Rethink Your Business

Interesting article in Fortune about managing chaos featured these interesting approaches to addressing your business challenges in what is an increasingly unpredictable world:

Tough talk: Force a conversation on how the company will have to operate differently to be successful not now, but two years (or more) out. This keeps navel gazing and self satisfaction of today’s successes at bay. I’ve referred to this as having Crucial Conversations, which is also the title of a book to which one of my former graduate professors contributed.

Yellow flags: Pay close attention tro what your sharpest, most mobile (those who can change suppliers easily) customers are doing. They act as an early warning system. That is, while it is possible to set up barriers to customer churn, ultimately these factors (sticky applications, etceteras) will merely slow the stampede. A few months ago, I finally changed banks even though I had established CDs, safe deposit boxes, checking, savings, online banking, direct deposit and a host of other services with them. The hassle postponed the move, but did not eliminate it, as I was finally irritated enough with high fees and poor service (and a non-committal response from executives to my complaints) that I took the time to make the adjustment.

Remodel early: Start changing your business model when you are most successful. See my earlier post from January: “The time to repair the roof is when the sun is shining.” (JFK)

Abandon yesterday: Maintaining what no longer works draws resources away from the job of creating tomorrow. Any decent financial planner knows that there is a time to abandon all hope that your holdings will rebound. Create a storyline: Your company’s past, present and future is a story: articulate it as such to all stakeholders!

Corporate Self-delusion

According to a Bain & Co. survey, corporate self-delusion is at critical levels, particularly as it concerns perceptions of customer satisfaction. The survey of 362 firms found that 80% believed they delivered a 'superior experience' to consumers. Yet only 8% of customers of those same 362 agreed with that characterization.

So why the chasm? One, companies are defining their own standards of performance. Two, they aren't looking broadly enough at the entire customer experience. It is critical that companies transform quality and service measurements according to customer expectations and experiences, not internal operational standards. Let's look at these two critical issues by picking on, say, randomly, a cable company...

Cableco says it has over a 90% satisfaction rating because they are arriving within a promised four hour window 94% of the time, and addressing the issue on the first visit 97% of the time. Trouble is, customers do not see waiting for half a day as good service, even when that time window is observed. Conscious of the value of their time, they want a narrower service window. Further, after a four hour wait, resolution on the first call is a considered a baseline standard for customers, not an indication of superior service.

Relatedly, if timeliness and first call resolution are the only standards Cableco uses to measure satisfaction, they'll overlook other critical touchpoints that impact customer experiences - from the initial call and ease of use of an IVR (Interactive Voice Response) system, to the physical appearance of technicians, through to the billing system and complaint resolution process.

Then, as competitors recognize the factors that are impacting the customer experience and make adjustments to their own policies to exploit them, Cableco will continue to hemmorage market share as their leadership gazes contentedly at a PowerPoint slide that reveals "90% customer satisfaction".

When it comes to customer satisfaction, measure the right things. Not just the easy things.

Confident Leadership

"The qualities that people look for most in leaders is not infallibility or infinite knowledge but confidence in themselves and in their group's collective ability to find a solution." - Jerry Colonna, Flatiron Partners

You have cash in the bank, a market-leading product, enviable market share, and the attention and affinity of analysts. Yet it is the confidence exposed and inherent in corporate leadership that drives morale. When it is said that companies succeed 'in spite of themselves', it is as equally likely due to this inability of leaders of companies in enviable circumstances to inspire and motivate employees as it is to complement leaders of an otherwise struggling organization with maintaining an environment of enthusiasm and dedication among employees.

If faced with being part of a currently leading organization uncertain of its circumstances, fearful of the future and unwilling to take risks, versus a struggling organization revitalized by a confident, encouraging leader; it is not difficult to determine to where the quality employees and smart investors will be drawn.

Yesterday means nothing, you don't lead from the rear.

