the marketplace. Involving supply management from day one greatly increases the likelihood that an organization will deliver the right product at the right time in the right manner to maximize success.