Q&A: Regis McKenna discusses storage networking

Regis McKenna is legendary in the ranks of high-tech marketing. His firm was busy advising would-be MIS kingpins well before the PC was even introduced. Everybody, it seemed, turned to him for advice on how to get ahead in the then-nascent computer industry.
Flash forward to 2003. These days, McKenna is an author and adviser who sits on the boards of several high-tech companies. He just published a book titled
Total Access with Harvard Business School Press, and he will be a keynote speaker at the Spring Storage Networking World conference in Scottsdale, Ariz., April 14-17. He was recently interviewed by SNW Online executive editor Bruce Hoard.

What happens to the IT industry when a new technology like storage networking becomes prominent? Generally speaking, we see two broad effects of any new technology. One is new standards or benchmarks for performance and costs -- i.e., dramatic productivity increases evolve, which tend to establish new leaders in both the development of those innovations as well as by early adopters. Users gain by entering the learning curve earlier than their competitors do.
The second effect is that industry standards take a relatively long time to become "the industry standard," creating a perception/reality gap. Initially, new products and particularly new standard-setting concepts are more costly, complex and generally require more market education and hand holding.
As Clayton Christensen, author of The Innovator's Dilemma, pointed out, new technologies are not immediately recognized as winners. Yet storage-area networks offer great promise for focusing network resources and management on what has become the core asset of every enterprise -- rapid access to reliable data, information and knowledge.
After all, we humans have an insatiable appetite for information. Note the TV program Who Wants to Be a Millionaire -- a show where people are paid a million dollars to recall a few facts! The last few years of market turmoil and economic uncertainly only accentuate and stimulate the demand for more immediacy and accuracy of information.

The quest for storage networking interoperability leads to a lot of marketing hype. Based on your experience, how can users separate the hype from the reality? Marketing is a process and not an event. By event, I mean theatrical launches, expensive promotions, a media blitz or road show. Media hype and event-type promotions are part of the time-to-market pace set by technology developers/marketers. They help spread the word, but too often, simply gaining media attention appears to be an end in itself.
A lot of this messaging is aimed at the analysts and journalists who are expected to pick and choose leaders of future technologies. The fact is, new technologies and standards and the adoption pace evolve over a relatively long trial-and-error learning process.
Time to acceptance is a better way to think about it, because the market pace in adopting a new technology is more complex and unhurried even by a media blitz. New technologies become standards largely through collaboration between industry players, integrators/solution providers and strategically selected end users. I look at the application and solution integrators as distribution channels. Partnering is essential right now because adoption criteria for IT/network solutions have become much more difficult in these days of cost-cutting and downsizing. Everyone has to leverage one another's existing assets.
Today, we see less experimentation of new applications and more emphasis on squeezing out the costs and productivity promises from existing suppliers and solutions.

If you were to sit down with clients who had a hot new storage networking product, how would you advise them to proceed? The same as I did with companies 20 and even 30 years ago, and that is that you first build a supporting infrastructure and credible reference base. All IT solutions from the customer viewpoint are more like heart surgery than like buying a Coke or Pepsi. More proof-of-performance and features such as scalability, compatibility and the value of ownership over time have to be demonstrated. Vendors must provide more education, user interaction and have more referenceable users and outcomes in place to give the buyer confidence.
Anyone and everyone can make claims. Few deliver on them. Start small and build. I think IT product companies must focus more on assuring the success of the initial users or betas. The marketplace is much more complex today, and while the total markets are getting bigger, the opportunities are few and competition intense.
Smaller IT companies use much larger partners to build end-user trust and confidence. For large, established companies, I would first partner with their existing customer base and build a beta partnership on new solutions, allowing them to engage early in the development cycle. I have used both these approaches over the past several years, and they have almost always been successful.

Should vendors share financial risks with their customers? I think it has to be shared. The vendor/customer relationship is a partnership, and although it is difficult to place a value on a future risk/payoff, we know that long-term commercial relationships do return value. There are numerous studies showing the high turnover in customers and the benefits of keeping and leveraging existing customers.
Anytime a user or integrator initiates a solution within an enterprise, everyone is on the hook. If the customer sees a long-term advantage, there is R&D as well as success benefits accrued to both supplier and user. The customer is going to learn from this, and that learning curve is valuable to them as much as it is to the provider of the product or service. So both vendors and customers should arrive at some sort of mutual agreement that benefits both sides economically long-term.
Back in the 1980s, when American companies were losing business due to poor quality, companies such as IBM and HP began working closely with their customers, sharing process and quality management information and experiences, not only to improve design and manufacturing process, but also to cut costs and increase the value of their respective products. In the long run, they achieved strong vendor/customer ties.

Some vendors do a great job of working closely with their customers, while some very prominent vendors do not. Why is that? The people who work closely with their customers realize early in the relationship process that there is value in a feedback loop. What both sides must be concerned with is the concept I mentioned earlier -- time to acceptance.
Time to acceptance is particularly important for small companies who are trying to gain credibility and establish a standard. I have found that vendors who work with solution providers or end users early in the development process tend to get acceptance faster because, in effect, the early users can help shape the solution and more often than not also become advocates.
This is not easy. It takes time, investment, experienced product/marketing people and a willingness to allow customer input early. Developing a best-practices customer relationship process, like CRM, requires a management learning curve, processes and practices that can be instilled in the culture of the business. Working closely with customers is not about being friendly. It is about being reliable, consistent and progressively improving each other's productivity.

How has marketing changed over the years? Hype dominates the very idea of marketing, and despite some vibrancy, much of marketing has become obscure and even ridiculous. Thanks to the deafening noise of hype, we no longer know what is real, what is effective or what common set of principles should guide the marketing process.
One thing that's clear is that tactics have replaced strategy. For example, buzzword solutions, promoted as brands themselves and dispensed by branding consultants, proliferate. Terms such as viral marketing and buzz are some of the latest marketing buzzword brands used as new tactics for gaining the customer's attention.
And while the terms may be new, the concepts are old. The original ideas behind these terms have merit, but such terms reflect tactics that usually rely on traditional forms of broadcast tactics in an attempt to manipulate consumer behavior. Consequently, once those ideas are implemented, they usually end up as programs that generate more junk e-mail.


Copyright © 2003 IDG Communications, Inc.

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