720 Hours

I was perusing old Fast Company articles and stumbled across one from 2000 that highlighted a company called etime (I googled the company and discovered they were acquired in 2002 by TradeBeam, www.tradebeam.com).

In the article, it is pointed out that commerce technology's promise is not one way, and as the delivery of goods and services is sped through the introduction of new technologies, and suggests that accepted standards such as the 30 day due date for accounts receivable is a relic.

It sounds at first blush an overstatement, but upon refelection, if the issue were prepayment for goods and services with a thirty day delay before receiving them, it would cripple manufacturing (rendering JIT useless) and slow economic growth. What must be the as-yet unrecognized impact of slowed access to Accounts Receivable?

Treating your vendors well is a reflection on the brand, so this is an opportunity for creative differentiation in the market - at least as it impacts the supply chain. Certainly timely payment would be rewareded by vendors with discounts and better service, which is passed forward to the consumer.

So what argument still preserves thirty days (or more) AR in business to business transactions?

Perhaps this is yet another opportunity to rethink all of the ways the consumer is impacted by business decisions throughout the organization, and then re-create them to impact direct or indirect creative differentiation in the market.

What does it take to be a great marketer?

A great marketer is an individual that works to assure the company knows itself.

To do this a marketer must understand the motivators and measurements that drive activity in all the seemingly disparate functions of an organization and discover the common thread among each. This constancy drives, and is driven by, the vision of the organization, which in turn is incorporated into product and service roadmaps, evangelized by management and employees, communicated to the market, and finally delivered upon to the customer.

A great marketer is a leader in facilitating the discovery of the organization’s vision, a motivator in engendering it among employees, a strategist in building that vision into the delivered goods and services, a tactician in articulating it to the market, and a customer advocate in assuring that it is delivered upon.

Watch Your Behavior

For ages marketers have segmented consumers by age, education, geography, income and gender, or any combination of these descriptors and several other similar segments. More recently, these have been further parsed with psychographics, which segment individuals by beliefs and biases. Today, I advise clients to research and segment consumers by buying behaviors instead, as the other established segmentation methods are increasingly antiquated.

Aging but active boomers, formerly self-involved Gen Xers pushing strollers, computer-savvy grandmas, stay-at-home Dads and other so-called 'anomolies' are blurring long-held views of what defines a generation or gender. Combined with the power consumers have to gather and share information about brands and products, no traditional demographic component is particularly useful in product development or messaging.

Whether retail or business to business, buying decisions follow discrete, established processes of collecting and evaluating information that are far better barometers of what messages and media are most effective.

Reaching out and responding to consumers is most effective as a reflection of common behaviors, not birthdays.

...and in between promotions, a game was played.

In Promo-palooza, blogger David Nottoli recounts the number of promotions (not counting advertisements) to which he was subjected during a recent Padres-Mets game at Shea.

By the numbers:

Sponsored Promotions: 47
Participating Companies: 36
Attendence: 49,979
Final score: Mets over Padres, 4-3

http://davidnottoli.typepad.com/sidewalklife/2006/08/promopalooza.html

Dis-synergy

In the world of mergers and acquisitions, an activity that appears to be going through its cyclical upswing currently, there is much discussion regarding revenue synergies, expense synergies, and to an (unfortunately) far lesser extent, market and cultural synergies.

What is often overlooked are the dis-synergies* inherent in each proposed merger or acquisition. With 70% of M&A failing to reach the top-line synergies promised, and 25% missing the expense reduction mark by 25% or more, perhaps it is wise to give more weight in diligence to potential disruptions - dis-synergies - than the oh-so-appealing potential synergies. While they vary from industry to industry, some of these dis-synergies include:

- Not understanding customer motivations for loyalty, resulting in more customer loss than anticipated.
- Loss of employee productivity during the period of diligence
- Underestimation of the impact of 'onetime costs'
- Loss of quality employees to competitors seeming to offer more stability
- Underestimating the amount of time to address both the external and internal requirements of a merger, including information systems, branding, reporting structures, and all related processes

*Scott Christofferson, McKinsey and Company

For more information on this, contact Strategy180 (www.strategy180.com) for the McKinsey brief.

