Chief Strategy Officer, Issue 3

ISSUE 3

STRATEGY AT HP

We talk to HP's Chief Strategy Officer about HP's use of new strategic business planning

Contents

4 9 11 17

Yulia Ivanova gives us a breakdown of long tail vs short tail retail strategies

22 29

Toni Jones, the Director of Social Media, at U-Haul discusses how the company has adopted social media within it’s strtategies

David Barton discusses the reasons behind the recent success of gamification within business strategy Michaela Jeffrey Morrison discusses digital strategy with Keith McKluskey from Harvard Business School George Hill Talks to Imran Haque about his work at Zoetis, the world’s largest animal healthcare company

George Hill talks strategy with Mohamad Ali, the Chief Strategy Officer at HP

Letter From The Editor Hello and welcome to this issue of the Chief Strategy Officer Magazine.

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This is the first issue of the magazine that we have printed so I hope that you find it as good as the online version.

We have received some brilliant feedback from the first few issues and I hope that this issue lives up to the high standards that have been set with the others.

In this edition we have David Barton looking at the process of gamification and the ways in which companies are utilising it to learn more about their customers and employees.

Yulia Ivanova follows up her great article on content marketing with a piece about long tail vs niche and the pros and cons of both approaches for retailers.

We also speak to Keith McKluskey, the Senior Director of Online Strategy at Harvard Business school about his presentation at the digital strategy innovation summit in San Francisco.

These plus many more articles make this an issue packed full of insight and strategic thinking.

As always, if you are interested in contributing to the magazine or have an idea that you would like to see being covered then please get in touch.

George Hill Managing Editor Ghill@theiegroup.com

Managing Editor George Hill President Josie King Art Director Gavin Bailey Assistant Editor Joanna Giddings Advertising Hannah Sturgess Contributors David Barton Yulia Ivanova Max Bowen Michaela Jeffery-Morrison All Enquiries ghill@theiegroup.com

Long Tail vs Short Tail Yulia Ivanova

Retail strategy is currently at a crossroads.

On the one hand we have 'one size fits all' companies such as Amazon, who produce a large range of products to cater to many different markets.

On the other, we have companies such as Apple, who have

deliberately limited the number of products that they produce in order to perfect a particular product niche.

be bought in one place at a price that is cheaper than almost anything that you can find in a traditional shop.

Both are seeing an incredible amount of success. Each have billions of dollars of profit every year, but they have considerable differences in the fundamental ways in which they operate.

Apple has taken the opposite approach, concentrating predominantly on 5 main products, the iPhone, iPad, iMac, Macbook and iPod. It could be argued that due to the selection of each of these products that there are several more, but realistically they are simply derivatives of these five. The other products that they sell are also generally accessories for each of these products, they are there to simply enhance the experience of the original products.

One utilises the long tail technique; this is the theory that by having somewhere that stocks everything that people want, they won't need to go anywhere else. This is the reason that other companies such as supermarkets and electronic warehouses have been a success in the past.

If you only need to go to one place to get everything you need then you are more likely to go there than to several different places.

This approach is perfect for Apple, who's main drive during the past five years has been on the detail within the product. This is anything from Amazon took this idea a step the basic design of the device further when they put the to the way in which the users idea online, creating a web- can interact with the prodsite that could send out al- uct. The fact that the Apple most anything to almost an- maps fiasco sticks in people's ywhere globally. They have minds shows that this is not hubs all over the world and something that happens ofhundreds of different sites ten. that cater to different geog- So which is the best approach to take? raphies.

An interesting fact is that Amazon has over 160,000,000 products that you can currently buy. This means that anything from a book to a swimming pool can

It is easy enough to say that offering a middle ground of selection and concentration is the obvious approach.

However, data has shown that especially during times

of recession, people tend to go for one or the other. The guys in the middle who do not specialise or offer everything are the hardest hit.

Each company must make it's own decisions around this as certain companies will perform well using one approach and poorly under the other. Employees can become either frustrated at the perfectionist mentality or become disillusioned at the lack of product identity, depending on which approach is taken.

One of the major points that needs to be addressed is that by old logic, the person with the most stuff to sell will naturally sell more of it.

This is still the case, but the internet moved the goalposts.

Before the internet, people had the option of going to a shop and buying what they needed or sometimes a mail order catalogue could give them a basic overview of the product that they needed.

