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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:

  1. First distributed through a business partner;
  2. As sustainable sales grew, opened a sales site;
  3. As sustainable sales grew, opened a warehouse;
  4. 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:

Lootok Demand Model
Lootok’s Demand Model

  1. Unaware—[don’t know] uninformed; not apprised of services, products, or their value;
  2. Drafted—[don’t care] somewhat aware, but forced to participate by policy or assignment;
  3. Enlisted—[like it] willing to participate, but not proactive (good corporate citizen);
  4. Loyalist—[love it] participates proactively; is self-organized, trusted, and a true believer;
  5. Evangelist—[can’t do without it] advocates publicly; is a change agent and future BCM leader.

When the majority of users are unaware, we need to spend more resources and time on awareness through education, persuasive communication, and coalition building.

When the majority of users have been drafted into the program, we most likely have a tainted brand. We need to simplify, restructure, and build trust.

When the majority of users are enlisted, we have good corporate citizens that will do what is asked of them if it doesn’t take too much of their time. At this point we need to implement some complexity and sophistication into the program. Start to look at industry standards and maturity models. Warning: At this stage, as soon as we take the pressure off the program, it withers. Enlisted people need someone driving the program.

When we have loyalists and evangelists, we need to continually advance the program to maintain interest and participation, and to build new leaders.

By positioning participants along the continuum we also identify barriers that prevent us building demand and the corresponding drivers to create demand. Barriers and drivers help us identify leverage points to create sustainable change within organizations. They give us insight into challenges and solutions as well as cause-and-effect relationships.

Finally, the model tells us three key pieces of information we can use to build our project plans and execute:

  1. What to “sell” to our participants (services and products);
  2. How to “sell” those services and products to our participants (delivery);
  3. How to structure that delivery for our participants (who is doing what, when, and where).

The upshot

Building demand (or adoption) is about creating cultural change and a mindset. Risk management, crisis management, and business continuity aren’t something you think about once a year; they influence the way you work and how you implement new ideas.

We need to put knowledge into practice and form new habits. Without driving this type of cultural change, risk management, crisis management, and business continuity can easily be dismissed as nothing more than buying insurance, tabletop exercises, and building plans.

Lootok’s Demand Model® takes a leader—an entrepreneur with long-term vision—to ensure a lasting change.