Required understanding if you are to succeed

Required understanding if you are to succeed

Jun 6, 2016 | Change, Governance, Strategy

Mary Meeker has again produced a report that should be required reading for all who seek to engage with an audience, with the 2016 update of the Kleiner Perkins Caufield Byers Internet trends report.

Disregard the previous statement.

It should not be required reading, it should be required understanding.

The 213 slides are filled with data driven insights, some with scary implications for the laggards, and offering some ideas for what is about to come. Ms. Meeker delivers the 213 slides in 20 minutes, no time to dig the detail, she is delivering a series of trends, and leaving the deck for you to ponder the implications and dig where you wish.

  • At some point, Google will set about increasing the returns on the investments so far in the Android operating system, now it has +80% share of mobile systems. Astonishing numbers as Apple is still making all the money.
  • Digital advertising is exploding, but the share of legacy media is way greater than it should be. Mobile advertising is particularly underweighted. However, the use of ad blockers is also exploding, so the creative challenge is a huge one. While it is not in this report, I have seen others that estimate the amount of digital advertising fraud at over 30%, and I suspect that is on the light side. Add in the fact that many advertisers just translate their TV ads into something digital and you will find billions more being wasted.
  • Hyper-targeting of advertising is a fact of life now, privacy be dammed. Strange thing is that our kids, and grandkids are way less sensitive to this that we digital geriatrics who make many of the decisions.
  • Video is exploding, in all its forms, particularly live streaming, and all on mobile. We always knew we are a visual species, but digital is opening an entirely new door to communication, and we have barely had time as yet to make a rudimentary exploration.
  • There is a whole section on China in the report, and the numbers are astonishing. Uber is extolled as one of the poster boys of the exponential growth enabled by the double sided platforms emerging, so look at slide 181 to see how the growth in China dwarfs the growth in other markets. This is just emblematic of  the digital growth occurring in China and across the Asia Pacific generally, with the exception of Australia, that struggles to deliver upload speeds that would embarrass Nigeria. (In the middle of an election campaign, perhaps this is something that should get an airing? Perhaps not, a bit embarrassing for both sides)
  • The last 20 or so slides concentrate on the implications for business. Read and understand, then take some positive action. The only thing you know for sure is that staying still  is not good enough.

Thanks Mary, and crew!

Is the supermarket model being disrupted, and nobody is noticing?

Is the supermarket model being disrupted, and nobody is noticing?

May 11, 2016 | Branding, Governance, Leadership, retail, Small business

Business models are being disrupted all over the place.

The new centre of business models has become the customer, and the way they perceive and receive value. It was supposed to be this way in the pre-digital days, but really  was not, because the sellers held all the cards. Now however, the power has really reverted to where it should be, to those who drive the value chain by their purchase choices.

AirBnB has become the biggest single retailer of short term lodging on the planet, and they do not own a room, Uber is the biggest taxi service on the planet, and does not own a car, newspapers have been replaced as sources of news. There are many examples, and all are of business models that have arrived in the last few years with a common theme.

They have replaced the linear, sequential business models of the past, where there was always a choke point dependent on physical infrastructure that exerted control, with a model where the physical  infrastructure is simply a logistical resource to be deployed to deliver a service, the real product is information.

Information on availability, product provenance, performance, and many other factors of value to customers, including, you guessed it, price.

It is a two sided model, enabled by technology that is making the logistical control of the infrastructure redundant in the face of consumers having information at their fingertips. The competitive advantage has moved from the physical infrastructure to between the ears of employees and consumers equally.

Employees create and deliver the information that enables consumers to make decisions, which then dictate the physical logistics driven by those decisions.

Meanwhile,  the supermarket  retailer model has not changed  much.

They have huge amounts of capital invested in real estate and physical assets, it has made them  really successful, so the tendency is naturally to do more of the same, just try and do it a bit better.

They have chased, very successfully, productivity of  the assets, a financial measure of success not a sustainable measure of success with customers. As a result they are losing their customers to discounters, specialist retailers, and various direct models that offer an alternative value proposition.

It seems to me that Woolies have walked away from, or simply not understood this evolution of their business model.

Their Everyday rewards loyalty card was gathering momentum, building a picture of their customer base and their individual behaviour, critical information that would over time deliver a capacity to engage on a highly individualised basis. However, it was clearly costing a bit, so they took the short term route, and reduced the cost to them, and therefore value to their customers, gave it a new name and sat back thinking consumers would not notice.

They did, and nobody came.

Woolworths took a short term financial decision that has apparently bitten them in the bum. A bit like the ones they took that killed off Thomas Dux, and led them to misunderstand the market when they bet the back paddock on Masters. Pretty clearly someone in the top floor of the majestic head office out in the hills, can read a spreadsheet, but probably does not know what goes on inside customers heads when they are contemplating a purchase, and making a choice about the manner in which that purchase will be made.

Perhaps new CEO Brad Banducci will claw back some of the customer centric culture that gave Woolworths the wood on Coles for so long, but he better move quickly, as the momentum has shifted against them, and it will be hard to regain.

 

Train dogs, educate people.

Train dogs, educate people.

Apr 26, 2016 | Governance, Leadership

That phrase, ‘you train dogs,  but you educate people’ was used to me years ago by Harvard professor Jim Hagler, making the point that education involves nurturing the ability to think and question while training is simply  enforcing a repeatable routine.

Both have their place, but getting the two mixed up and expecting training to take the place of educating leads to failure.