However, these were essentially the two choices that people had.

Now, people can search the internet and find thousands of products, each with a unique factor anything from price to popularity. With this new found ability to find particular products for their needs, companies working within a niche area and selling only a limited product line held an advantage.

These companies that may have been locally popular 20 years ago could now find people on the other side of the world who were interested in buying their product.

This meant that a company specialising in a certain type of stereo could be a viable

product, as their audience, which may not be as big as a company who sells many different types of stereo, has increased.

On the other hand there is an argument that Amazon and companies that take a similar 'all under one roof approach' have also made it simpler for shoppers.

Using different techniques to take shoppers to where they want to go has meant that shoppers aren't overloaded with the huge number of products that are available to them. The use of analytics by companies can take people where they want to go, rather than expecting them to find it themselves.

This is where the two strategies combine in a core belief, which is the ease in which they can be found.

Using analytics to pinpoint the kind of products that people want within a long tail organisation is similar to the way that the internet has made companies with more short tail or shorter product ranges findable for those who want to find them.

Essentially there is no easy answer to which of these is

the 'better' strategy as it will very much depend on the company mentality.

The main points that need to be looked at for each strategy are: Long Tail: - Make your product line broad, focussing on high end and budget at the same time - Your products need to be searchable, if you have thousands of products, the customer needs to be either pushed based on behaviour or directed based on interests - There needs to be sufficient variety, not simply a small selection of many products Niche - You need to have special products, either in terms of exceptional quality or originality - The products need to be findable and also need to utilise the internet to make sure you can capture your audience where they are likely to be

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Gamification David Barton Traditionally when people think of games, they think about families playing monopoly at christmas or geeks playing computer games in dark rooms all night.

The traditional thinking on games is not something

that really falls into corporate strategies.

This is changing.

A classic, if basic, gamification model would be through the use of loyalty cards in shops. When buying products the customer earns points, which can then be used to purchase rewards such as money off future purchases or even buying a reward in itself.

Thanks to companies such as Coursera, Bunchball and Bigdoor, this is no longer the case, with gamification appearing as a viable option for multiple divisions across most The uses of gamification companies. can go beyond simple moSo what is gamification? tivational uses and with It is more than just creat- analytics can actually be ing a video game or board used to predict behaviour game, but involves a sys- and identify underlying tem of rewards to achieve strengths and weaknesses. wider goals.

Within education, gaming has become an accepted and widely utilised method to engage with children and improve dedication and concentration.

This same concept can be brought to a work environment with rewards being earned through tasks.

The rewards for this are not necessarily physical things or even things that have any monetary value.

Leaderboards and aspirational goals are often one of the best ways to engage with users.

The process is becoming more and more popular and we are increasingly seeing leading consultancies adopt this in order to help both identification and implantation of projects.

The basis behind this can be traced back to computer games. In reality the goals of the games have no real world value, but in terms of a desire to complete a game, the use of aspirational targets is what drives people to succeed. This same mentality

can be seen everywhere, even looking at something as old as Lent, ultimately giving something up for a predetermined time and then starting again after this time serves no actual purpose. The key to this though is the satisfaction in knowing that you have done it.

gress can be an important way to engage employees to complete a task, be this in training or action.

Gamification can also be mutually beneficial to both parties from a business perspective. Take Duolingo. com for instance. Duolingo allows people to learn a language through ‘levelling So what business uses up’ and ‘losing lives’. The benefit to Duolingo is that does this have?

The ability to get people in return for this they can to fulfil necessary criteria translate websites without is one of the key ways that needing to have dedicated ramification is currently translators. used. For instance looking This kind of mutually benefiat the way that Linkedin cial business model pleases uses this to complete your everybody and shows the profile. They have a bar at kind of power that gamifithe top of the screen that cation can achieve, making shows what percentage of tasks that may otherwise your profile has been com- seem monotonous, not only pleted. Seeing a bar that is fun, but almost compelling. at 75% makes most peo- The limits of gamification ple aspire to fill the bar the are only in the imagination entire way. In reality this of those who want to imachievement means noth- plement it, so which busiing to the individual, but ness areas could you use it they feel the compulsion to for? do it regardless.

