The Simple Cost

Sometimes company leaders equate doing the simple thing with keeping things simple. They are not the same. Sometimes doing the “simple thing” creates unintended consequences.

As it relates to boat models and corporate decision making, let’s go back to a simpler time.

In 1965: 

When automotive companies had only a few car models, they would endeavor to improve each model each year. For instance, the ’56’ Chevy Bel Air had changed radically by 1965, but it was always the Chevy Bel Air. The same model logic held true for about every car company.

Now, new models with new names come out every year.

In the past, the distinction of having a market-specific model helped the manufacturer establish a successful relationship between the model and the customer, which contributed to the overall company success.

In other words, the success of the each branded model reinforced the popularity of the manufacturer and the success of the manufacturer reinforced the overall product line. Each success fed the other.

In today’s world of boat manufacturing, the success of the brand seems to be managed by a bevy of totally new models on an annual basis, leaving the older models to dangle unsupported. It’s not pretty.

Car companies discontinue the sales of an old product but boat companies keep them in the line. Yet, keeping old, slow selling models is a costly mistake.

(It’s not a wise plan to have a product line that has more losers than winners. How can that be good for your image and/or brand identity?)

Of course the “simple thing” has always been to keep the old models in the product line. It, however, adds to the complexity of your marketing image and that adds cost.

Here’s an example of keeping things simple as opposed to doing the simple thing.

Before Steve Jobs came back to Apple the company had grown its model line to an almost unbelievable selection of computers. Steve realized that the only way out of the losses was to reinvent the product line and eliminate the slow selling models. Before his death, Apple had made things simple again with a product line that was manageable and completely understandable by the general public. Gone were the multiple configurations that bewildered the first time buyer. iMac was the “hit” that started Apple on the road to consumer understanding and reinforced the brand as the simple, and highly profitable, computer company.

In contrast, the common refrain emanating from corporate boardrooms in the boating industry rationalizes that the “cost” of carrying the lesser selling models is negligible since the molds are in good shape and the parts are in inventory.

It’s a nice theory, but the true cost is the “hit” your company’s image is taking because of some poor selling models.

Your image is what establishes your brand. The cost of tarnishing that image can eventually destroy your brand and severely diminish your potential profits.

And that’s about as simple as it gets.

When The Light Shines Through

I often talk about the need for today’s executives to understand the relationships that govern the differences among their marketing department, their sales group, their engineers, and their designer(s). Too often they pair up Sales & Marketing with one another, and Design & Engineering. Big mistake. Though it's a common practice, it makes little sense to anyone who thinks it thru. 

Executives should take a second look. Sales deals with the present, Marketing deals with the future. Likewise, Engineering deals with the present while Design deals with the future. By incorrectly pairing these sectors of the company you can create the formula for argument, bickering, and eventually bad decisions for product development. Sales and engineering are about the company and products. Marketing and design are about the consumer and the product's use and/or impact.

Each division of the company has a specific goal to achieve. The real question is “What should come first?” If your answer is something other than Design then you will most likely relegate your company to mimicking what someone else creates. And that’s only the “tip of the ice burg”.

Fortunately, some top executives "get it."  They've spent years learning how to navigate the initiatives necessary for successful product development. Design, not engineering, develops the wow factor that establishes the brand. Engineering builds the wow factor. Marketing presents it and sales brings in the bottom line. Each element brings an indispensable component to the company.  

One of the most successful executives recently shared his insight in a magazine article. If you don’t know the name "Bob Lutz" you should. Bob was, and still is, one of the most respected automobile executives, and he understands what sells. 

In Bob’s most recent article, Driven by Design, (Road and Track September 2015) he notes, “There aren’t any bad cars anymore.” “Reliability, braking, steering, handling, ride, and refinement are all largely on par across automakers and segments. That leaves just one chief differentiator: design.”

In our industry, boat manufacturers make fiberglass. Almost everything else, engines, dashboards, seats, windshields, canvas, generators, sinks, etc. is supplied to the manufacturer and is installed by the manufacturer. In other words, almost everybody has the same things to install. The manufacturer’s pricing is determined by the amount and cost of those installations. 

