Oct 8, 2024 | Analytics, Innovation, Strategy
Have you ever been in a situation where you just ‘know’ a course of action is right?
No data, no detailed scenario planning, you just know.
I have.
Where does that confidence come from, and is it justified?
Have you distinguished between genuine intuition, based on experience and knowledge, and the overconfidence that can arise from a lack of awareness of one’s limitations?”
In my experience which includes choices that have been both very good, and very poor, there are two qualitative drivers of those good choices.
Significant domain experience.
This experience does not come from being around for a while, it comes from taking action many times, and learning from the outcomes, resetting, and trying again.
For example: a seasoned chess grandmaster can often intuitively anticipate the best move without consciously calculating every possible outcome, drawing on years of experience and pattern recognition.”
Learning from analogy.
When you see a course of action succeed in other domains that have some similarity to your own, you can infer that the success may be repeatable in yours.
For example: The introduction of disc brakes in cars came from their development for use in stopping aeroplanes when landing.
In a world increasingly dominated by data, it’s crucial to remember that while numbers provide valuable insights, they should not be blindly trusted. True wisdom often lies in the delicate balance between data-driven analysis and the intuition honed through experience and learning from mistakes.
Chess is a game where a grand master has a store of intuition gathered and sorted by years of practice that is leveraged instinctively when playing.
Oct 2, 2024 | Communication, Marketing
Marketing is about stories, and most stories start with an event, situation, or circumstances recorded in narrative form.
Being a marketer, I write frequently. Some of my musings are published on the StrategyAudit blog and often elsewhere. I also keep extensive files on ideas, snippets, URL’s of interest, anecdotes, and potentially useful metaphors. Usually it feeds my own interests, ‘ideas bank’ for this blog, and serves my clients.
Writing provides clarity, it helps give ideas substance, and form, and reveals holes. It also makes them stick in memory. Writing well will become even more critical as we spend more time prompting machines to give us answers. Machines are literal, failing to interpret the nuances of language we usually do not see.
When a piece is evolving towards publication, there are 4 basic rules of editing gleaned from experts I set out to follow.
- As short as possible, no shorter
Short, simple words make writing clearer and provide a better base for the reader’s imagination. I keep in mind Ernest Hemingway’s challenge to write a complete story in 6 words. His famous contribution was: “For sale: Baby shoes. Never worn.”
Remove words that do not add meaning. Words such as just, very, and so.
- Strong and simple words only
Using a weak verb with an adverb is both weak and adds unnecessary words. Find strong verbs to replace weak verbs and adverbs.
E.g. “Susan sprinted to the gate” instead of “Susan ran quickly to the gate.”
Similarly, use strong nouns.
E.g. Use “mansion” instead of “grand house,” or “athlete” instead of “outstanding runner.”
Ditch the thesaurus, those long, flowery words impress only you, not the reader.
- Replace passive voice with active
Passive voice is an engagement killer. It removes room for the reader’s imagination.
E.g. “The bully stole the boy’s bike” instead of “The boy’s bike was stolen by the bully.”
E.g. “The storm destroyed the garden” instead of “The garden was destroyed by the storm.”
Along with adding unnecessary flowery words, using passive voice is my most common error.
- Edit and edit again
No first draft is ever perfect. Ensure the basic stuff like spelling, grammar, capitalization, and comma placement are correct. Make sure each sentence is as short as possible and contains only one thought. Then read the copy aloud, or have a tool read it to you. I use the read function in Word to avoid the trap of reading aloud what should be there rather than what is there. It is amazing how many simple mistakes are revealed by having copy read back aloud.
Application of these four rules does improve the understanding and readability of your copy. This post has been edited, and re-edited numerous times with these 4 rules applied.
How did I do?
Sep 30, 2024 | Branding, Marketing
Pareto’s 80:20 principle applies universally, though its proportions vary across markets and circumstances. While media choices have proliferated over the past 25 years, the core drivers of consumer behaviour remain largely unchanged. However, brand loyalty has eroded as information became ubiquitous, and price promotions ‘trained’ buyers to prioritize ‘value,’ often misinterpreted as the lowest price available.
In Fast-Moving Consumer Goods (FMCG) markets, the Pareto curve is typically flatter than in Business-to-Business (B2B) sectors. The rise of house brands has further flattened this curve, resulting in a significant percentage, often a majority of sales, occurring at discounted prices.
The work of the Ehrenberg-Bass Institute has refined Pareto’s rule into the ’20:30:50′ rule. This suggests that the heaviest 20% of buyers contribute around 50% of total purchases, the middle 30% account for 30%, and the lightest 50% of buyers account for 20% of purchases.