Channel Surfer

Of the constantly refined and now largely modified "4Ps of marketing", the one that most often is outside the narrowed authority of a business-to-business marketer is "place" (which addresses channels - distribution... the other Ps, of course, are product, price and promotion).

The new business models introduced in the past decade that have revolutionized the way businesses are managed and products marketed forces companies to change many of their long-held beliefs about the role and influence of marketing, particularly as it impacts decisions regarding distribution and margin management.

The requirement for marketing's involvement in distribution is driven by marketing's understanding of the customer. The role of 'place' in creating differentiation cannot be overlooked strategically, as distribution methods are often difficult to mirror by the competition and can be associated by customers with actual product or service offerings. (Dell, for example, is known more for its website, kiosks and direct to customer model as for its products.)

Customers remain the primary concern, but the way these customers' needs are met have already changed manufacturing practices... today, it changes distribution practices... not only will the products be developed as part of "mass customization", so, in a sense, will the manner in which these customers actually get the product. It is now important to identify and promote the most profitable available customer segments (and with the greatest potential) and to serve them with the most efficient delivery model, be it direct sales, catalog, internet, or any other of the numerous hybrids.

Re-evaluating channels is just one of the challenges that the proliferation of segments, brands, messages, media, and channels poses for marketers. You can uncover unserved markets, lower costs, and increase per customer revenue by guiding customers to the most efficient channels. To do so, companies should try to get a clear understanding of their channels and plan proactively with their channels and channel partners. The expanded role for marketing in distribution strategy has never been more important.

Theodore Levitt, RIP

We lost a marketing icon last week, as Theodore Levitt died at age 81. A thought leader and past editor of the Harvard Business Review, Ted Levitt revolutionized the way marketing was researched, taught and conducted.

His 1960 article for Harvard Business Review, called "Marketing Myopia", is the source of the oft-repeated comment that firms that define themselves too narrowly do so at their peril - the example being railroads defining themselves as in the railroad industry and not transporation industry allowed them to be overtaken by upstart airlines, air cargo, and trucking firms.

Globalization is also a term first coined by Levitt as early as 1983, with an equally influential article "The Globalization of Markets," which addressed the new world markets for standardized consumer products and started today's debates regarding globalization.

It is a giant passing and all of us in the industry who work to improve marketing's effectiveness, influence and credibility owe Theodore Levitt a great debt of gratitude.

Big Ben Learns A Lesson

Ben Roethlisberger, the youngest quarterback ever to win a Super Bowl was not wearing a helmet when he crashed into a car that was turning left in front of his motorcycle. But today Roethlisberger said in a statement that if he ever rides a motorcycle again “it certainly will be with a helmet.”

I would have laid odds that a young man like Roethlisberger would have gone the route of so many others, cursing luck through broken teeth while vowing to continue the behavior, defending what clearly was an error in judgement. So congratulations to Ben for doing what so few of today's business leaders seem to be able to do: Admit a mistake, take responsibility, and change direction. Such responsibility saves careers and saves companies.

In this particular case, it may save a life as well.

Good Effort

The boys run off the field after the last out and after allowing four more runs. "Good effort, guys!" shout the coaches.

That's the way you manage boys. Six, seven, eight year olds. Effort is important. Instilling the team effort, good sportsmanship, putting forth your best effort.

But when it comes to marketing efforts, a 'good effort' is never enough. It is too easy today to measure, refine and improve. Too often, 'a good effort' is all that expected of marketing. And far too often, that is all marketing professionals expect of themselves.

No more 'visibility', no more 'mindshare', no more intangible measurements that only serve to give credence to management biases against marketing. Measure marketing performance with home-grown or commercially available marketing dashboard software. Then you can build the credibility that is required for marketing to get a seat in the boardroom and leave the 'keychain and brochure people' characterization long behind.

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