So what is the chief differentiator in the marine industry? 

Design.

Hopefully this sheds some light on how to manage your future.

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What's in a Name?

Do you remember your uncle JG341? No? Then you might remember your Uncle Joe.

I bring this up because we sometimes overlook the importance of a name.

Take the internet for example, the Internet Corporation for Assigned Names and Numbers (ICANN) manages all the names assigned to all the numbers. Many people don't realize that website addresses are actually numbers, but it's too hard to remember strings of numbers so we needed something more personal, easier to remember, and something to which people could relate. So we gave our websites names.

When Starbucks, takes a coffee order, they write your name on the cup instead of a number. They understand the value of treating a customer like a person, not a thing. 

Numbers are extremely impersonal, but they have their place. One place that clearly defines you as a number is prison. Prisons immediately strip you of your identity and plaster a number on your back. It's demeaning and it's meant to be.  

People respond to names. This appears to be especially true when we talk about our cars. A name lends a personality and fosters a psychological connection. In 2012, Automotive.com did a survey and found 61% of people surveyed personally name their own vehicles. Those people endeavor to give their vehicle a character that they relate to because it makes their vehicle more personable.

Product designers strive to create an emotional connection between the customer and the machine, and it shows up in some of our cars. Sometimes we find the exact vehicle that speaks to us on that personal level, and it usually has a name. We do have a love affair with our vehicles. 

The top name in the automotive world that beats all the rest is simply the Mustang. The pony car is the all time favorite car name according to askmen.com's contributor, Thomas Bey. The "stang" has "evoked thoughts of freedom and the open road for generations of drivers." 

It's true that names can add the flair and romance we want. In contrast, the alphanumeric naming of product that gained traction in the 70’s with Mercedes has just about run its course. Consumers are tired of soulless numbers that say nothing. They want to identify with their cars, and in some instances they want their cars to identify them. Besides, it's no secret that keeping numbers and letters straight remains a mental challenge to the best of us.

Witness a perfect example. Back in 2007 Mark Fields, then Ford's Executive Vice President flubbed a line when he was on stage at the L.A. Auto Show. While speaking about the the Lincoln MKX, the flagship sedan…oops, he made the common mistake. (Who can remember all of those alphanumeric derivatives) The MKX was the luxury SUV, not the sedan. He corrected himself and finished his introduction of the new sedan, the Lincoln MKS. 

Beginning years ago with the accepted course of using an alphanumeric system for product identification, bean counters have continually favored the system because it saves on all that costly research and the worrisome possibility of litigation. Besides, bean counters would contend, that it’s usually enough for someone to explain the type of vehicle they own by relying on the brand name and not the model. 

Bean counters need to stand aside.

Brand names boast of the company, they say nothing about the personality of the driver, the brand only hints at how much the owner paid.

On the other hand, a model name reflects the combination of characteristics or qualities that form or embody the individual and distinctive character that brought the customer to that specific vehicle.

Offering a number to a customer only signals that he’s standing in line and waiting to be recognized. Recognition comes easier with a name. 

So, when you consider identifying your product remember that the name isn't about the brand. It isn't about the vehicle. It's about the person behind the wheel. 

The Art of Imagineering

Imagineering is one of the greatest capitalistic tools ever created and most companies do not know what it is, nor how and why to make it part of their company’s culture.

It is an idea with value ramifications that can dramatically increase the probability of a successful and profitable new product launch.

Interested? To create a structure for imagineering within a company, one first needs to examine the difference between Design and Engineering.

Corporations have long combined the disciplines of Design & Engineering with mixed results. Usually Design falls under the auspices of Engineering, which will almost always create a friction between the two if each is true to their own discipline. As a result, the company usually winds up with a lesser product. The answer to creating better products lies within a deeper understanding of the two disciplines.


In general terms, Engineering endeavors to save money, Design strives to make money. Engineering is related to product refinement, while Design is akin to new product discovery. Those are significant differences!