The same thing can be done with internal training and tasks. Having a way to measure and display pro-

Digital Strategy in Education: A Chat with Keith McKluskey, Senior Director of Online Strategy at Harvard Business School Michaela Jeffery-Morrison

I caught up with Keith McCluskey, Senior Director of Online Strategy for Harvard Law School, ahead of his presentation at the Digital Strategy Innovation Summit in San Francisco in September.

Keith McCluskey is the Senior Director of Online Strategy for Harvard Law School. Keith is a seasoned online strategist and project manager with more than ten years of experience in the education, marketing,

technology and consulting sectors. He has worked for MIT, Harvard, and Sapient, and holds a Master of Architecture Degree from MIT. Keith was one of the first Department Liaisons at MIT OpenCourseWare, and later a Publication Manager, overseeing OCW’s work with over one hundred faculty. At Sapient, he helped to build a project management function and organizational model for a growing advertising agency. Most recently, he has worked to define an online strategy for Harvard Law School, focusing on governance, staffing, and content organization while also working to improve the tools being used. Throughout his career, Keith has focused on analytics and measurement as keys to organizational improvement.

What unique challenges have you found from working in online strategy at Harvard Law School?

The biggest challenge has been setting the groundwork. When I arrived, my role was new to the school, so the first few years have been focused on educating our constituents and creating buyin around large projects, like re-architecting the school's web site. That process has taken a fairly long time but is now coming to fruition.

How do you think online strategies have changed in the last two years?

The proliferation of channels, and the means of digesting them (primarily mobile) has made it harder than ever to keep up. We see many well-intentioned constituents building their own solutions with easy to use

tools, which satisfies their needs in the short term but over the long term creates a very disjointed experience for our audiences. So, we work to streamline how we do work and how we present content. It's a challenge - we try to mix rapid responses with well-thought long-term solutions, to provide the best mix of speed and longevity.

Social Media is an increasingly important strategic area, how do you think strategists can achieve success in its use?

Measure its use and measure your audience engagement, as much as possible. When resources are constrained, chasing every channel is not a viable solution. Instead, look for channels that provide the greatest reach and impact, and expand on those.

How does the use of online strategy and social media differ at an educational institution to other industry areas?

It's not so different in that we have a high-level message and are trying to attract the best and brightest

amongst faculty, students, and staff. But the pace is different, and the level of buy in is greater. Decisions are largely made by committee, and there are many constituent groups to consider.

What key skills do you need to succeed as an online strategist?

An awareness of the latest trends and tools, and the ability to hold off on them until they make sense for your organization.

Good management skills to ensure that project scope is well understood and work doesn't simply end halfway through. A willingness to take chances on quick, easy solutions that, while not perfect, may serve your needs well. And a good sense of humor - as things change quickly, being flexible is critical.

Strategy in Animal Health: A Discussion with Imran Haque, Head of Digital Strategy at Zoetis

George Hill

I spoke to Imran Haque,the Head of Digital Strategy, eCommerce and Multi-Channel Marketing for Zoetis Inc, ahead of his presentation at the Digital Strategy Innovation Summit, San Francisco, in September.

Zoetis is the world's largest provider of Animal Health products and was until recently part of Pfizer Inc. before debuting its IPO in

February, 2013. In his current role, Imran is responsible for driving the organization's digital strategy as well as enabling delightful customer journeys through all digital channels and ensuring alignment across these various channels as well. Imran was also responsible for orchestrating and launching the organization's eCommerce channel and is responsible for driving revenues through this channel.

included clinical informatics and safety risk management roles. Prior to working at Pfizer, Imran was part of various successful start-up companies. He founded LogonHealth, one of the leading e-Prescribing solutions of its time. Imran was Vice President at LogonHealth and led its strategy and technology areas.

Prior to LogonHealth, Imran was a founding member of Viant, a leading digital stratPreviously, Imran was re- egy consulting company of sponsible for managing Pfiz- its time. Imran holds a BS in er Animal Health's Inside Electrical and Computer EnSales organization where he gineering from Rutgers Uniwas able to double the an- versity and an MBA from Conual revenues contributed lumbia University's Graduate by the division in one year. School of Business.

