Introducing the Real Job Creators

As the election season winds down and with politicians calling for more jobs and claiming they can create them out of thin air, it is fitting to step back from the rhetoric and look at exactly who does create jobs with sustainable economic growth.

Jobs are created by government, existing business and startups.

But some people think that it is a government that creates all the jobs.

This is somewhat true.  Government creates the 22 million or so jobs in the public sector.  Government creates jobs for teachers, police, firefighters, soldiers, diplomats, governors, congressmen and so on.  Government jobs provide education, public health, safety, defense, security and so forth.  They also create jobs by buying products and services from the private sector like defense spending.

The government can also take away jobs.  For example, during the great recession, Congress declined to loan money to the states so as a result there was a loss of 569,000 government jobs since June 2009

On the other hand, its start-ups that really create jobs.  As Carl Schramm, who heads America’s top entrepreneurial think tank, the Kauffman Foundation, says, “growth is directly correlated to startups that get big. In fact, the single most important contributor to a nation’s economic growth is the number of startups that grow to a billion dollars in revenue within 20 years.”

• So who is it in those startups and in other businesses that are the real job creators?
• Who created the 115 million (NAICS data) or so private sector jobs in the United States?
• Where do they come from?

It starts with a person or company that has a want or need.  Then they find a solution to that want or need that they then purchase.  Or whoever has created a solution finds them.

Jobs are created by dreaming up a product (a service is a product too) that is then sold and paid for by consumers or organizations.

The people who dream up the product and/or facilitate the process are performing the role of a product manager.  The people who launch the product and direct its on-going marketing is the product marketing manager.  The person who learns the customer’s needs and communicates those needs to the product manager is doing business development.  Helping companies implement this process effectively in an agile fashion is what SPICE is all about.

So real job creation in the private sector takes a new business creation team that can define, refine and successfully and sustainably deliver new products and services. The heart of this team is the Product Management, Product Marketing Management, and Business Development functions.

Once a product is sold, more jobs are created to handle the payments (accounting), support, service, development, manufacturing, distribution, operations, finance, legal, HR and so forth.  But none of these jobs would exist if business development, product marketing, and product management did not do their jobs.

It looks like this.  The customer is the foundation.  Without customers, there are not jobs.  Then the business development, sales, sales engineers and the distribution channel listen to their customer needs and sees if it is a match with what product or service the company provides.  If not, they work with product management on those needs which are then communicated to development/engineering so the product can be built and manufactured.  Meanwhile, product marketing takes the work done by product management which includes the business case, whole product definition, differentiation, market requirements, product requirements, competitive analysis, position and product roadmap and generates the marketing plan, foundation for collateral and sales tools, and launch plan.  The work of the product marketing manager is then used by the marketing department, advertising and PR agencies and for social media.  Here are a couple of examples showing the relationship between the customer, product and the company with the important roles of business development, product management, and product marketing management.

Once the product or service is purchased, then distribution kicks in with operations implementing the distribution, finance invoices and collects payment.  Legal sets up the purchase agreements.  Human resources see to it that the right and trained people are doing all the above.  Senior executives enable everybody else to be able to do their job and a lot more.

But there are lots of examples where a company’s products are not bought by customers and everybody loses their job. In fact, business development, product managers, product marketers and business development haven’t executed as well as they could.

Numerous studies indicate that anywhere from 65% to 95% of all new products fail in the marketplace. The primary reasons are that for a particular customer’s needs the wrong product is created, the product concept and design are off, the marketing is poor, management’s execution is lacking, or the company itself gets in the way.

Imagine the substantial increase in productivity and return on investment if the new product failure rate could be reduced?

When a new company is formed, the founders typically perform these functions.  But as the business grows these functions must be transitioned to business development, product management, and product marketing professionals who have the skills, resources, and support to perform them.

Our economy and new business ventures need to be able to drive real sustainable growth. In today’s market where insanely great is the new good enough, it takes a team that is deeply skilled in total customer engagement and continual learning and innovation and agile business processes.

We can’t think of a better place to focus investment than within these core growth engine functions:

• Business development
• Product management and
• Product marketing

We believe the return for the companies and our economy for ensuring these teams have the skills, resources, and support they need to excel is far greater than most organizations or for that matter politicians realize.

What do you think?

David Fradin, Principal, Spice Catalyst

dave(at)spicecatalyst.com