To implement Imagineering within your company begin by creating an equal opportunity for influence between the two (Design and Engineering) within the corporate structure. After establishing an equality of influence, take an active role in the management over each of these separate disciplines. Once you do, you’ll be on the road to creating and establishing one of the great business tools for continued sales success.

I’m sure you have a firm grasp on what your company is prepared to spend in order to insure a lower operating cost, like better equipment within the plant, or creating processes and procedures to insure a lower cost of production, or how much engineering time should be spent to refine a new product or an idea.

Question… Have you thought about what you are prepared to spend in the discovery of a new product or idea?

Ask yourself what opportunities have you afforded to your design department in collecting the proper information so that they can start the design process with the proper premise? If your designers are pragmatic about their processes they will want to establish a premise for the design project before they start, otherwise they will be lost before they begin and you will never get the result you are looking to achieve.

Successful implementation of Imagineering demands a greater interaction of each of the disciplines of Design and Engineering with the customer and the consumer. This is especially true for designers.

Designers need time outside their cubicle and away from corporate influences. After all, their job is to design first for the consumer.

They have to be aware of trends and consumer movement. How much are you willing to spend for them to grasp and identify some of the outside influences that affect the consumer and his buying habits?

In the end, Imagineering is a well managed synergistic effort between those that can make you money and those that can save you money.

Like anything else of value, creating an Imagineering department within your company is a process of continuing effort. How it adds another element of success to your company will be as individual as you are.
Peter

First printed July 2006 in CEO Magazine. Reprinted with permission.

Your Future and Being on the Right Track

By Peter Granata, president, Granata Design — Will Rogers once noted that “Even if you’re on the right track, you’ll get run over if you just sit there.”

So if you’re sitting there waiting for your customers to come back let’s explore a few thoughts.

There are opportunities in some, as yet, undiscovered areas of boating. The thing to remember is that your product, or service, has to adapt to a new style of appeal. Today’s customer requires a visual reinforcement of his/her current values from your product.

The current economic times have created numerous changes in buying decisions, and it will continue to become increasingly obvious that many boats have priced themselves above their intended market (sometimes it’s not smart to listen to everything the customer wants). A long list of manufacturers are hopelessly waiting for the “same” customers to return as before this economic downturn. Without acknowledging it, they are expecting buyers to be interested in the same old thing that is “dressed” a little differently. Big mistake.

Here are some things to consider as you develop a new product or service.

Recent surveys show that the population is migrating to geographical areas that are nearer to coast lines. Job salaries have declined and the workforce is experiencing a diminished psychological relevance in terms of their value in the work place.

For men this is an especially important element that defines them. While women define themselves by their relationships and put “security” above all else, men need to feel relevant and significant in all areas of their life.

As such, it is imperative to address these feelings in any new product.

Many boaters are financially unable to buy a boat that is equivalent to what they would have purchased before this economic downturn. According to marketing experts I spoke with, this diminished purchase capacity on the part of many consumers can leave them feeling less significant and keep them away from purchasing a boat.

In order to offset any feelings of financial inadequacy and restore the buyer’s feeling of significance, automobile manufacturers are responding with new categories of transportation. Crossovers, mini’s, Value cars (Small but high near luxury content), electric cars, hybrids, etc. Anybody can buy one of these and hold their head high in their social group because it’s different and also meets the buyer’s financial capability.

A common assumption made by producers of new products and/or services is that the consumer is going to want what they have always wanted, except they will want it at a lower price.

If you count yourself in that group, it’s time to re-think your strategy.

Nowadays a boat (even a service) has to be made to appeal to the eye, the mind, the wallet, and the prevailing social environment. Buying a boat is no longer a decision that is made on one of those requirements, it needs to have an undeniable appeal to all of those requirements.

The key is going to be a configuration that has great versatility. Product versatility equates to a better value in the mind of the new consumer and allows for a greater social acceptance of the purchase.

Ask yourself, “Does my product offer the customer a broader range of use and is it a purchase that can have a broad social appeal?”

Your company’s future is vested in your customer feeling good about his decision to buy your product. Time to get a move on.

Choo-Choo!

Boating Industry Magazine May 26, 2011 

It’s Only a Matter of Time

By Peter Granata, president, Granata Design — Just as “clocks” were incorporated into every imaginable electronic instrument a few years ago, so too are more sophisticated electronics being incorporated into daily use electronics, like your phone.

The telling of time has become so accessible to us today that many of us have stopped wearing wrist watches. In many cases, the once utilitarian watch has been relegated to little more than a piece of jewelry. Our phones keep perfect time and even change time zones automatically as we travel. Separate timepieces have been marginalized.

Other items long considered a stand alone item have become marginalized as well.  One such item would be a camera. Just a decade or so ago 24 hour Photomats were all the rage. Today, electronic cameras come in all versions, even on a keychain. The simplest among them take excellent snapshots, such as the ones currently “incorporated” into our smart phones, and we are in charge of developing our pictures. We still love to take pictures but Photomat is extinct.

Over the past summer I took a long weekend and visited an area of Florida. While there I had the use of a small runabout sans GPS. I found an app for that! (an app is an online application that can be downloaded to your device … in case you aren’t keeping up with the lingo.)

For a download fee less than $50 I was able to download a full set of charts that mapped out all of the waterways I would ever visit. It turned my iPhone into one of the most complete GPS’s on the water you could want. Tide info, direction, speed, waypoints, everything you might desire of a GPS was there on my tiny little screen. I had to remind myself that as small as this screen was, it was not short on information.

Which brings me to the iPad, its 9.7” screen, and the subject of electronic redundancy. Why would I buy a $3000 GPS when a $600 iPad loaded with a $50 app could do everything most GPS’s could do? And when I was finished using it on the boat, I could take it with me. I use the iPad for many multiple uses in daily life. I use it to read books, correspond in e-mail or social sites, create presentations, listen to my tunes, etc. Oh yea! Tunes, did I mention satellite radio? There’s an app for that too!

We’re living in one of the most exciting times anyone could have imagined a decade ago. We’re also beginning a re-education of simple economics in our lives. People still want to have fun. They just don’t want to spend as much doing it. So, just keep your iPad dry, eliminate as much electronic redundancy as you can, and enjoy the extra money. Build smart. Boat smart. Wait until you see my next concept boat.

Boating Industry Magazine October 5, 2010 

A Positive Outlook

By Peter Granata, president, Granata Design  — This morning I was scouring the newspapers and came across what’s wrong with a lot of business.

As business leaders we try and stay abreast of what’s in the news so we can make well-informed decisions for our companies today and in the future. Maybe we’re looking in the wrong place.

This morning I noticed two separate and distinctly different views on the same information from two different news organizations.

Reuters News led with the headline: “Higher GM and Ford sales point to steady recovery.” I was glad to hear that news, but then I noticed Bloomberg News reported on the exact same story and led with the headline “GM, Ford sales in July come in below expectations.” Same news, different story.

It reminded me of the story my dad told me about the value of a positive outlook and how damaging it can be to have a negative outlook on the future.

The story my dad told was of this little old man who had a hot dog stand and worked hard enough to send his son to college (back then this was not something to be taken for granted).

The son returned in the midst of the Great Depression and was shocked to find his dad had so many hot dogs. The son convinced his dad that this was a great depression and that if he continued to inventory so many hot dogs he would surely go broke. Being sure that his son had received the best education and was therefore more insightful about business than he was, the old man got rid of much of his inventory.

Soon after, with less to sell, his daily receipts began to tumble. Within a short time the old man was out of business and became convinced that his son had saved him from the great depression.

The bottom line is that the little old man listened to the fears and created his own depression. Now you can tell me you’re not doing what the little old man did and you can tell me all of the things you’re doing to avoid going broke, but, can you tell me what you’re doing to sell something?
Or are you waiting for better news before you invest in your business’s future?

Boating Industry Magazine August 10, 2010