Prior to his current role, Im- George: What unique experan was the Global Portfolio riences have you found from Director at Pfizer where he your work at Zoetis? managed the global spend and strategy for technology Imran: Working for Pfizer investments. Imran spent the Animal Health, which is now previous 5 years in various Zoetis, has been a great exstrategy, technology and op- perience for me. Zoetis is the erational roles at Pfizer which world’s largest provider of

medicinal products to animals (both farm animals and pets). Zoetis sits in an interesting and unique space. It is a pharmaceutical manufacturer with much more regulatory flexibility in engaging with end consumers (both farmers and pet owners) than the traditional human pharmaceutical manufacturer. In addition, we sell our products directly to the Veterinarians making the business model unique.

I have been involved over the last four years in helping a cultural transformation within the organization to drive digital adoption within the company. The key reason for that is to become ‘easier to do business’ with for our customers by offering them great customer experiences via multiple online and offline channels.

It has been a tough but enjoyable ride thus far.

Having worked within the business technology and strategic sectors of the same

company for the past 11 years, what do you think the biggest changes have been?

For large organizations like ours who have been successful using traditional business models it is hard to challenge the status quo and bring about change.

However, the present day customer (whether it’s a physician, veterinarian or pet owner) demands more from the company that they do business with and thus companies like ours have to continue to evolve and try to not only meet but exceed customer demands. The biggest changes I have seen in our organization, probably similar to other organizations our size, is bringing customer insights in to each and every decision that we make. For example, we are developing a new customer pricing and loyalty program and one of the key work streams is defining a customer journey and gaining customer input prior as part of the new program design. In the past,

we would have created and launched a program and then conducted feedback to modify the program. Incorporating the ‘think customer’ mind shift is thus the biggest change in my opinion.

do and I learn from them every day.

What do you think makes a great digital strategist?

Here is a mouthful that I live by. A great digital strategist is one who can not only enviYou were a digital strate- sion the future of digital but gist as far back as 1996, how also be able to link the path have you kept at the front of to that future from a customnew innovations for so long er perspective in the context and in such a fast moving of the industry that he or she area? is working in.

It’s relatively easy for me on Where do you see digital this front. One, since I am strategy in 5 years time? passionate about the space, being in the loop with innova- From a corporate perspection in this space is not real- tive, Digital strategy will bely work for me and digital is come more pervasive and a core part of my personal start to become part of the life (as it is for many people fabric of core strategy within these days). Secondly, I do large organizations and not work with various analyst a separate function. For exgroups such as Forrester to ample, today we have tradiensure that we keep a pulse tional and digital marketers. on the leading edge research In the future, the ‘traditional’ as well as with my former col- marketer would need to be a leagues from my entrepre- digital expert as well. neurial days, many of whom are involved in leading startups in this space and I try to feed of their energy J. Finally, I have a small team but they are really good at what they

How U-Haul Do Social: With Toni Jones, Director of Social Media Max Bowen

Toni Jones is the Director of Social Media for U-Haul International, Inc., where she leads a team of social media professionals dedicated to Making Moving Easier for U-Haul customers. Toni overseas all U-Haul social media initiatives including content development, customer support, marketing and analytics. Toni’s unique background in process

design, statistical analysis, project management and documentation has aided her successful implementation of a social media strategy that has quadrupled social media referral traffic to uhaul.com in less than a year. She develops and maintains guidelines and training on social media for team members and affiliates across the U.S. and Canada.

Having worked in U-Haul for the past 8 years, do you think that this has given you a unique perspective on your approach to their social media?

Yes. One of the greatest things about working for U-Haul is that we have teams with many years of experience. Believe it or not, even with my eight years of experience here I'm still a rookie in terms of U-Haul standards! In my previous position at U-Haul I managed project management at our Tech-

nical Center, which is the centralized location for our engineering, product development, manufacturing and repair-standards teams.

Working at the U-Haul Technical Center enabled me to gain unique insight into the quality and effort that goes into building and maintaining our products, while providing me with many opportunities to get hands-on experience with the equipment and learn best practices from the experts. When it comes to social media, having this deep understanding of our business has been critical to delivering cohesive and helpful messages to our customers.

What do you think sets U-Haul's social media apart from your competitors?

U-Haul has been helping customers move since 1945, which has allowed us to become the moving and storage experts…because we

have learned over the years from prior U-Haul Team members and customers’ experiences.

U-Haul always makes it a priority to listen to our customers’ feedback in order to improve our products and services for the do-it-yourself (DIY) moving community. This continues to be our top priority on social media.

Our long history of being part of the communities we serve has made it easy for us to embrace the online community as another resource to share best practices, listen to our customers and engage with the moving community.

How does U-Haul utilize their social media analytics to improve customer experience?

We use analytics to measure the success of our social media efforts

and to manage online mentions of our brand.

Our customers are talking about us and with us every day. We view this social engagement as an opportunity to understand the overall customer experience, which helps us develop and share content that is relevant to the current DIY moving community.

Do you think that social media would have grown to it's current size without the use of analytics?

This is an interesting question. My answer is twofold. I do not think analytics has played an integral role in the growth of social media for users.

Social media have become major channels for people to express them

selves, and engage with their online and offline communities, and these communities now include brands.

The participation of brands in social media, however, is entirely different. Social media is becoming an essential part of all brand communication with customers. This growth would not have occurred if brands could not measure improvements to their business or customer experiences as a result of their social media efforts.

Where do you see social media in 5 years time?

The world of social media changes so quickly; five years seems like a decade away.

I do believe that the use of

social media by people and brands will adapt as the rewards and consequences of using social media continue to unfold. As more and more social media channels and functionality become available, users likely will be more selective on where and with whom they engage.

Brands will continue to follow their customers to new social media channels, but will need to find new means to reach them as the social media space becomes cluttered with ads and promoted posts.

Strategy at HP: A Chat With Mohamad Ali, Chief Strategy Officer George Hill

I spoke to Mohamad Ali ahead of his presentation at the Chief Strategy Officer Summit in New York on December 5 & 6.

Mohamad is Chief Strategy Officer for Hewlett Packard. Most recently, Mohamad was CEO of Aspect’s workforce optimization division. Before

joining Aspect, Mohamad served as president of the Avaya’s global services division, and previously as senior vice president responsible for the company’s strategy, corporate development and research labs. Mohamad has also held various senior executive positions at IBM including vice president of strategy and business development for the information management division where he sourced and integrated key acquisitions, including Cognos, FileNet and Ascential Software, creating the foundation for IBM’s business analytics strategy.

What do you think you need to succeed in a strategy career today?

I come to strategy from an operational background.

I’ve spend time in engineering, sales, services, business unit management, strategy, mergers & acquisitions and post-merger integration at various companies including IBM, Avaya and HP. I find the operational experience and resulting insights very helpful in designing and implementing strategy. Having said this, formal management consulting training brings a certain discipline and methodology that is critical to framing and structuring the stages of the strategic process: determining where you are, where do you want to go, and how to get there. As a result, I hire strategists who have a combination of consulting firm experience and operational

experience, and I would advise someone looking to have a career in strategy to build both skillsets.

How has strategy implementation changed in the past 5 years?

I don’t know if this is a general trend, but from my experience, the strategy implementation work that strategy groups do seem to have expanded over the years. At HP, examples include diagnosing, developing and working with the business and functional teams to implement pricing policy changes, measure results and adjust implementation; tearing down hardware to advise the engineering teams on the right supply chain strategy and working with those teams and vendors to implement; and developing governance mechanisms for the company as a whole and working with IT to deploy and debug. Yes, at the top of our charter is developing the company strategy from which all these projects emanate, but that’s just the beginning. Operationalizing the strategy is a critical function of the strategy group. As you can imagine, one of the key elements of the HP turnaround that we are well on our way in implementing has a sizable process reengineering project as a core element, which is coordinated through the office of the Chief Strategy Officer, further aligning strategy implementation with strategy development.

What unique experiences on-line surveys or indirecthave you found from your ly from the growing number of publically available data work at Hewlett Packard?

