Required Reading: Tom Osenton on the "Death of Demand"

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When we've had too much to eat, our stomachs tell us that we're full. But when the demand for consumer goods has reached full capacity, the signal isn't always as obvious. According to Tom Osenton, author of The Death of Demand: Finding Growth in a Saturated Global Economy (Financial Times, Prentice Hall), however, consumers have reached their limit. This book emphasizes how essential it is to acknowledge limitations, reevaluate current objectives and expectations, and invest in innovation to reach a level of stability that will get the economy back on its feet. CRM magazine's Emmy Favilla spoke with Osenton to get an inside look into his theses. CRM:
You emphasize that cutting investment in innovation and jobs are bad moves for long-term success. Are companies doing this for a quick fix? Tom Osenton: For the most part it's about a quick fix. It's about making the numbers this quarter, and the future be damned. And historically, most CEOs of public companies have been monetarily motivated to operate this way. This is why Wall Street applauds CEOs who are tough on costs. We don't need any more CEOs who are tough on costs. We need more CEOs who are tough on revenues. CRM: You assert that businesses must acknowledge limitations, reevaluate current objectives and expectations, and invest in innovation to get the economy back on track. Will they? TO: It's going to be necessary for survival, though many don't fully realize or believe this yet. It will always be difficult to move traditional markets in new and perhaps unnatural directions. Because of this, I think you'll see some undreamed of consolidation over the next five years, for example in the auto and airlines industries. Some will fail to one degree or another and then slowly we will see healthier companies emerge. But this will take time, and will not happen without a fair amount of pain. CRM: Your book describes how the CEO of Campbell's Soup convinced his board to reduce earnings for two years to revamp some of its classic products. What can companies extract from innovation investment as a means to justify the need to reduce company earnings? TO: In terms of technological innovations, its going to require companies to embrace a direct marketing mind-set, which is going to be driven by CRM going forward--and that's going to require an investment in innovation. Companies need to start to more logically capture data with a purpose or application in mind, [and] with the intent of using the data as a marketing tool to generate more sales from existing customers.... The Web provides a practical cross-selling solution for the first time ever. Prior to the Web you would have had to use direct mail to attempt cross-selling efforts. But even then the efforts would not be as precise as they can be with data that literally identifies consumers who are buying your competitor's products in categories in which you also compete. [Companies] must embrace CRM and customer share marketing initiatives as the most logical means to communicate with customers going forward. Other Page Turners
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