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Malcolm Gladwell, Spaghetti Sauce and Broadband

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May, 2014

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Malcolm T. Gladwell, a Canadian journalist, speaker and the bestselling author of books like The Tipping Point: How Little Things Can Make a Big Difference, Blink: The Power of Thinking Without Thinking, Outliers: The Story of Success, in one of his TED Talks, “Choice, happiness and spaghetti sauce” talks about Howard Moskowitz, an American market researcher and psychophysicist who is best known for the detailed study he made of the types of spaghetti sauce and horizontal segmentation. By providing a large number of options for consumers, Moskowitz pioneered the idea of inter-market variability as applied to the food industry.

How did he do it?

Back then in 70s, Prego was a better tomato sauce than Ragu. The quality of the tomato paste was much better, the spice mix was far superior, and it adhered to the pasta in a much more pleasing way than Ragu did. Despite being far superior in adherence and quality, Prego was struggling.

When Prego approached Moskowitz to fix their problem, here is what he did. He got together with the Campbell’s soup kitchen and he made 45 varieties of spaghetti sauce. He varied them according to the tomato sauce by all possible means -by sweetness, by level of garlic, by tartness, by sourness, by tomatoey-ness, by visible solids, etc. He wanted to test these 45 spaghetti sauces so he visited people across many states in the US and made them sit down for two hours, and he gave them, over the course of those two hours, 10 small bowls of pasta, with a different spaghetti sauce on each one. And after they ate each bowl, they had to rate, on a scale of 0 to 100, how good they thought the spaghetti sauce was.

At the end of that process which went on for many months, he had loads of data about how the American people felt about spaghetti sauce. When he analyzed this data, he did not look for the most popular brand variety of spaghetti sauce, rather he tried to group the different data points – into clusters. After analyzing all the data on spaghetti sauce, he realized that all Americans fall into one of three groups. There are people who like their spaghetti sauce plain, there are people who like their spaghetti sauce spicy, and there are people who like it extra chunky.

The third category was the most significant one. Moskowitz identified a new product line liked by one-third of Americans, which was not serviced by anyone. Prego took this observation very seriously and came out with a line of extra chunky sauce that immediately and completely took over the spaghetti sauce business in this country. And over the next 10 years, they made 600 million dollars off their line of extra chunky sauces.

When everyone else in the industry looked at what Moskowitz had done, they realized that they would have to recheck their premises on which their products were introduced.  And that’s how we have 7 different kinds of vinegar, 14 different kinds of mustard,  71 different kinds of olive oil and 36 varieties of Ragus J today!

Let us see what assumptions that Moskowitz fundamentally changed through this experiment

Assumption 1: There is a perfect product that makes everyone happy

There is not necessarily one product that is perfect for everyone. There might be/would be different products that are perfect for different clusters of customers.

Assumption 2: The best way to find out what people want to eat – what will make people happy – is to ask them.

People need not necessarily state what they like and desire. The knack lies in sensing the unstated needs as well and be prepared to serve as well as delight them with interesting offerings

Assumption 3: The idea of universals. Through the 19th century and much of the 20th – the world was obsessed with universals. Psychologists, medical scientists, and economists alike – were all interested in finding out the rules that govern the way all of us behaved.

The great revolution in science for the past 25-30 years is the movement from the search for universals to the understanding of variability and questioning the obvious! By understanding and embracing horizontal variationone  would be looking at serving different groups of customers and providing an offering that appeals to them.

Cool! What is it got to do with Broadband?

Go the Moskowitz way – try applying the same logic to your Broadband & Telecom business. As an operator, try challenging the same assumptions.

Have you considered variability amongst your customers?

If yes, have you re-looked at the way the variations are studied? Are the parameters on which the segmentation is done capturing the all the customer needs accurately?

How are you sensing the unstated needs of your customers?

How often are you looking at the contemporary relevance of the products that you are offering to your customers?

If an operator has answers to these questions or is in the quest of finding them, my guess would be he/she is on his/her way to becoming a pioneer in product innovation and consequently a market leader.

For an operator who wants to be proactive in providing the best offering to their customers, one needs a CRM system to enable him/her with the data that one needs to strategize and plan activities well. The CRM should not only capture customer information, interest and feedback but should also provide actionable insights using the same. Horizontal segmentation, refining the segmentation variables and ability to re-work on the strategies set should be very simple with a capable CRM.

CRM system should also help the operator understand the reasons for customer churn and enable him/her to curb the same by various means.

Now that you have identified the right product for the right segment.  What are your next steps?

How flexible is your environment to support variations in your products comfortably though it increases complexity of operation?

A classical approach of maintaining individual technology stacks for an individual offering worked fine when the offerings were simple and not as complex as they are today. For example, having an IPTV and Broadband offering from the same service provider is a desired product by many customers across the world but it should not be a technology nightmare to the service provider.  The most likely problems in such cases would be in ordering and customer management due to lack of a converged view of service information. Having a federated product catalog helps as different services are no longer different lines of business. They can be bundled into a single offering in any combination – one customer, one order, one bill, one invoice and many more

Speed is the name of the game

A lot has been talked about Quick-to-market. Just how fast do offers need to be out of the gate? For a customer, service and service delivery is important. He/she is not really bothered about the access technology behind it. Be it fixed, mobile or cable, the customer patience levels are more or less the same. For all types of communications, consumers have ‘internet expectations’ about speed and simplicity. No one wants to wait a week or make multiple clicks to get a new service or feature. Consumers expect to ask and get, or respond to a pitch and receive. If a new offer is more than a call or click away, most subscribers simply will not bother with it.

This is how it is done

In our rapidly changing Broadband & Telecom landscape and extremely fluid requirements of various customer segments, operators cannot be bogged down by system limitations around product creation and roll-out.  Operators stand to lose major revenue sometimes to competitors and sometimes by missing the opportunity to capitalize the right moment, if their lead-to-service processes aren’t fast enough, sophisticated enough, nimble enough, and are not able to get the job done right the first time.

A centralized product catalogue management system enables service agility to an operator. Via this, an operator would be able to have an end-to-end perspective on composite applications and drive all stages of the lead-to-service cycle from the catalogue management. With a modular structure, the product catalogue management system is designed to centralize every aspect of product definition right from rating to QoS (Quality of Service) requirements. It not only allows easy configuration and personalization but also enables an operator in building re-usable assets.  Further, the catalog drives every process – order negotiation through order decomposition and orchestration spanning fulfillment, charging/billing, assurance and service delivery – all in real time. A modular catalogue management not only removes the system limitations in introducing products but also opens up new revenue avenues.

Are you already a thought leader in this space or planning to transform into one? Let me know your story and we’ll share notes on how you can be SURE! of your success. Time for some extra chunky spaghetti now!

By : Madhavi Natukula

Madhavi Natukula heads Global Strategy & Marketing for the Telecom & Broadband vertical in Magnaquest Technologies. She is passionate about disruptive innovations and technology marketing. Helps sell emerging technology fast. An avid reader, happy wife and a go-getter.

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