I love my job at HP. Last Au- aggregation services. But gust, I had the opportunity to with all this data comes the take a similar job at another challenge of finding the neevery large IT company, and dle in the haystack. HP proelected to join HP instead. vides cloud, big data, moThe challenge of developing bility and security products and implementing strategies and solutions for customers. for a company this rich in IP Our big data products help covering possibly the broad- customers solve this “needle est spectrum of IT product in the haystack” problem, of and services in the industry finding actionable insights is a once-in-a-life-time op- from large piles of data. At portunity. We cover a wide HP, we use our own big data spectrum of strategy at HP products, such as Vertica an – from operational reengi- Autonomy, to analyze large neering to product strategy, quantities of data for our infrom consumer tablets to ternal strategy projects. An software defined network- example is supply chain oping for data centers, from timization around memory optimizing one of the world’s forecasting. As you can imlargest supply chains to de- agine, HP buys a lot of memsigning the strategy for to- ory for the tablets, PCs, printmorrow’s most reliable and ers, servers, storage and secure public cloud. But un- networking equipment that like many other technology we make and sell. Our old companies, HP has technol- model of forecasting memoogies under development ry demand and prices had a that can change computing certain accuracy, which was in as fundamental a way as not 100% of course. But imthe transistor. So today’s im- agine, if you knew with 100% mediate job is to enable one accuracy that memory prices of the world’s largest turn- would go up in the next three arounds, while planning to months and what your defundamentally transform our mand would be, you would world tomorrow. It’s a pretty probably buy a bunch of it now, and save a lot of monawesome job. ey. Similarly, if you knew pricHow has the increased use in es were going down and your internet usage changed the current inventory would meet way that many companies your forecasted demand, approach their strategies? you would likely wait and not The internet, and technology buy at today’s higher prices. in general, has provided new There has always been a lot tools for strategists. I can of data available to forecast gather data very fast today, things, and more in becomwhether directly through ing available every day.

value” of our strategic choices. Having started my career after leaving Stanford at two small companies, including one start-up, I tend to prefer the fast route with fewer alternate routes. However, this can require the driver at times to make the impossible happen, such as finding a route around the accident that doesn’t seem to quite exist. Yet, this is the fundamental spirit of our industry, of entrepreneurialism, of Bill Hewlett and David Packard How do you manage to bal- – to do the seemingly imance targeting and flexibility possible. Of course, we do when implementing a new not build all our strategies with the same profile, and strategy? the portfolio contains a mix A strategy can be viewed as of these trade-off points beroute on a map to get from tween speed and flexibility. where you are today to where you want to go. No map route What elements need to be provides all the information concentrated on to make the needed to get from point A most effective strategies? to point B. There could be The strategy business is a an unexpected accident on people business. You need the road, and the driver may smart people. I could just stop need to find an alternate here. However, I’m gathering route. In many cases, you can that you are looking for more, build that flexibility into the and there is more. Straterouting. You might have the gy is fundamentally about option to send the driver on a knowing where you are (and road that is the fastest, but if many organizations comthere is a problem, there are monly can’t get this very first no alternatives. Or you could step right), knowing where choose to send the driver on you want to go and then a slower route, but one that mapping the optimal path to has several alternate paths. get there. I will focus on the We make these trade-offs last piece here, because it is every day in many things the most fun, at least for me. we do. However, sometimes Mapping the optimal path is in business we forget to ac- about data and process. I am tively consider the “options a heavy user However, recently, new data-structures and algorithms have been invented, such as HP Vertica’s columnar data-structure and related algorithms, to help us analyze this data more effectively. By using Vertica on this supply chain strategy project, we were able to realize dramatic financial benefits for HP. So yes, the internet as a source of data, and related new technologies to analyze that data, have indeed changed the approaches we take.

of deep data analytics. One of the small companies that I worked for after Stanford was a data analytics company, and I was the executive responsible for developing the algorithms, including statistical techniques, neural networks, fuzzy logic and genetic algorithms. At IBM, I led and integrated most of the acquisitions that became IBM’s “business analytics” business. At HP, I lead our shared services team of data scientists that provide analytic services to the company, and I am a large consumer of these analytic services for our corporate strategy projects. “Process” is about how you get things done, such how do you determine what new product or service to develop. So my approach to developing optimal strategies to get from point A to point B includes a significant amount of work upfront to gather good data and develop a solid understanding of the process. And then it’s back to people. You need smart people to come up with the techniques to gather the data, understand the processes and have the analytics and consultative skills to synthesize into an optimal strategy.

Now, to make the good strategies effective, the strategy needs to be “impedance matched” to the organization execution capabilities. This

means that a great strategy that an organization cannot execute is not an effective strategy, nor is a weak strategy that the organization can execute well. This is the topic I will be speaking on at the upcoming Chief Strategy Officer summit in NYC in December.

Mohamad Ali, Chief Strategy Officer at HP

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