Market variations significantly impact purchase behaviour, influencing marketing strategies. For example, household laundry detergent is a category with near-universal penetration but relatively low purchase frequency, driven by household size and composition. In contrast, the disposable diaper market has low penetration but high purchase frequency among households with babies.
The choice of media, weight of media, and the nature of the message delivered will vary significantly between these two different categories. This is before considering the different behaviours and preferences of individual buyers in these markets.
These complex and interrelated success factors are often overlooked by amateur marketers, but are always considered by experienced professionals.
Sep 27, 2024 | Customers, Marketing
‘Marketing’ is a word used and misused widely. Perhaps that is because there are so many definitions around, including my own: ‘The generation, building, protection and leveraging of competitive advantage’
After 45 years of marketing, I have gained some experience. Often it has been painful, coming from the unexpected. Distilling all those lessons into a few headline statements has been a mission to help others.
Not all you try will work.
Marketing is about the future, trying to shape behaviour of your customers to remain with you, entice others to try you out, or for them to do something new. As a result, not everything you try will work. This is an unchanging truth irrespective of all the resources devoted to any project, or set of initiatives.
The customer is not always right.
Some customers, often many that are chased most seriously, simply do not matter. They will cost to capture and keep more than you can ever make from them. However, the right customers are always right. The challenge is defining who they are, recognising their pain points, gain points, articulating the value you deliver, and focusing resources on them.
Digital marketing and it’s ugly brother social media is not a silver bullet.
More often than not, relying on digital in the absence of other wider strategic considerations will result in you shooting yourself in the foot. Digital marketing in all its forms, is just another tool in the toolbox. Like any tool, it can be used well or badly depending on the context of use, and the skill of the user.
Customers articulate your brand better than you do.
Meaningful conversations around the board table that seek to define what your brand means to customers is nowhere near as effective as getting the meaning straight from the horse’s mouth. Your brand is what your customers say it is, not what you might wish for, believe, or what some consultant says is ideal. It is almost certainly not what your partner says it is.
Trends go both ways.
The positive trend in your market, your sales, customer attitudes and all the other things tracked will at some point turn and become a negative trend. Nothing lasts forever. Relying on a trend to continue driven simply by its own momentum is a dream. It might be OK in the short term, it will never be OK in the long term. Your task as a marketer is to identify the drivers of the trend you can influence, and do so, while acknowledging those you cannot control, and responding to them.
Success comes from being different.
Different requires risk, going against the grain and the crowd, and often internal naysayers. Success rarely comes from just being the same as others but slightly better. Being incremental can result in you holding your place in an ever-increasing pace of change occurring in every market, but it will never allow you to break the mould and build anything remarkable. It is remarkable that creates real success. The forces arrayed against being different are so powerful that it is an extraordinarily difficult path both for an individual and an enterprise. Perhaps that is why we focus attention and eulogise those few who do break through and generate something truly different
Sep 18, 2024 | Analytics, Governance
Economic Value Added, EVA, is another of those annoying acronyms accountants tend to use to confuse simple marketers. Therefore, it is a term marketers must understand if they are to hold their own in the boardroom.
EVA is a calculation used to measure the net cash flow from an asset, after taking into account the cost of the capital necessary to acquire that asset. It is often a part of a business case made to support a major investment or M&A proposition.
There are a couple of calculations that need to be made, all from the standard company accounts.
- The net cash flow is obvious, what comes in versus what goes out, as a result of deploying the asset.
- The cost of capital will be some combination of the cost of equity and the cost of necessary borrowings.
When the net cash flow is greater than the cost of capital, the asset is generating value. When it is less, it is destroying value.
The formula is simple: EVA = Net cash after tax – capital invested X the weighted cost of that capital.
The shortcomings of an EVA calculation are twofold:
- It is based on the past. The cost of capital yesterday is unlikely to be the same tomorrow. Interest rates bounce around, and the mix of debt and equity while not as volatile does change with circumstances.
- Increasingly business transactions are being done on the basis of intangibles. Costing the replacement value of intangibles, is a practise lacking discipline, consistency, and financial rigor.
Building a business case for an investment always requires deep consideration of the cash flow results of that investment. By definition, that requires a forecast of the future be done as the driver of that cash flow.
It is always easier to take the past and extrapolate, than to spend the time and energy building a strategic case for an investment. A strategic case requires that the relative costs and benefits of differing choices be articulated, in an environment of information scarcity. A much more demanding task than constructing a future that is the same as the past, and hoping that this time, it will be.
Header illustration by AI, in a few minutes.
