What do dog food and risk management have in common? Lootok’s Demand Model®
“Nothing happens until someone sells something to someone.” Thomas J. Watson (1874–1956), Chairman and CEO, IBM
Would a company sell a product or service that no one wanted? It’s an absurd question with a simple answer: absolutely not. You need demand. People have to want what you’re offering. At Lootok, we apply this same basic principle to risk management, business continuity, and crisis management programs.
Of course, most practitioners—people like you and me—see the value and the importance of their role in such services. But if you go outside this tight circle, demand quickly wanes. Rather than march to a linear project plan or industry standard, let demand drive the pace of progress.
Before you rollout, change, or update a global program, begin by assessing demand. Organizations tend to prefer immediate success and tangible artifacts (e.g., risk assessment or business impact analysis), but if you think of your program as a business, assessing demand would be the first thing you would do.
Out of this concept came Lootok’s Demand Model®, developed and refined over the past decade.
A basic business concept as risk model
The Chief Risk Officer (CRO) of a global pet food company was eager to rollout a global business continuity management program. With the goal of protecting his people, products, and profits, he quickly turned to industry standards, best practices, and maturity models. That makes sense and sounds right. Right? It does, except it is the worst approach to building and maintaining a successful, sustainable program.
First, all of his goals and strategies were based on him, not his community (i.e., the end-user; the buyer). It is called egocentric thinking. He defined what he wanted to do and what he thought was good for the organization. He had no idea what the various end-users thought or cared about. This is a common challenge; we tend to see our programs through our own eyes and the role we play. But what is the incentive for the end-user?
Second, he fell into the planning fallacy trap. His plans and timelines were simple and linear, too optimistic. It is called positive illusion. Overconfidence is rewarded in the marketplace and within organizations. When you hear a leader say, “we will do abc this year, xyz next year,” you know they are thinking linearly and do not appreciate how unknown and disruptive the future is. Overconfidence is a program killer.
Third, there was no perceived need (demand) for the global program. No one was begging for us to come or was even inquiring about BCM. In a world of doing-more-with-less, program atrophy, limited attention spans, and budget erosion, good ideas often don’t make it. The CRO needed to create a strong demand or go bust.
We stopped him and asked a question that would change his entire approach to his program.
How did you sell dog food to Brazil for the first time?
When the company entered Brazil there were millions of dogs and a culture set on feeding dogs table scraps, but dog food didn’t exist. The company’s go-to market strategy wasn’t to offer dog food that promised shiny coats, good breath, or strong teeth. The company didn’t offer vitamins or pet insurance. These types of products are for sophisticated buyers and mature markets.
To penetrate emerging markets, you need to solve a problem (real or perceived) with a simple solution. For dog owners, table scraps lead to a broad variety of messy intestinal “outcomes.” But if your dog eats dog food, it is a lot easier to clean up after him. Problem solved, and demand created. Once you have demand, you can then increase sophistication and service options. But first you need strong demand, brand, and reputation.
Then came our second question that would change how much and how fast he would go.
How did you build a presence in Brazil?
Did you build a factory right away (the build-it-and-they-will-come model)? Of course not. Market presence increased with demand and success:
- First distributed through a business partner;
- As sustainable sales grew, opened a sales site;
- As sustainable sales grew, opened a warehouse;
- As sustainable sales grew, opened a factory.
By growing with demand, the company learned about the market in digestible amounts with a lot less risk.
Lootok’s Demand Model®
The Demand Model® is based on the idea that it is futile to roll out an initiative until participants understand what it will do and want to do it. Participants can be a person, function, region, division, segment, or brand. It depends on what you want to measure.
The model begins with categorizing and positioning participants along a continuum, grading their awareness, acceptance, and enthusiasm for the various risk management, crisis management, and business continuity services and products being offered. Five categories of participants comprise this portion of the model: