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SHIFT PERSPECTIVES
READ SAW YOU KNOW FELT HEARD
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SHIFT PERSPECTIVES
Foreword by Alain Thys, Futurelab
hese are exciting times. Sure, we have a recession, and there is the looming threat of inflation, unemployment and further value destruction. But all these clouds are also lined with opportunity. The opportunity to change the way we work. To set things right. After all, people only change when they “have to”. And from a business perspective, this is the case. In many companies, doing more of the same is not an option any more. While this possesses challenges, it also allows shedding the bad practices that have accumulated over the past two decades. The mindless shout and sell communication efforts. The customer-toxic practices. The often uninspiring types of innovation which shun breakthrough risk to the benefit of play-it-safe-incrementalism. So for me, and for Futurelab, these are great times. After all, beyond helping our clients, we are on a mission to change the nature of marketing itself. We want to bring the profession back to its roots by focusing on the customer, the bottom line and breakthrough innovations that truly differentiate a company. We want to make marketing an all-company sport. Get finance, logistics, sales, production, HR and yes even the marketing department to do what is right for the business and for the customer, rather than what their silos dictate. But we cannot do this alone. In fact, no one can. For marketing to regain its position as a truly meaningful profession, it needs to step away from the centralist knowledge paradigm. Here, a number of smart people hold all knowledge and disseminate this to those less literate. They often call themselves professors, thought leaders, strategists or even gurus. Yet if there is one thing we’ve learned from this recession, is that no one holds all the wisdom. The world as we know it has become unpredictable, and anyone claiming to have all the answers is simply not being truthful. That is why we have started to look for initiatives from people that get it. Individuals whose thinking and actions we can help amplify by means we have available. You are currently looking at one of them. Launched by Bogdan Meica & Stefan Moghina, Shift Perspectives is a digital publication that transfers on to 30 pages what we attempt to do on the Futurelab blog. Bring together the thinking of some of the sharpest minds in marketing, strategy and innovation into one thought-provoking piece. I have to say, they did it quite well. From Seth Godin to Tom Anderson they brought together global thinkers who understand that a project by two young people in Romania can have the same value as the journal of a prestigious business school. To ensure it also has the same reach, I am proud that they asked Futurelab to endorse their initiative and help launch it to world. This we gladly do. Because it is people like Bogdan and Stefan that are the real change agents of the marketing revolution.
October issue
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SHIFT PERSPECTIVES SETH GODIN CHALLENGING THE STATUS QUO IS WHAT I DO FOR A LIVING ARE WE SOLVING THE SAME PROBLEM? NOT SO GOOD AT MATH
GERALD NANNINGA IT MUST BE BETTER LIVING IN FEAR
JONATHAN SALEM BASKIN TRANSFORMATION INTERRUPTED SCARCITY AS A BENEFIT
MITCH JOEL MAYBE IT’S TIME FOR MARKETING TO MOVE AWAY FROM THE BIG IDEA TRUST IS NON-TRANSFERABLE THE LESSER OF TWO EVILS WHEN IT COMES TO DIGITAL MARKETING
IDRIS MOOTE WHAT’S YOUR STRATEGY FOR STRATEGIC INNOVATION? WHAT’S THE LAST INNOVATION YOU’VE SEEN COMING FROM THE INSURANCE INDUSTRY?
CHRIS LAWER LESS CAN BE MORE: PREPARING FOR THE RECOVERY IN UNCERTAIN TIMES
DAVID ARMANO 5 CHALLENGES SOCIAL BUSINESS WILL FACE
JOHN CADDELL To motivate front-line employees: don’t just thank them, use their insights
TOM H. C. ANDERSON Should Fortune 1000 Companies be Active on Social Networks?
INTERVIEWING SETH GODIN October issue
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SHIFT PERSPECTIVES
Challenging the status quo is what I do for a living
SETH GODIN SETH GODIN is a bestselling author, entrepreneur and agent of change. Godin is author of ten books that have been bestsellers around the world. Seth is a renowned speaker as well. He was recently chosen as one of 21 Speakers for the Next Century by Successful Meetings and is consistently rated among the very best speakers by the audiences he addresses. Seth was founder and CEO of Yoyodyne, the industry’s leading interactive direct marketing company, which Yahoo! acquired in late 1998. He holds an MBA from Stanford, and was called “the Ultimate Entrepreneur for the Information Age” by Business Week.
http://sethgodin.typepad.com
October issue
Willfully ignorant vs. aggressively skeptical
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hallenging the status quo is what I do for a living. Either that or encourage other people to do it. But there are two ways to do it, and one of them is ineffective, short-sighted and threatens the fabric of the tribe. The other seems to work. I heard someone screaming about death panels and how the government was not only going to kill his grandmother, but would take out Stephen Hawking himself if it had the chance. The screaming is a key part, because screaming is often a tool used to balance out the lazy ignorance of someone parroting opposition to an idea that they don’t understand. (If you want to write to me about this post, please write to me about the screaming part, not about whether or not you agree with the facts or the science. That’s what the post is about, the screaming.) If you want to challenge the conventional wisdom of health care reform, please do! It’ll make the final outcome better.
But if you choose to do that, it’s essential that you know more about it than everyone else, not less. Certainly not zero. Be skeptical, but be informed (about everything important, not just this issue, of course). Screaming ignorance gets attention, but it distracts us from the work at hand. It’s easy to fit in by yelling out, and far more difficult to actually read and consider the facts. Anytime you hear, “I don’t have the time to understand this issue, I’m too busy being upset,” you know that something is wrong. Brands face this as much or more than politicians do. I witnessed a knock-down fight between two teenagers over which operating system was best. There are generations of arguments between Ford and Chevy owners. Motorcycle gangs are often parochial in their choice of bike. And in each case, the less people know, the more they yell. If you want to change what your boss believes, or the strategy your company is following, the first step is to figure out how to be the best informed person in the room.
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Are we solving the same problem?
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SHIFT PERSPECTIVES
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his is the biggest disconnect I know of. It happens all the time in B2B sales, in service marketing, in getting along with your boss and even in hiring someone. One side thinks they have figured out a solution. They spend a long time talking about the solution, architecting it, refining it, pricing it, pitching it, delivering it. The other side ends up not liking what they get. The disconnect: the first side says, “this solution is exactly as we described it!” the other side says, “it doesn’t work right.” The disconnect is caused because people focus on the solution instead of the problem you were given to solve. It’s a lot easier to talk about features and hours spent and someone’s resume and a lot more difficult to dig into the problem itself. This is where the obligating question becomes so critical. “If we can deliver a dam that stops the water flow, will you be delighted?” “If I can hire someone who can answer ten calls an hour and keep customers coming back, will that work?” “If this book cover receives an award for best design, will that be a win?” The difficult conversation about the problem is far more useful than the endless effort on solutions. The reason is that people don’t tell themselves (or you) about the problem they’re actually solving. Sure, they’d like an employee that does x, y or z, but you know what, they’d also like that person to be really good looking and willing to do our bidding, waiting on us hand and foot. Sure, we’d like a personal computer with a lot of computing power, but we’d also like it to be light and sexy and covetable...The more clarity you can get about what a successful solution looks like, the more likely you will be to have a delighted customer when you’re done.
imple quiz for smart marketers: Let’s say your goal is to reduce gasoline consumption. And let’s say there are only two kinds of cars in the world. Half of them are Suburbans that get 10 miles to the gallon and half are Priuses that get 50. If we assume that all the cars drive the same number of miles, which would be a better investment: Get new tires for all the Suburbans and increase their mileage a bit to 13 miles per gallon. Replace all the Priuses and rewire them to get 100 miles per gallon (doubling their average!) Trick question aside, the answer is the first one. (In fact, it’s more than twice as good a move). We’re not wired for arithmetic. It confuses us, stresses us out and more often than not, is used to deceive.
October issue
not so good at math •• 5 •
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SHIFT PERSPECTIVES
It Must Be Better
Gerald STRATEGIC PLANNING FROM Nanninga
I have nearly 30 years of experience in business, having worked with a number of leading retailers, including Best Buy, DSW, Supervalu, Shopko, Filene’s Basement, Tweeter Home Entertainment, Save-A-Lot, and Value City, among others. Most of my work has been in the area of Strategic Planning, but I have also done work in marketing, finance and consumer research. I am bi-lingual (speak both marketing and finance) which helps me take a more complete and balanced approach to business problems/issues. http://planninga-from-nanninga. blogspot.com/
October issue
THE STORY
THE ANALOGY
any years ago, there was a comedian who specialized in doing impersonations. Now, it used to be that a lot of comedians did impersonations. This comedian, however, put a unique spin on the genre. He specialized in doing impersonations of people who died long before the invention of recorded sound. For example, he would do impersonations of people like Abraham Lincoln or Aristotle. It was interesting to watch, but was it accurate? I have no idea what Aristotle sounded like or what his mannerisms were. For all I know, this comedian could have it all wrong and not even be close. But in the end, I guess it doesn’t matter. Since nobody else knows what Aristotle sounded like or acted like, nobody could challenge the accuracy of the impersonations. As long as the comedian was funny, the audience would accept his impersonations. It was those other comedians, who did impressions of people we knew, who were more sharply critiqued (“Hey that’s not what John Wayne sounds like”).
When nobody knows what truth is (and nobody is able to discern the truth), then nobody can effectively challenge your position. This was the situation the comedian was in. Nobody knew what those ancient people sounded like or acted like, so the audience could not challenge the comedian’s impression of these old people. They just sat back and enjoyed the show. However, if someone is doing an impression or imitation of something you are very familiar with, then the criticisms come flying. You know what “truth” is because you have experienced the real thing. Any variation from the real thing will be noticed as a flaw or defect. Rather than just sitting back to enjoy the show, you compare the imitation/impression to the reality (as you remember it) and get upset if the imitation does not live up to your expectations of what truth is. You’ll shout something like, “I know what John Wayne sounds like and acts like, and that was not it!”
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FUTURELAB This situation is similar to what happens in business. In product development, you have one of two strategic choices: either create something totally new, unlike anything else in the market OR create a “me, too” product that is a variation of something which already exists. The first choice would be like our comedian, who did impressions that were totally new to you (you had never heard the voice of these people before—you have no reference point). Similarly, totally new products have no reference point—what you invent defines the category. It is accepted as authentic and people enjoy it for what it is. The second choice (offering a “me too” product) is like comedians who do impressions of people we are very familiar with (you have a reference point). You are more critical, because you have a benchmark to compare it to. Any variance from the original reference point makes your product less “authentic.”
THE PRINCIPLE The principle here is that the less the familiarity, the greater the acceptance. Therefore, if you blaze new trails in product development towards areas unfamiliar to your customers, your development efforts have greater potential for acceptance. We could see this principle at work in the comedian story. We are more forgiving of the comedian going where we’d never been than ones covering familiar impressions with a slight imperfection. I also experienced this principle recently in a restaurant. This was no ordinary restaurant. It was an exotic restaurant specializing in exotic foods which I had never eaten before. Heck, I couldn’t even pronounce the words on the menu, let alone understand it. When the food came out, I had no preconceived notion as to how it was supposed to taste. I had never eaten anything like this before. Some of it tasted fine. Some of it tasted very odd to me. But since this was a nice restaurant with a October issue
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SHIFT PERSPECTIVES
I had never eaten anything like this before.
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good image, I assumed they were all supposed to taste like that. It never occurred to me that the dishes might be prepared wrong. They supposedly had excellent chefs, so I just took it for granted that these concoctions were supposed to taste that way— even if I didn’t like it.
But what if I was wrong and the food really was prepared poorly? What if this really was bad tasting food? I wouldn’t know. So I was satisfied, whether it was right or wrong, because I didn’t have a pre-conceived notion of what “good” would taste like. I just sat back and enjoyed the dinner. Now if this fancy restaurant had served me a hamburger, I would have had a reference point. I could have complained if their gourmet burger drifted too far away from my concept of what a hamburger is supposed to look like and taste like. But they did not offer a “me too” burger. They offered me a taste of the unknown. A taste of the unknown is always yummier than an off-beat version of the familiar. You can also do this at the low end of the restaurant spectrum. Quiznos has had great success with their $4 Torpedo. The beauty of the Torpedo is that it is so unlike anything else out there that there is no reference point to tell if it is a good torpedo or a bad one—so you accept that it is a good one, and worth the $4.
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FUTURELAB Quiznos knew that having a $4 item on their menu would be a key to success in this recession. They could have lowered the price of their familiar regular sub sandwich to $4, but that would have caused problems. First, once you lower the sub to $4, there is an expectation that $4 is now the right price for that sub. It would be difficult to raise the price back up later without ruining the new perceived value. Second, the regular sub is not designed to work in the business model at $4. Either you have to cheapen the sub (which would be noticed, since people were familiar with it) or you have to lose money on the deal. By contrast, the Torpedo was designed to work in the business model at $4. It wasn’t a “cheapened” anything, since it was brand new. Sure, it had less meat than a regular sub, but the Torpedo never was a regular sub and was not expected to be one. It was a Torpedo, and this is how Torpedos are supposed to be. They had never been anything else. A strategic piece of genius!
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When positioning your product, don’t spend too much time comparing it to the status quo product.
If you make too big a deal out of the status quo, you are acknowledging its leadership, which makes you an also-ran. People will say, “If you are so good, then why does the status quo have higher sales?” Instead, position yourself as an entirely new way to solve an old problem. There’s just something about saying that “my revolutionary new way is better” which sounds more believable than saying “I’m making basically the same thing as what is already out there and successful, but I’m better.”
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Sometimes you can get around cost pressures by replacing the familiar with a cheaper unknown which is positioned as a wholly new product.
October issue
SHIFT PERSPECTIVES
So what does this mean for your strategy?
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It is almost always better to create something brand new, where you can define the parameters of success, than to copy someone else, who has already defined success (as being them). When you control how a product is defined, then you can define the perfect product as the one you are offering. Apple has been very good at this. When Toyota invented the Prius, they made a brand new car which defined what a hybrid is supposed to be. After that, anyone else who tried to make a hybrid brand had to be compared to the definition of the perfect hybrid—the Prius. And of course the Prius is the superior Prius, so it wins. Worse yet were automakers who tried to make a hybrid version of a non-hybrid car people were already familiar with. That didn’t work, because their familiarity with the gas hog version biased them against the hybrid version (familiarity made them more critical).
Cheese was getting very expensive, which is a problem for companies like Taco Bell, who use a lot of cheese and want to keep their prices low. But Taco Bell has never been afraid of inventing new menu items nobody has ever heard of. So the new items substituted cheaper cheese sauce for cheese. However, since these were brand new items that never had real cheese in them, it didn’t look like a cheap substitution. It was just how the new item was supposed to be. This is far more successful than if they had taken familiar items and did the substitution. Then, Taco Bell took this cheap sauce and put hot spices in it and invented “Hot Lava Sauce.” So now the cheaper substitute was a unique, premium item in brand new menu items.
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SUMMARY Winning strategies tend to blaze new trails rather than rework the familiar. The revolutionaries get to define the category in their favor and tend to receive less criticism. Because they define the category, they must be right.
FINAL THOUGHTS Even if your product is not all that revolutionary, that doesn’t mean that you cannot package it in a revolutionary manner. Chrysler was making fairly ordinary trucks, but they were packaged as revolutionary because they had the magic Hemi engine. October issue
LIVING SHIFT PERSPECTIVES
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THE STORY
knew a woman who was very curious. She liked to read all the time. One of her favorite topics to read about was the dangers and threats which could beset the world. She became an expert in understanding all the potential dangers—everything from the dangers which could beset a women walking alone in a parking garage to the dangers to the entire planet from the thinning of the ozone layer. The more she read about potential dangers, the more fearful she became. She eventually became afraid that all of the potential dangers had a high likelihood of happening—to her. She became increasing afraid to leave the house. Her fear for the entire health of the planet (and her inability to stop every threat) became so intense that she was prescribed medicine in order to cope.
THE ANALOGY
Although it is not a bad idea to become informed about potential risks, too much fear about those risks can be very detrimental. As we saw in the story, excessive fear over potential threats can be paralyzing. Too much fear leads to an inability to act and move ahead. The fear can trap us in our homes. Business is all about taking risks. As they say, “No Risk, no Reward.” Of course that doesn’t mean we should ignore all warning signs of risk and dive into a situation blindly. That almost always leads to disaster. The recent economic collapse, for example, was due to not properly understanding the risks of the complex financial products which were introduced. Financial institutions dove too deep into these risky ventures—blind to the extent of the risk—and it almost collapsed the entire economy.
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One of the key roles of strategic planning is to provide knowledge and insight so that the risks are minimized. Better, less risky moves can be made based on the discipline of strategic analysis—a solid understanding of the environment. Strategic planning makes you smarter so that you can act smarter. However, even with the use of strategic planning, the risks do not go entirely away. If you wait until all the facts are in, it will be too late to take the lead. The market dynamics will already be set in concrete and not have room for your late entry. Therefore, there will always be an element of the unknown in every good strategy.
FEAR Over time, the fear so gripped her that she could no longer function in the outside world. She was a true sufferer of agoraphobia—and it was so sad to see.
The key is to not become paralyzed with fear. Instead, the goal is to make risk your friend.
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LIVING 1
SHIFT PERSPECTIVES
THE PRINCIPLE
The principle here is that risk is not to be avoided, but rather to be exploited. Don’t be like my friend who was so fear stricken that she was afraid to leave the house. To win, you have to take your business out into the marketplace and aggressively fight for success. Even in tough economic times, one cannot just hunker down in the bunker in fear and wait it out. Market share changes hands all the time—especially when times get tough. Customers are more willing to reconsider their habitual buying patterns when their economic condition worsens. Therefore, tough times are not times to hide in your house, because your share is more vulnerable than ever. Of course, the share of your competitor is also vulnerable, so you have an opportunity to gain if you go out and act smartly. Taking calculated risks into uncharted territory can be one of your best friends, because:
Of course, not all ventures into new space are successful. So how can we improve our chances of success within this uncertainty? Here are four suggestions.
Plan the Entire Chain Successful ventures are based on successful business models. In today’s increasingly sophisticated marketplace, it is not enough just to create a cool product. To make money, one needs to plan and control the entire value chain around it. Your business model strategy must include a way to get the rest of the value chain to work in your favor. Otherwise it can work against you. Compare, for example, Sony versus Apply. Sony has concentrated on making cool devices. Apple has concentrated on making cool business systems—devices, apps, stores and so on. Apple realized that a cool device can quickly become a commodity—a piece of hardware that gets the profit margin kicked out of it if you do not control the selling process downstream. Therefore, Apple has tightly controlled its retail distribution. Second, Apple knew that if the cool applications shift to another device, nobody will want the Apple device, because what customers really want is the ability to get to the cool apps. As a result, Apple did its best to become THE place for the cool apps programmers to programming for. Finally, devices get purchased infrequently, whereas the apps get purchased all the time. Apple knew if it was not getting a cut of the apps business, it was losing out on where most of the ongoing value in the business model was being made. Therefore, Apple made sure it was THE place for purchasing the apps, so that it could get a cut of the sales. By planning the entire value chain, Apple was able to ensure that the value chain continued to flow through Apple and did not get diverted somewhere else. This this thoroughness and control significantly increased Apple’s ability at being a success in risky new ventures like the ipod and the iphone. By contrast, Sony’s recent ventures aimed at cool devices only have not been as successful. They have recently suffered a large loss. Sony’s cool devices are not cool enough on their own to create a secure business model. By not controlling distribution downstream or applications upstream, Sony is more vulnerable to being bypassed in the value chain. By not having the compelling stickiness of a tight value chain, Sony has to cut prices in order to create preference, which hurts margins. Sir Howard Stringer, head of Sony, has seen the error of this narrow focus and is in the process of transforming Sony to think more holistically about the entire value chain. So, success in new ventures goes up if you plan out the entire value chain—to build a system which is biased in your direction and makes all the players better off if they play by your rules.
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FEAR
a. It allows you to get a head start in an area which is relatively uncontested (like the Blue Ocean Strategy). b. It allows you to write the rules in your favor. c. It increases your chance of being the leader and reaping most of the rewards. October issue
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SHIFT PERSPECTIVES
Look for Superior Solutions A lot of businesses get excited by a new venture when it uses the latest and greatest technology. The mindset tends to be that “if it uses the latest technology, it has to be better, so the business model should succeed.” The problem is that most people don’t care about how up-to-date the technology is. What they really want is a superior solution to a problem. Sometimes, the latest technology does not improve the ability to solve a problem. Sometimes it even makes it worse. Take internet grocery shopping, for example. Nearly every venture into this space has been a miserable failure. Is it because they did not use the latest technology? No, it’s because internet grocery shopping is an inferior way to shop. They claimed that internet grocery shopping would be more convenient. However, how convenient is it really when you consider that:
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Narrow the funnel quickly Although there are risks to putting all your eggs in one basket, there are also risks to trying to venture into too many different directions at the same time. The solution? Don’t be afraid of looking at a lot of potential new ventures early in the process. This increases your chance of finding a real winner. However, quickly determine which ones have the best shot of success and stop the funding on the rest. One of the biggest drains occurs when one delays halting support for the losers. The longer you wait, the worse it gets.
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a) You have to sit at home for a 4 hour delivery window (which is a longer time than it takes to shop). b) If they are out of stock on an item you want, either they may make a substitution you don’t like or they will not supply the item, leaving you with only half the ingredients needed for a meal. Is that convenient? c) The ordering process on line is less enjoyable than shopping, and unless you like eating the same food every week, it is still time consuming. On top of that, a lot of the things a customer does for free when shopping the store (picking out the items, checking them out, taking them home) now are done by labor that must be paid if you buy off the internet. This makes the internet process a lot less efficient and the groceries a lot more expensive. As it turns out, the minor bit of convenience is not seen as enough to justify the higher prices the new internet grocery model needs to earn a profit. So the business model fails. The moral? Just because a model uses newer technology does not automatically make it better. Only go after ventures which truly have a significant advantage over the status quo in solving the customer’s real problem.
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Experiment and Adapt Ultimate successes rarely end up looking like the original vision. They tend to morph along the way as you learn. Therefore, rather than working in the lab alone until the original vision is perfected, do some early experimentation. Let beta models out into the marketplace. Get input along the way from your customers. Be willing to flex and adapt. This increases the likelihood that the final product is what the market really wants.
SUMMARY
FEAR
October issue
Even though new ventures pose risks, that is not a reason to hide and resist venturing into new areas. The idea is to use a strategic planning process which minimizes the likelihood that the risks will hurt you. This includes ideas such as planning the entire value chain, planning for superior solutions, narrowing the funnel quickly, and experimentation/adapting.
FINAL THOUGHTS
If you do the types of activities mentioned in this blog, risk moves from being an enemy to being a friend, because it gives you an edge over the competitors who do not follow this advice.
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SHIFT PERSPECTIVES
Transformation Interrupted JONATHAN SALEM BASKIN I’m Jonathan Salem Baskin, and I’ve worked for 27 years translating branding strategy into something more than images and words, leading marketing communications for world-leading brands and advising others. For almost a decade, I partnered with experts in 6 major markets worldwide to serve clients in Europe, Asia, and North America, leading a number of business initiatives to deliver the behaviors that substantiate brand by crossing departments, functions, and both digital and offline communications domains. My experience taught me one, overwhelming truth: The best way to discover better answers consistently is to ask better questions relentlessly. I have dedicated my work and writing to this purpose, in the hopes of improving the delivery and experience of brand marketing for businesses and their consumers. http://www.baskinbrand.com/
October issue
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ccording to market research firm Hartman Group, consumer loyalty is shifting -- from products and brands, to the experiences offered by retailers -- in a radical transformation that started before the recession. I think the change is much bigger than that. Hartman is onto something because it specializes in enthnographic market research (among other tools), which is an attempt to understand consumers in the context of their lives, both in terms of their knowledge and beliefs, and through their behaviors. I believe the firm is saying that capturing consumers’ attention with creative and/or compelling marketing communications no longer carries the water in our busy, confused, noisy lives; experiences are what stick, bring differences into sharp focus, and compel purchases. The problem is that retailers can’t “own” experiences or, more broadly, experience is a synonym for the context of reality. The more people know, or think they know, the less they believe (broadly), and more tenaciously hold onto what little they do (specifically). This is the intriguing dichotomy of our Internet Age; as consumers gain the capacity to explore and share, they lose the ability to trust and commit.
Institutions are no longer credible, and historic truths aren’t reliable; facts and fiction are endlessly available, and often impossible to tell apart; every subject is up for discussion and debate, which occurs in real-time, all the time. No wonder people aren’t willing to buy based on the intangibles on which brands have relied for almost a Century. Reality is the new imagina-
Reality is the new imagination tion, providing the context in which actions can assert truth (if not simply immediacy, and thus clarity) to consumers. This idea isn’t limited to retailers; the challenge is for any business to make what it does, not just what it says, believable and compelling.
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FUTURELAB Actions, and the myriad of experiences they enable -- from in-store environments, online glimpses of manufacturing, policy decisions, to the behavior of every employee and vendor, whether at work or not -- are what feed awareness, conversation,
SHIFT PERSPECTIVES and thus brands.Brands exist in this reality of experience. Communications can describe it, but marketing can no longer serve as a substitute or dictation for it. It’s a great opportunity, and it’s bigger than, say, a social media strategy, or something that’s experiential and in-store. These are tactics. The radical transformation underway in the marketplace started before the meltdown, and it’s inevitably changing the very substance of what marketers do for a living. The recession was a brief interruption. The challenge is to see past it.
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Think how many marketers fail to see this somewhat simple truism, and waste time and money trying to educate consumers about what they should know about stuff. The whole concept of differentiation relies on a series of attributes that are often lost on folks; consumers are supposed to discern the “bold” positioning of one product from the “reliable” qualities of another one (that’s otherwise all but identical). This is especially evident in new product launches, which struggle to break through the cluttered mediaspace to get seen. But who cares if a laundry detergent has 5% more stalagmites than another, or that one bottle of hooch is aged 9 years vs. 8? These can be very meaningful and relevant attributes, but the communications challenge is to make such things apparent in a nanosecond. Perhaps longtail growth plans look smart on a spreadsheet, but I suspect that loads of people have lost their jobs before reality ever lived up to the aspirations of the far right-hand column. That’s why social media chatter isn’t synonymous with sales, and why so many of the latest product campaigns have failed to deliver. Talk is cheap, if not outright worthless sometimes, and I think the definition of “success” in this business context requires the tangible, unequivocal truth of paid transactions. Anything else can be an enabler and/or sustainer, but not a substitute. nob Creek bourbon has announced that it may run out of stock yet this summer, and that thirsty customers will have to wait until the next batch arrives on store shelves in November. I think this is brilliant, old-school marketing. One of the most important brand attributes of successful products and services is success; consumers want to know that other consumers want stuff, and sales is a qualifier that goes far beyond conversation as proof of that interest. That’s why movies strive for big opening weekends, and why a sellout of anything invariably leads to reservation lists. While software mechanics strive to make supply meet demand in an idealized state of ongoing one-to-one perfection, a little extra demand goes a long way.
Scarcity as a benefit
October issue
Which brings me back to Knob Creek. It announced that it is “letting its current supply run out,” which “may” lead to shortages..so it pretty much told its customers to go out and horde the stuff. I love it. It could have also applied some new media strategies to the ploy: • Let customers register for updates/access to the next batch (even pre-order, though I bet there’s some law against doing that online) • How about a social media campaign letting drinkers post “their last Knob Creek experience” and enter some contest or game for a payoff via the next batch? • Why not create a campaign that let would-be customers witness the production process? If it’s the true differentiator, they’ve got the nanosecond part communicated, so why not get folks involved in the education part. I could see an “Aging-cam” that let people stare at an oak cask. Nothing would happen. Get it? Campaigns like this renew my faith in the marketing business. Scarcity is a brand benefit. I hope it’s a successful strategy for Knob Creek.
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FUTURELAB
SHIFT PERSPECTIVES
Maybe It Is Time For Marketing To Move Away From “The Big Idea” Mitch Joel
Marketing Magazine dubbed him the “Rock Star of Digital Marketing” and in 2006 he was named one of the most influential authorities on Blog Marketing in the world. Mitch Joel is President of Twist Image – an award-winning Digital Marketing and Communications agency. In 2008, Mitch was named Canada’s Most Influential Male in Social Media and one of the top 100 online marketers in the world. His first book, Six Pixels of Separation, named after his successful Blog and Podcast will be published in the Fall 2009 on Grand Central Publishing – Hachette Book Group (formerly Time Warner Books). www.twistimage.com/blog
October issue
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verything we do in Marketing, Advertising and Communications comes out of “The Big Idea.” It’s what drives the marketing strategy, it’s what drives the brand and agency to get excited about the campaign, and it’s what drives consumers to put their hands in their pockets and hand over their hard-earned dollars. Maybe it is time for Marketing to move away from “The Big Idea.” Whether we like it or not, times have changed. Prior to the Internet and the social media platforms it has given us, we never could really hear what consumers wanted, we never could listen in on the types of conversations they had between them, and we never could really understand what made them buy, click and share.
In a world of Twitter, Facebook status updates, Google Profiles and FriendFeed, we know more than we ever thought we would.
In a world of Twitter, Facebook status updates, Google Profiles and FriendFeed, we know more than we ever thought we would know and - the truth is - we’re barely scratching the surface of what we can do with all this information, data and insight. On top of that, we are getting this information in real-time (or close to it). To couple that concept with advertising, in the Mad Men days of wooing the big clients and winning them over with one pitch and one big idea, it was - essentially - a strategy where a brand was putting all of its eggs into one basket (all of them from the same chicken). That big idea had better work, or heads would roll. We all know the professional lifespan of the Chief Marketing Officer (it’s anywhere between 1-2 years) and there are very few brands that still maintain a single agency of record for a significant amount of time. In fact, ad agencies and brands are as fragmented as the media outlets they serve. So, in a world of media fragmentation, multiple media outlets, new media platforms and brands harnessing multiple agencies to meet their needs, perhaps the time has come to ditch the concept of “the big idea” and move more towards a world of “many ideas.
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FUTURELAB That’s not to say that the many ideas should not all tie into the overall strategy, consumer insights or be stunningly perfect (in terms of creative and execution), but that it is to say that in this day and age, winning the marketing game is going to be about doing a lot of little things, over one big thing that brands will then cram into multiple outlets. Doing “many things” also doesn’t mean to think small. In fact, it’s probably a much more difficult strategy to organize and execute. In this era of Digital Marketing it’s also a significant amount of work because as the campaigns evolve, so should the creative and strategy. If some of the many ideas don’t float, we kill them and move on. If some of the many ideas take off, we nurture, optimize and push on. Our overall marketing strategy and execution becomes a lot more focused on the types of people we’re connecting to, where they’re connected, and how brands can add value while building trust and community. It sure does sound like it will take more than a “big idea” to get that done. Maybe, “the big idea” in Marketing today is all about how we’re all going to move towards a “many ideas” platform? Are the days of “the big idea” over? What do you think? October issue
SHIFT PERSPECTIVES
Trust Is Non-Transferable Some Bloggers were recently taken to task when they published a sponsored Blog posting about a shopping spree they took with a major retailer. It is an amazing view into what marketing and advertising is in this new media channel (especially one where everyone can be a pundit and critic).
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he idea of being paid to post is a fascinating and recurring topic (shall I trot out the dead horse now?), and one that needs to be removed from these specific incidents and looked at with a more macro perspective. The reality is that there are many great Bloggers out there who are seen as leaders. People want to connect to them and, more importantly, some companies see them as an opportunity to connect their brand to that community, or to build credibility and create awareness for their brands, products and services. Also, because there are no clear advertising and sponsorship models in many of these newer social channels (beyond buying banners), we’re seeing a ton of experiments to figure out “what works.” It’s very interesting and somewhat confusing - but that’s the amazing part of being in the Marketing, Advertising and Communications business right now.
Real interactions between real human beings. Advertising works when it’s the right brand in the right environment with the right audience. The general comments on these Blogs are all focusing on the levels of transparency and whether or not the Bloggers are entitled to take money in exchange for a Blog posting. I think this is the wrong conversation to have (all of these Bloggers were very transparent). Marketing and advertising works when there is trust between the content provider and the audience. It’s not just about that relationship of trust, it is extended towards two very different sides of publishing - the content and the economy behind it. On the one hand, the audience trusts that that the content creator will stay true by providing valuable content, and on the economic side, the audience continues to play along knowing full well that all of this great content comes at a cost - advertising, sponsorships, consulting gigs, book deals, speaking opportunities, and everything else.
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SHIFT PERSPECTIVES
No matter what, both sides have to live up to the audiences expectations, meaning the content must be strong and the advertising must be relevant. That’s how all successful publishers across all of the media channels have won to date.
You can’t buy trust. The best advice a Digital Marketer can give a client who is asking them if they would accept money to post about them, etc... would be to help them understand that a brand can’t buy trust, but they can - over time - build community and earn reputation. And, by going through with a program of this nature, it’s also not very social media at all it’s just advertising (whether a Blogger yaps about it or they run a banner ad on their site). Someone is being paid to write about something. The advertorial has been around forever (well, at least, since the 1960s). There’s nothing all that experimental with this format. But there’s a problem if it doesn’t work: the bigger brands can chalk it up to experimentation and simply move on, while the Bloggers now have to rebuild something that is incredibly frail and impossible to buy from their audience: trust.
October issue
When a company pays someone to post, they are hoping that the trust people have for that Blogger will be transferred to them.
No chance. Many Bloggers react with an, “I don’t ask my readers for money, I give readers all of this great content for free, so what’s wrong with a little money from someone else along the way to cover some costs and put shoes on my babies’ feet?” statement. There’s nothing wrong with that, if it’s the understanding of the community from the get-go. There might be something weird about it if it just suddenly appears out of nowhere.
Trust in non-transferable. We expect Bloggers who post - and are paid to do so - to be transparent. Transparency is table stakes. We expect people to disclose what is an advertisement, what is sponsorship and what - if any - affiliations are had with other things that are mentioned within these social environments. But, there is something more profound going on here. When a company pays someone to post, they are hoping that the trust people have for that Blogger will be transferred to them. No chance. Trust is non-transferable. We have companies who have little-to-no social community credibility riding the coat-tails of Bloggers who have spent a long while building up their community and, if there was no prize at the end of the rainbow (meaning the community also gets a chance to “win” something - not just the Blogger), it would probably leave everybody feeling a little icky. The only way for that not happen is when the company that is paying to post has equal or more trust within the community. Ultimately, everyone has to figure out what works best on their own spaces - be it a Blog, Podcast, Twitter or Facebook. The real challenge is in knowing your community well enough to decide if it’s a good fit and, if it’s not, is it worth the advertising dollars over the community trust and engagement?
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The Lesser Of Two Evils When It Comes To Digital Marketing In a recent keynote address I gave, a discussion came up surrounding Facebook, privacy, and the general public’s best interests. It’s a story that has been covered in the news in recent months, but the truth is that this story has little to do with Facebook and much more to do with the Internet as a new media platform and communications channel.
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omehow, we as people have this amazingly powerful (and weird) tendency to forget events of the past. It wasn’t too long ago (about 2000) that we were all concerned about “cookies.” According to the website How Stuff Works, an Internet cookie is a “piece of text that a web server can store on a user’s hard-disk. Cookies allow a website to store information on a user’s machine and later retrieve it.” Without getting too technical, it’s a little digital imprint that websites use to better understand user’s behaviour and preferences (like when you select your country and language preference the first time you visit a new website, and on all subsequent visits, that website remembers your choices). After cookies, we became more concerned with what Google was doing poking around our e-mail. Google’s free e-mail service, Gmail, provides targeted ads embedded in your messages based on the content of the e-mail itself. Let’s say you were writing to a friend about an upcoming trip to New York City - you would see ads for hotels in New York, or cheap flights to that city. Google’s computers are scanning your Gmail account and sending you targeted messages (also known as behavioural targeting) in hopes of putting the right message in front of the right person.
October issue
SHIFT PERSPECTIVES Back to my keynote presentation: One person questioned whether or not it is a good thing that all of these online social networks and websites have so much information (much of it quite personal) about so many individuals. It can be scary when you look at it from that very valid perspective. What real choices do we have? The “terms of service” for many of the more popular online social networks (Facebook, MySpace, LinkedIn, or Twitter) are nearly impossible to read with all of their legalese. And even if you can keep your eyes open long enough to work through the details, only a few people would understand the real implications. So, let’s put all that aside and agree that many of the terms-of-service waivers are complex, or even incomprehensible. Bottom line, here’s what they basically say:
“Listen, we’re going to give you all of this new and cool stuff for free. So, yes, it’s free for you to use, but how we - the people who are giving this to you - get paid is by selling the data (not you as an individual) we’re gathering to marketers. Now listen, I know what you’re thinking. You think that from now on you’re not going to be able to do anything here without getting some kind of annoying message about how we can increase your sexual stamina or help you to lose weight. We don’t want to run those types of ads, but if someone doesn’t buy some advertising space with messages that are more relevant to you, we probably will have to. Sorry, but that’s what you have to endure for having the ability to upload your photos and videos for free and share them with your family, friends and colleagues.” At any point in that dialogue you - as a consumer - can opt out. But, be forewarned, if you agree to move forward, the gift of being able to poke your friends, tweet about your dog, or post a book review, is brought to you courtesy of the advertising and marketing messages that surrounds your online experience. Some say, “It’s the price of admission - especially when that admission cost is free.” Others see it as an invasion of their privacy. Both sides have valid points. From an economic perspective, it’s important to understand the business model for many of these online channels. Many of the new digital and online platforms have not figured out the ideal revenue streams. Until they do, they are using advertising and marketing products and services to monetize their traffic. As an individual, always be aware that the more detailed information you provide, the more “they” know about you. (“They” being the service you signed up for and all of the marketing partners they are currently working with - or may work with in the future.)
The bigger question becomes: Would you prefer the random and annoying weight loss ads, or highly targeted messages based on what you have disclosed on an online social network? To the average consumer, it all still feels like a lesser of two evils.
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SHIFT PERSPECTIVES
What’s Your Strategy For Strategic Innovation?
Idris Mootee is a highly acclaimed strategy and innovation expert and keynote speaker who has a long history of working as a strategy adviser serving C-level executives and start-ups. Idris leads retreats, facilitates executive strategy meetings, speaks at prestige conferences on the topic of strategy, business model design and innovation, and conducts executive level workshops around the world. He is the author of four business books (some are published in mulit-languages). Quoted in publications including the WSJ and NY Times. He holds advanced degrees in business and management. Idris’ presentations range from 40 minutes to 90 minutes. Each presentation is researched and customized specifically to company and its industry. http://www.mootee.typepad.com/
October issue
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idris mootee
s the pace of innovation accelerates and beyond the speed limit, executives are experiencing two other kinds of hot water, declining bottom line results caused by the “credit crisis” and declining consumer attention as they are becoming immune to “marketing.” Everyone is therefore looking for ways to improve their innovation capability and process; both within the organization as well as with outside help through consultants and even consumers that can help them detect early trends. Their mission is to find ways to both drastically widen (and deepen) the funnel of ideation and then more effectively manage the process from concept to pilot and roll-out. Some are seeking to update their obsolescent innovation process and many don’t even have one. They just struggle to get started and many are simply borrowing from product development process which isn’t design for innovation. Everything company has different needs and once a decision is made that your company must innovate to remain or to become competitive, you should
start planning a logical yet adaptable process to guide the team during the entire course of action. Where to start? First pick a type of innovation process that works for your company. Declare your intent and objective. Are you responding to a disruption or simply want to find want to grow your business? The result of this process could include a new product, a new service, a new business model? Look at what tools you have and what are your ingredients that you have to work with. How many cycles of innovation is needed on a 12 month basis? Second: Once you have decided on your strategic intent, you should look at your organization to see where and how this process should be initiated. How much collaboration is required both inside and outside the organization? Do we have the right support from outside consultants? Does your organizational structure support the innovation process you have selected? Will the culture within the company support the innovation development procedures?
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FUTURELAB The important point here is that the level of acceptance of “transformative” ideas as well as the level of risk tolerance must be compatible with the overall management philosophy of the company, or the dissonance could doom the project. Third: What is the time scale for such innovation process? This will depend on a couple of factors. Among these are the drivers of the project and the size and complexity of the project. If the development project is an extension or minor modification of an existing product or service, the time scale could well be a few months versus a disruptive move that takes up to a few years. Fourth: Decide on how you want to finance it? Do you have an innovation budget? Or if you plan to finance it though your marketing, product development, research or other budget? Or you need to create the business case before you get started? Or it is a corporate mandate and you have access to some corporate strategy dollars which the CEO put away for special use. October issue
SHIFT PERSPECTIVES Even Google has finally realized they just can’t let continue using a laissez faire approach to innovation and product development. In a recent interview with a WSJ they admitted that Google can no longer afford to let promising ideas fall by the wayside. The Internet search giant’s once-torrid growth has slowed. At the same time, it faces fresh competition from Microsoft’s new search engine, Bing, and start-ups such as Twitter Inc., which was founded by exGooglers. The response? Google has recently started doing internal “innovation reviews,” they are formal meetings where executives present product ideas bubbling up through their divisions to Schmidt, Google founders Page and Brin, and other senior folks. The processes are designed to “force management to focus” on promising ideas at an early stage, according to Schmidt. Even innovation needs a process.
What’s The Last Innovation You’ve Seen Coming From The Insurance Industry?
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FUTURELAB With the average age of agents rising steadily; sales is stagnant and margins getting thinner, insurance company needs to rethink “marketing and distribution”. Steady of influx of new investment products from banks that are also competing for insurance dollars. The biggest disruption will most likely remain on the distribution side. The importance of asset accumulation products is particularly noteworthy because this is the market where insurers face the most intense competition from all the banks, mutual fund cos, and investment advisory firms. Because these nontraditional competitors have much lower distribution costs than insurers, insurers face intense pressure to operate more efficiently. Distribution costs are one of the largest expense items associated with life and annuity policies. Industry consolidation in insurance is different from banking. We’ve seen small banks going away but there are not many changes among insurance players, because it has less restriction and many are successful in operating in nationally. But the restructuring of the life insurance industry primarily tends to involve such strategic objectives as an increased emphasis on core competencies or the expansion into new markets rather than the consolidation of geographically October issue
SHIFT PERSPECTIVES concentrated firms as in banking. Expect competitive intensity to remain the same. Back to the question posted to me. I think there are two ways the insurance industry can take advantage of social technologies. First is to empowering agents to take advantage of social media as their CRM systems. It is the best way to reach people with common interests, while the other is connecting with people engaged in a similar occupation. Provide them with tools to make content a lot more engaging and tons of training. It is as important as knowing how to use a phone. Second is the extreme widgetization of the products an services. Innovative thinking needs to be built in the existing products around their “socialabiity” and “connectivity”.
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Life insurance is a high involvement product, it helps us to prepare for two risks—dying too young or living too long.
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Life insurance is a high involvement product, it helps us to prepare for two risks—dying too young or living too long. I think living too long is more of a problem. A recent study done by The Boston College Center for Retirement Research found that 43% of American households are at risk of being unable to maintain their pre-retirement income. And if you take away some optimistic assumptions such as using a reverse mortgage, over 60% are not prepared. You can put a lot of innovative thinking into making the product (and experiences) more engaging. Here are a few of the ideas I have from the back pocket and each one of them can be big: • A socially-enabled annuity product – designed to be marketed through online word-of-mouth? • A mass produced, multi-component prepackaged one-click solutions – there is a gap in the market place for this? • A hyper-efficient direct distribution model – a super low cost solution that makes ING looks expensive? • A direct selling mid-market lifetime income solution – income is now the most practical consideration? • Plan conversion exchange – allow people to convert defined contribution assets into income for life through annuitization?
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SHIFT PERSPECTIVES
Less can be more: Preparing for the recovery in uncertain times
CHRIS LAWER I am MD of Strategyn UK. We create product and service strategies for client companies using our patented innovation methodology. We work with a company’s executive management to invigorate growth and drive shareholder value through creating an internal engine for innovation. Our structured innovation process takes approximately 4 months to complete and the result is a precise view of where in the market there are opportunities for our client companies to create value. This process has created billions of dollars for value in market cap for client companies. Our list of clients includes Microsoft, Unilever, Colgate, MetLife, StateFarm, Motorola, J&J, Medtronic and AIG to name a few. Specialties: Innovation, New Product Development, Breakthrough product creation, Outcome-Driven Innovation and Research I also lead The OMC Group - a UK-based network of customer strategy consultants. Collectively, we have several years’ senior, international management and consultancy experience in consumer and business-to-business companies and the public sector as well as strong academic research pedigrees. We work in the fields of strategy, innovation management, organisational learning, marketing and brand management, customer insight and customer-focused capabilities development.
http://chrislawer.blogs.com
October issue
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aced with tough decisions that can make or break their company’s future, it is little wonder that innovation managers are seriously fretting over their product portfolios, go-kill decisions, new projects, resource allocations and go-to-market timescales. Latest forecasts indicate it may be the end of 2010 before the recession bottoms-out and growth starts to return. So far, many companies have responded to the unprecedented trading conditions by slashing costs, cutting employee numbers, conserving cash and reducing investment in all new initiatives as though their survival depended upon it. This may be necessary for now but in the longer-term, companies may already have gone too far by postponing or cancelling key innovation projects that had the potential to plant green shoots and drive long-term business success. Whilst riding out the “perfect storm” may be the watchword for some, scaling back too heavily could bring serious consequences for the longer-term. I recognise that making such critical decisions in times of high economic uncertainty is not easy. Crucially, it hinges on knowing - with a high degree of confidence – which pipeline projects or platforms should get the axe and which should receive any remaining investment to secure market growth once recovery arrives. But exactly how can these decisions be made? Well I suggest the answer can be found in developing one critical capability that many companies still lack - that of acquiring, assimilating and commercially applying a far deeper understanding of unmet customer needs with which to review an existing pipeline of innovation projects and make critical growth planning decisions. Let me explain.
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FUTURELAB
Acquiring, assimilating and commercially applying a far deeper understanding of unmet customer needs
The problem with what still passes for innovation in many companies today is that it is not innovation at all, but rather ‘invention’. Companies that invent rather than innovate tend to measure the success of their efforts by the number as well as the quality of new ideas they generate, their ability to develop and market experiment these ideas quickly and then speed them to market with a fanfare. Summed up by the mantra - “if we’re going to fail then at least let’s fail fast” – this accepted culture of risk-taking and mistaketoleration cannot be sustained in a downturn when cash is king and certainty is in short supply.
SHIFT PERSPECTIVES Let’s look at some evidence that compares the performance of invention with innovation. Goldenberg et al (2001) tracked the performance of 197 new product introductions. They then categorised them according to how the products were originated, whether through ideas, need spotting, market research or in response to events. They identified that the least successful new products were most likely to have been born from internally-generated ideas – or what they term, mental inventions. Such inventions had only a 25% success rate. By contrast, the most successful new products originated from capturing and understanding unmet customer needs or events then responding to them with appropriate solutions. This approach succeeded in between 50% and 90% of the new products originated in this way. If you can identify and cut out those projects destined for failure – those that don’t meet customers’ important unmet needs – you can easily trim the wasteful parts of your innovation budget. Put simply, understanding unmet customers’ needs is fundamental to innovation success.
“if we’re going to fail then at least let’s fail fast.” October issue
Here are some questions any innovation manager should ask of their current project portfolio:
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Do you know exactly who will be the likely target customer or target segment of your concept / product?
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Do you know the market size of the target buyer / segment?
How will this market size change at the time of launch? Will the concept / project address known, quantified important unmet customer needs?
Do you know what these unmet needs are without ambiguity? What improvement in satisfaction in needs will the project / concept achieve?
Do you have the optimum number of features and functions on the platform matched to unmet needs? Have you defined a clear value proposition for the concept based on unmet needs?
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10 FUTURELAB
things you
should know
before
reinventing
the wheel.
Getting started - today
Using the jobs-to-be-done and outcomes approach devised by Strategyn, here are some specific activities those responsible for innovation can perform to address the following questions: October issue
SHIFT PERSPECTIVES
1 2 3 4 9 10
5 6 7 8
Reassess customer needs to discover changing priorities (e.g., cost versus convenience, simplicity versus complexity). Adjust pricing and positioning according to new customer priorities.
Refocus your concept generation efforts by adding discipline to the inputs used. Go outside the firm in a more systematic way.
Reassess how customers buy your products and the channels they use. Make it easier for them to buy and discover a new point of market differentiation.
Bring in top customers and lead users at the concept generation stage once opportunities are known, not
Determine if you are truly messaging to your product strengths. Reassess current value propositions, informed by a solid understanding of customer needs.
Focus your innovation efforts on your most profitable customers. Protect them by adding related jobs to existing platforms or by satisfying their outcomes better. Innovate along their new priorities.
before.
Pull previously cancelled concepts back from the “pipeline bin” and reassess them again using unmet customer need inputs. Add adjacent jobs to current platforms to quickly and cheaply extend market offerings.
Undertake a competitive disruptive assessment against core jobs and top outcomes addressed by existing platforms in the market or new concepts. Determine the ability of new entrants to address core jobs and outcomes faster, cheaper, more conveniently or at a non-central location.
Understand how current jobs-to-be-done served by existing products will evolve post-recession. Start preparing future scenarios and inform them with expert opinion and new customer inputs.
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SHIFT PERSPECTIVES
Challenges Social Business Will Face
I am currently building a practice around social business design with Dachis Corp. I have 14 years experience in the creative field with the majority of my time spent in digital marketing and experience design. An active participant in the industry, I write Logic + Emotion which is ranked in the top 10 media + marketing blogs according to Advertising Age. My writing and visual thinking has been cited by Forrester, The Boston Globe and has landed me in BusinessWeek on several occasions including their “Best of 2006”. Prior to Dachis, I spent time as a creative/strategic lead at notable firms such as Critical Mass, Digitas and Agency. com—putting in a combined tenure of 8 years in the large digital agency environment. I led multiple initiatives for clients such as HP, Allstate, Fifth Third Bank, Miller Brewing, Grainger, and Bally Total Fitness. Previously, I earned my interactive stripes working with The Chicago Tribune on their site initiatives. Today, I blend strategy with design and look for new opportunities around the evolving Web (otherwise known as “Web 2.0”) to enhance the customer experience and bring brands and people closer together.
http://darmano.typepad.com/
October issue
david armano
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recent survey conducted by Proofpoint found that 8% of companies had terminated employees due to social media usage (common causes including sharing sensitive information on a network). And while the statistic seems significant, it only underscores one of several upcoming challenges nearly every organization will face as changes in people, process and technology fueled by the collective movement we call social media begin to transform business. Here are a few challenges that every organization should be planning for right now. If you aren’t you will be.
1. Integration Becoming a social business can impact nearly every function of a business. Marketing, PR, communications—even supply chain and any function that deals with employees. So where does it live? Is it a department? Do organizations hire a “Chief Social Officer” much like they would a Chief Technology Officer? All organizations will eventually grapple with integrating social somehow into their entire ecosystem adopting either centralized, distributed or hybrid approaches.
8%
of companies had terminated employees due to social media usage •• 24 •
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2. Governance Many organizations now understand that anything that can and will be said about them on the internet will be. The good, the bad, the ugly. And this includes content produced not only from the general public, but also from internal constituents such as employees. Organizations will not only need to begin actively listening so that they are in the know, but they will need rules of engagement for how they deal with multiple types of scenarios from responding to a compliment to dealing with a detractor to following up with an employee who just posted something inappropriate or sensitive.
4. Human Resources In order to transform from a business to a social business, (meaning true participation as opposed to leveraging social media as a new form of marketing), businesses are going to have to upgrade their HR protocols, as well as legal. And it’s likely to be a never-ending process as new technologies continually hit the scene. Before there was Twitter, companies scrambled to publish blogging guidelines for employees, now the wrong tweet or Facebook status can get you fired. Organizations will not only need to update guidelines but actually train their people who may be leveraging social technologies for work. Customer service in particular comes to mind.
SHIFT PERSPECTIVES
3. Culture All organizations fall somewhere on a spectrum of being “open” or “closed” meaning that they are either more transparent with how they operate and collaborative or they hoard knowledge internally. Consider that it’s probable that the Zappos purchase by Amazon had a good deal to do with their notoriously open culture. Likewise, even Apple which can be notoriously secretive is benefiting by leveraging a strategy that opened up their iPhone application ecosystem. Sure Apple has a great deal of control over it, but for the first time in history—they have legions of people developing applications which run on their hardware. Organizations have the potential to benefit from embracing customers, employees etc. but will have to manage it intelligently and with purpose.
5. Measurement & ROI Every organization will continue to struggle with how results get measured and how ROI is reported. Philosophically, this question can be answered with another question: “what’s the ROI of e-mail”? But it’s a question that won’t go away. New social constructs will be needed to measure social initiatives such as attention (the size or number of participants actively engaged) or authority (the amount of influence a participant has in the ecosystem). Because social business is enabled by technology, it is by definition measurable. However, tying it to revenue made or saved becomes more of a challenge.
There’s more, but I think these represent some big ones. What are your thoughts? October issue
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To motivate front-line employees: don’t just thank them, use their insights John Caddell has finally realized that his left and right brains are the property of the same person. For more than twenty years, he worked for companies in the telecom industry, developing, marketing and implementing IT solutions, including end-user and interconnect billing, CRM, and mediation. He has worked both for telecom operators and their suppliers. John has specialized in wireless telecommunications since 1992, working with companies such as EDS and LHS Group to provide solutions to some of the global mobile industry’s pioneers, such as AirTouch Communications, Hong Kong Telecom and Sprint Cellular, and upstarts such as KDDI Mobile (USA) and Working Assets Wireless. Prior to starting his own consulting practice, he spent six years as a corporate officer, fulfilling executive roles in sales, P&L management, account management, product development and strategic marketing.
http://www.caddellinsightgroup.com/
October issue
JOHN CADDELL
S
ylvia Ann Hewlett blogged at Harvard Business Review that leaders need to inspire lower-level employees. She writes:
…No one succeeds alone, which is why all leaders must find a way to pollinate the workforce with their values, ideas and enthusiasm. This is what keeps businesses humming, especially during a downturn. Some leaders inspire the masses via the grand motivational speech. Others via oneon-one conversations. At Time Warner, CEO Jeffrey L. Bewkes held a series of skip-level lunches with ten to twelve high performers that typically had little or no access to him. He spent two unscripted hours talking about his vision and answering their questions. Employees who attended Bewkes’ lunches reported feeling more “confident in the company” and developed a new affinity for their chief.
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Don’t spout hyperbole — “Great job” or “we can do it!” Instead, serve up concrete, achievable goals
Whatever vehicle leaders choose to use to reach out and inspire employees at local levels, their talk must have teeth. Don’t spout hyperbole — “Great job” or “we can do it!” Instead, serve up concrete, achievable goals. Listen to people’s problems and offer real solutions. Mentor by sharing your own lessons learned, celebrate teams’ efforts and reward tangible achievements. Even a simple “thanks” goes a long way when delivered from on high.
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SHIFT PERSPECTIVES
Each week at furniture designer Knoll, president and COO Lynn Utter emails four senior managers and asks them for the name of one person on their team who has been exemplary. Utter then calls each person to thank and congratulate him or her for a specific accomplishment. Utter is as timeconstrained as the rest of us but says that if she cannot make four phone calls a week to acknowledge people’s good work, then she is not doing her job.
duction System. This benefits the company by ensuring a constant stream of innovation, and the employees by making the workplace a more rewarding place to spend time. I am focused on one particular group of employees–those who interact directly with customers. This includes customerservice reps, retail clerks, bank tellers and account support staff. It is a group with tremendous insight, and a group that’s held in low esteem in companies I’m familiar with.
Hewlett is right–inspiring the troops is an important leadership task, especially in tough times. But my reaction on reading this prescription was, “Ugh, more top-down thinking.” In other words, everything’s up to the leader–that “affinity for the chief” and thanking employees makes a company better. How about this idea instead? Let’s forget about CEO Bewkes for a moment, and focus on making the work more fun and rewarding for the 87,000 people who work for Time Warner. Gary Hamel discussed this idea in his recent book “The Future of Management.” In it he pointed out how Toyota is able to leverage the creative thinking of all its 300,000 employees through means like theToyota Pro-
To borrow a phrase from my friend Matthew Achak, “Nobody listens to the reps.” They sometimes are not even allowed internet access. This is just wrong. These groups occupy a unique position in the company. They hear the unvarnished truth from customers. Their stories, rather than being ignored, should be nurtured and collected. Everyone else in the company should read them and absorb the lessons (especially the leadership). They should be primary inputs to strategy, marketing and product development. The best stories and best storytellers should be acknowledged and promoted.
They sometimes are not even allowed internet access
October issue
“Let’s forget about CEO Bewkes for a moment, and focus on making the work more fun and rewarding for the 87,000 people who work for Time Warner” Companies should focus on something like this, instead of sending their CEOs around on motivational tours or making four calls per week to exemplary employees. Increasing employees’ sense of meaning and personal value in their work. Now that’s leadership.
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FUTURELAB
SHIFT PERSPECTIVES
Should Fortune 1000 Companies be Active on Social Networks? Tom H. C. Anderson provides hands-on personalized consultation, high-level advanced statistical and qualitative analysis, and actionable advice to Anderson Analytics clients. Mr. Anderson has over a decade of experience at the largest global marketing research companies such as TNS, NFO Worldwide, and AC Nielsen BASES. He has worked on product and market development projects across several countries and industries including financial services, telecommunications, packaged goods, and travel & entertainment. Prior to founding Anderson Analytics, Tom managed the Starwood Hotels & Resorts Worldwide account for TNS, where he managed market research studies in over 80 October issue
countries and consulted to executive and brand management of Westin, W Hotels, Sheraton, Four Points, St Regis, Luxury Collection, and Starwood Vacation Ownership. Before TNS-NFO, Tom helped found IQuestics.com, a ‘Gen-I’ consumer insights consultancy for Snowball. com, now IGN.com. While at IQuestics he perfected the online quantitative and qualitative skills required to understand and market to the technologically savvy 13-30 year old Gen-X & Gen-Y demographic. Tom has unusually deep and wide knowledge in all aspects of market research including advanced multivariate statistical analysis, data and text mining. Through his career he has consulted to dozens of fortune 500 companies and major marketing research suppliers and ad agencies.
www.tomhcanderson.com
TOM H. C. ANDERSON
I
Should your company have an app for that?
was asked to comment on MasterCard’s new iPhone application “Priceless” in this week’s Adage. Since publishing of the article I’ve received some questions on whether or not certain companies should be involved in social networks, specifically do they have any business building apps? Based on our recent research as well as our personal experience in building SNS Apps is that, yes in many cases apps can be a good tool for companies in providing something of value to their customers on social networks. However, companies do need to be careful in deciding what kind of applications to build and how they execute these.
Why should companies be active on social networks? In a recent survey on social networks Anderson Analytics asked whether or not social network users would like to see the brands/companies they normally purchase products from become more involved in communicating with them on social networks. As expected when asking about advertising, which at some level commercial involvement entails, a third of SNS users were negative (35%). However the real story is that most were neutral (45%), and there were nearly as many that were for it as against it (20% wanted more involvement). Put in other words, the majority (65%) are open to greater commercial communication on social networks!
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FUTURELAB The story was similar, and even more positive, when we asked whether seeing products/companies and their services on social networking sites influences their trust/buying decisions positively or negatively. Only 19% were negative. Again the majority of social network users were neutral (64%), and there were almost as many for it as against it (17% wanted more commercial involvement). Put in other words 83% are open to commercial involvement in SNS; a great opportunity! [see charts on the right]
SHIFT PERSPECTIVES Does seeing products/companies and services on social networking sites influence your branding trust or buying decisions positively or negatively?
I believe widgets/applications, if designed in the true spirit of social media, in other words if offering some value to the user, is a great way for companies to get involved in social media. This is the reason Anderson Analytics has begun to offer help with application/widget development as part of our new AA-Social Media offering.
Why is a market research company building social media applications? The game rules for social media and social networks in particular are changing on a monthly, even weekly basis. It is not possible to run exactly the same social media campaign this month as you ran last month. Social Network Service API’s as well as following limits/rules at Facebook, MySpace, LinkedIn and Twitter are changing constantly. By measuring campaign effectiveness through surveys, and text mining communities online we’ve been able to get a data driven understanding of what works well and what doesn’t on a broader level. More importantly, social network applications/widgets provide a benefit other than pr/advertising. These applications often provide a data stream which can be analyzed and add a whole new level of insights previously not available to market researchers. This is why we’ve decided to help companies with more tactical SNS offerings.
Would you like the brands/companies you normally purchase products from to become more or less involved in communicating with you on social networks?
Companies need to be careful in deciding what kind of applications to build and how they execute them October issue
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FUTURELAB
Before leaving you, we’d like to share these few questions Seth Godin managed to answer us.
SHIFT PERSPECTIVES Some companies are truly focusing on customer centricity, and actively try to engage consumers. Are there any key factors for success in engaging and starting a conversation? What about business to business marketing? How can companies engage other companies? Make promises and keep them! Treat people with respect. Talk about me, not you...
In the current economic condition more and more people are underlining the need for innovation and change. But companies often have no idea where and how to start. Any advice? They know exactly where to start. They don’t know how to FINISH. Starting is easier. Shipping is hard.
Your books and articles are filled with innovative ideas, that often change the way we see things. Can you tell us about a marketing lesson you learned from a least expected place? Where does the inspiration behind these ideas come from? I see marketing ideas everywhere, because marketing is everywhere. The little fly engraved in the toilet urinal is marketing.
How do you think marketing is affected by the current economic downturn, and how do you see it emerging from these darker times? Any changes on the horizon? I think traditional marketing works even less well when people aren’t running around spending blindly. I think intelligent creation of remarkable products and stories is working better now than ever before.
As a conclusion, can you give marketers one piece of advice that fits at most a “random” number of let’s say 140 characters :-) ?
What are, in your opinion, the biggest mistakes companies make when they adopt and start using digital and online marketing? Also, is there a specific way to approach their consumers on the increasing number of social networking websites?
Check out our website for updates and a few surprises:
They outsource it. They don’t understand it so they try to buy it. As for social networking, the hardest place in the world to buy attention is a social network. October issue
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