Company uses customer feedback from focus groups to hone its depth-sounding fishing device.
How do you find out what customers really want? After nine successive new-product failures, Jim Balkcom was ready to try something radical
Using customers to help develop new products, experts warn, is a dangerous proposition. Often their advice will take you nowhere. Sometimes it can lead you catastrophically astray.
The folks at Techsonic Industries don't buy it. After years of new-product failures, they decided to listen, to bet their business on the questionable art of the focus group. Now, they say they can do no wrong. -- J.H.
It wasn't that Jim Balkcom minded being dependent on somebody else to develop products. After all, he was hardly the most likely candidate to be running a company that made sonar devices for fishermen. His own preferences ran to golf. He hadn't graduated from Harvard Business School with his heart set on following the bass to Eufaula, Ala., and he knew perfectly well he'd never be his company's chief inventor. Still, he felt a little uneasy relying on Yank Dean IV's skills to keep the business afloat. With good reason. Dean had been dead for six years.
Luckily for Techsonic Industries Inc., Dean -- the company's founder -- had left behind a product with a life of its own. He had built the Super 60, a sonar fish finder with features only someone who grew up on the banks of Lake Eufaula could have conceived. Using military-grade connectors and components, Dean had created a waterproof housing and added a thin-line bulb, making it easier to read. He'd insisted that Techsonic offer a three-day repair guarantee, empathizing with the anxiety of a fisherman in fear of missing next weekend's tournament. Dean's eye for detail did not go unappreciated. As late as 1983 the Super 60 was accounting for 97% of the company's $11.5 million in sales. Six years after Yank Dean's death, Techsonic still could sell almost no product but his.
It wasn't for lack of trying. As soon as Balkcom assumed the presidency in 1977, he forged an ambitious long-range plan for the $2-million company: by 1979 sales would hit $6 million, he projected; by 1984 $20 million; by 1985 he would be heading a $31-million concern. How did Balkcom intend to grow so fast? "New products," he recalls. How, exactly? "We'd try a little of this and a little of that and see what worked."
His mistake was assuming that something would work. Between 1977 and 1983 the company came out with one new product a year, sometimes two. Nine in all, as best as Balkcom can recollect. Most of them flat-out disasters, me-too products that blew apart or stopped cold or capably solved a problem nobody seemed to have. After each failure, Balkcom and his managers found themselves again gathered around the Super 60, praying for its eternal health. "Every so often we'd ask ourselves, 'What's going to happen if the Super 60 goes away?' " recalls Al Nunley, now vice-president of marketing. "The answer would be 'We're going under. That's what.' "
Not if Balkcom could help it -- which by 1983 was an ocean-size if. The Super 60, no longer state of the art, was competing mainly on price. Investors were making noises about retrieving their money rather than watching margins sink slowly from view. "Our future did not look too bright," Balkcom recalls. "We needed to go through some serious self-analysis."
With his top executives and advisers in tow, Balkcom soon emerged with a product-development plan so radical that he himself admits, "I might not have done this if not for the failures." Not only was the plan expensive, but it challenged basic assumptions about the roles of suppliers, managers, advisers, and -- most of all -- customers in developing new products. Techsonic was going to give new meaning to the term market driven.
If it worked, Balkcom could stop hanging on to Yank Dean's legacy for dear life. "If it didn't," he says, "we'd be gone. It was either do this or disappear."
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The most successful products are born of gut feelings seasoned with some industry knowledge. Who knows better what the giftware industry needs, for example, than a former department-store buyer?
Maybe no one. And maybe that person will come out with a product that takes the industry by storm. Then what happens? Perched atop a company, the original visionary can't see the market as clearly anymore. Or arrogance clouds the view. Sometimes entrepreneurs just run out of gas. Or die.
Who knows whether Yank Dean IV would have milked the Super 60 or topped it? By all accounts, he was perfectly happy to have built a $2-million business and felt little urgency about expanding Techsonic's market either above the Mason-Dixon line or into other products. Not that he should have felt rushed -- the company's pretax margins were in the 30% range. Not bad for a product that Dean had created by one-upping the competition a bit and incorporating the suggestions of some fishermen friends.
Dean's management style would have been difficult for anyone to imitate. He kept costs down, for example, by ordering enough supplies for at least six years. Mysteriously, he named the product Hummingbird. Then he dropped the g because Humminbird was easier to trademark. It was not at all uncommon for the chief executive of Techsonic -- who often wore jeans and big wooden beads -- to crawl under a customer's boat to figure out just what, exactly, was ailing that transducer.
Dean was not exactly the kind of person that Jim Balkcom had palled around with either at West Point or in business school. But in November 1976 Balkcom, who had spent three and a half years in banking, accepted Dean's offer to become the vice-president of Techsonic. In archetypal fashion, the balding Balkcom would be the professional manager, while the bearded Dean would go off in hot pursuit of exotic ideas. Eleven months later Dean's heart failed him while he was jogging. By the time Balkcom got to the hospital, the 42-year-old Dean had been pronounced dead. Gone were the gut feeling and industry knowledge that had created the Super 60. Gone was the company's only engineer.
