The heart of product development

There was a time (not so long ago) when a new product introduced by one bank would stand out for quite a while with other banks ‘playing catch up’ to introduce their own, improved version. In those days, we talked about product life-cycles.

Unfortunately such times are now but a memory, particularly with the influence of the internet. Now it is a matter of days – or at most weeks – before the competition produces a ‘new and improved’ version of your offering. (In the fashion industry, the timescale is minutes and hours.)

Technology and social media have made the jobs of Product Development departments increasingly difficult, especially the task of differentiating products, achieved largely through features and bundles. In the past an international bank would have a pipeline of new features and ideas for the same product in different parts of the world, but that information advantage hardly exists anymore, thanks to the internet.  And so, to extend the shelf life of the product, ever more money is being spent on advertising or promotion – all to shout louder in effect. Truth be told, there is hardly any difference between most products banks offer – we keep introducing/tweaking features and offering various bundle permutations to keep the product innovation story going.

Nonetheless, the opportunity arises to create a distinctive (rather than differentiated) product experience, where you are not ‘competing’ on product features or price, but on creating a distinctive product experience. Adding features to a product is usually the job of the Product Development silo. Similarly, the people charged with selling the product sit in another silo called Sales, and the “new” product is passed to Sales for them to sell.

The implication of the this opportunity (creating a distinctive product experience) is that you need to break down the silos, not just on the organisation chart but also in people’s heads and attitudes. Indeed, a ‘customer experience focus’ has to be brought to bear on the entire product value chain. How do we help the salesperson inject more emotion and passion when explaining the product? How does this solve the customer need? How do we simplify the sales process so that it becomes more responsive? How do we internalize the storytelling? And how do we move the customer – who is currently at the end of the product creation process – to become involved in the product development phase? How, in short, do we get the customer to co-create the product that he will be using or buying from us?

Every sale involves the head and heart: the ‘head stuff’ might include product features or price while the ‘heart stuff’ relates to the emotional connection offered by the product, a connection that is much harder to create for certain product categories than others. The best sales are the ones where the customer buys with his heart and then justifies with his head.

That quality is harder for the competition to replicate. So, if we are thinking about how to improve profits and margins, we must think about how to reconceive the treatment of customers: what are we getting them to focus on? How do we move the engagement from a price-and-feature sale to an emotional sale? In short, we should stop selling…and get the customer to buy.

Doing (and discussing) the right thing

One of my favourite days teaching with the International Academy of Retail Banking in the last year or so was in Lagos, Nigeria where the subject of the day was Ethics. As most people will know, Nigeria has a certain reputation and no-one is more aware of that than Nigerians themselves.

I remember starting the day off with the tongue in cheek statement that “today’s class may be over in less than one hour or we may still be here at 10pm…the choice is yours depending upon your views”. In fact we had a fantastic day and the amount of interaction and debate amongst the class was excellent.

Our discussion naturally took us away from banking and into Nigerian politics and corrupt officials in government, but as we came back to banking it was clear that many amongst the class had already faced some difficult decisions in respect of complying with instructions from supervisors that they thought were wrong; the dilemma being “do I refuse and face the consequences for my job and career or do I comply against my own personal virtues and beliefs”.

It was re-assuring to them that a similar dilemma had been faced by many people in banking across the world, not least in the UK where the “mis-selling” of so many products has become evident in the last decade or so. For many it wasn’t simply your bonus that was at risk if you failed to hit your PPP targets, but your salary and job as well. Faced with such pressure, what options are available to you? What would you do?

In the class we debated at length the issue of culture and relativism. In a culture where corruption is known to exist and is almost endemic, what impact does that have on an individual and their own personal values? Does the judgement of whether an action is “ethical” vary from time to time relative to some kind of norms in society? In other words does what is morally right vary from time to time?

Time will tell whether this class makes the right or wrong decisions in their chosen profession and in their personal lives. But I am pretty sure that, like me, they are better informed to make those decisions having participated in the Ethics module of the IARB.