4 Key Lessons You Can Learn from P&G, HP and Apple

In writing my upcoming book entitled “Building Insanely Great Products”, I identified key lessons we can learn from an insanely great brand or product management from P&G, HP, and Apple.  Here are 4 important ones that help you succeed where others fail.

This is based upon the history of Product Management and Product Marketing Management covered in the previous video.

These lessons learned are even more important in today’s fast-paced market environment where if the enterprise is not agile and can’t respond quickly to changing customer needs, they will fall prey to the competition:

1.     Make sure your key performance indicator is customer value

2.     Drive decision making to be as close to the customer as possible

3.     All product decisions are based on the enterprises’ vision, values, and culture

4.     Accounting principles distort the job of product management

1. The key performance indicator is customer value

Apple is focused like a laser on management by customer value, the total customer experience, and building insanely great products because they have an insanely great company.

After Steve Jobs left Apple in 1985, I have found indications in the history that Dave Packard might have spent some time mentoring Steve Jobs. The key learning that Jobs had is that it takes more than to make simply make just insanely great products, as he would say, but one had to build an insanely great company. He then innovated on the Hewlett-Packard standard of a great company by furthering the concept that the company needs to focus on the total customer experience.   That decision making and management have to be by customer value and not other things.

2. Drive decision making to be as close to the customer as possible

HP never allowed a business unit to grow much beyond 500 people.  That way decision making would be as close to the customer as possible.  In 1993, HP formed council’s that took decision making away from the divisions at a place further away from the customer. Up until that point in time and for the previous 50 years, HP grew 20% per year. After the councils were formed, David Packard writes in his book “The HP Way” that growth slowed significantly for the next couple of years. HP then disbanded the councils and delegated authority back to the divisions. 20% per year growth per year continued through the mid-90s and until Carly Firina became president and started centralizing decision-making.

3. All product decisions are based on the enterprises’ vision, values, and resulting culture

So what must a company do to become insanely great and build insanely great products? My research has found that it all starts with a firm foundation of company values and vision that together creates a culture. Such that whenever any one goes into a meeting to make a decision, everybody is working from the same page.

HP’s values were codified in the HP way. They were used as a model for Apple values.  I used them every day in my decision making while working for both companies and I knew the other people in the room subscribed to the too.  They were not just words on paper.  We were taught them.  Managers demanded we follow them.

4. Accounting principals distort the job of product management

The chairman of General Motors Alfred Sloan codified today’s accounting principles in the early part of the last century which lists inventory as an asset and people as a liability. He developed this field of accounting as society evolved from an agricultural to industrial society.  We still use it today even though we are now in the information age.

HP didn’t strongly believe in the standard accounting methods as a means of strategic management of the company. How do I know?  I was there and the history books show how they pioneered the field of lean just-in-time manufacturing and helped teach the Japanese how to do it. Some of the same concepts of lean have evolved into agile product management and now a focus of Spice Catalyst on Agile Business Acceleration…for the whole enterprise.

When a downturn occurred, HP knew that their people were the most important asset, not a liability as Sloan’s accounting methods say.  During recessions, employees worked fewer hours so that all people can be retained.   The result: when the recession ended the company wouldn’t have to go to the expensive cost of finding and training new people. HP also doubled down and invested more during a recession doing product research and development even though that increased costs. Steve Jobs was quoted as saying in 2008 that he was doing the same at Apple. Hence we are seeing the results of that strategy with Apple now becoming the most valuable company in the world. They have come flying out of the great recession with the likes of Nokia, RIM, and Microsoft being lost in the dust.

Then take the Sloan notion still be practiced on Wall Street that inventory is an asset.  How much of an asset was the millions of cars and parts General Motors had when annual car sales fell to nine million per year in 2008 from 18 million projected?

Meanwhile Wall Street, which has been trained in the post-agricultural economics of accounting, continues to judge companies by their profitability which includes doing layoffs at the time of economic hardship and how aggressive they are in cutting costs including for new product development. This is further exasperated by their short-term focus on quarterly earnings.  This reduces the time available to truly learn about customer wants and needs and forces decision-making around profitability at the expense of customer satisfaction.  Not to mention a loss of focus on the long-term success of the company.