There are thousands of information products out there, courses of many types that promise to deliver a learning outcome, which is usually passive income so you can sit on a beach and make money while sipping G&T’s

You  have seen them.

They offer training, and often use that term. They are the digital equivalent of buying a book, on a topic, and once you walk out of the bookstore (are there  any left?) the author, publisher and bookstore owner have no further obligation to you, the responsibility is all yours.

By contrast, getting an education takes time, and effort, and there is a responsibility of the institution to teach you, and ensure that you not just know the topic, but can think creatively and critically about both the topic and related material. You cannot walk into the university office and buy a degree (although recent revelations might just make that assertion obsolete)

Education is a two way street, shared by both parties, as distinct from information provision, which is a once only transaction.

Key difference is when you need help, is it there? Most on-line courses are just information, with no help beyond technical assistance to download the stuff, if you are lucky.

There is a big cost to education, not just money, but time and effort, the cost of training is often low.

I would rather spend $2000 on education, really learning a topic,  than $200 on a training course.

This rant was set off by another of those very well crafted pieces of sales copywriting that landed in my email last week promising to give me a passive income of ‘at least 5,000/month’ for life. All I had to do was part with $779 now, or an easy $150/month for 6 months, and it would be mine. Easy, great ROI if it actually worked.

Utter bullshit aimed at deluding the easily deluded.

Marketing’s lean future

Marketing’s lean future

Mar 23, 2016 | Governance, Leadership, Lean, Marketing

The best marketers I employed in days past as a honcho in a corporate environment were pretty much always from a professional background of some type. Those with engineering, science, architecture training, and with a bit of sales thrown in were almost always better marketers than those with marketing degrees.

Having just a 40 year old (had anybody heard of marketing 40 years ago) marketing degree, this both intrigued and disturbed me, and it took a while to understand “why” it was so. It became clear that those trained in the professions had an instinctive approach to problem solving, commonly called the ‘scientific method’. By contrast, those with just marketing degrees tended to jump from problem definition straight to a final solution, missing all the nuances and understanding to be gained from the interim steps, and often getting it horribly wrong as a result.

“Lean thinking” 35 years ago was just a babe, an approach to operational improvement that has transformed the way manufacturing operations around the world are run, and delivered huge benefits to our way of life. It is absolutely based on the scientific method.

More recently however, it has been realised that lean thinking has applications far wider than just operations, and office work flows are rapidly transforming as a result. The next obvious cab off the rank is marketing, traditionally a qualitative, smoke and mirrors part of a business, and marketers have been their own worst enemy.

It often seems marketers sit around, drink coffee, and go to lunch a lot, and as a result of allowing that perception to survive, (and it has been true in an unfortunate number of cases) , we get what we deserve.

If people do not understand the role of marketing, particularly those who allocate resources and measure performance, no wonder there are problems, but there are some pretty simple solutions taken from lean thinking.

Have an objective

Map the processes

Form hypothesis

Test and measure

Rinse and repeat.

From the perspective of managing this process, it is essential that two criteria be met:

  1. There is great transparency of the whole process across functions, everyone these days is “in marketing”. Leveraging the resources available by the collaboration enabled by technology will evolve as standard practice, for which transparency is essential.
  2. It is OK to be wrong, you can learn more for your mistakes than from what works well, but to learn  there must be understanding of the flaws in the tested hypothesis coming from the failure. In addition, there needs to be a robust process of due diligence both before and after the experiments are done. Saying it is OK to be wrong is not a license to be sloppy, as I have seen from time to time.

Marketing has been very late to the technology table, and as a result the size of the gap between the ‘leading edge’ and what most small and medium businesses are doing is huge, and getting progressively ‘huger’. There is a real danger of just leaving it in the too hard basket, but that would be a mistake.

Marketing technology offers the opportunity to leverage resources and widen the impact, the core principals of marketing remain unchanged, indeed become more important as we increase the leverage that can be applied. For small and medium businesses these technologies are the competitive tool-box they have been seeking.

It is my prediction that inside a decade technology decisions will be driven by marketing. If you cannot locate, understand, engage, and deliver value to your customers in a digital world, you will not survive. This post from the ‘Martech’ guru Scott Brinker detailing the 2016 marketing technology landscape says it all.

Lets see how that goes as the technology landscape continues to evolve.

7 trends driving business in 2016.

7 trends driving business in 2016.

Jan 4, 2016 | Branding, Governance, Management, Marketing, Strategy

Like everyone else who sees themselves as having a useful view of the train coming at us, I have again tried to articulate the things I see as important to businesses, particularly the smaller ones that make up my client base.

Following are the outcomes of my assorted observations and crystal ball scratching.

 

The density of digital content is becoming overwhelming.

Businesses have always generated and distributed ‘content’, but it was called ‘advertising’ or ‘collateral material’. Since we all became publishers, and the marginal  costs of access to markets approached zero, there has been a content explosion, and we are now being overwhelmed. It has become pretty clear that video will take over as the primary vehicle of messaging, and I expect that trend to consolidate over the coming year, and see a bunfight for eyeballs between social media platforms and search tools and platforms. Ad blockers will change the way the so called pay walls work, as well as ensuring that the density of content is replaced by less but better stuff, ‘tailored’ to our habits and preferences.

Ad blockers may become discriminatory, allowing through stuff that the algorithms know you have been searching for. The focus on content will be on the sales funnel and conversion metrics, much more than just pumping the stuff out, which will be a huge improvement on the mish mash currently assaulting our inboxes.

Existing digital platforms will extend themselves competitively. 

Attracting new users will become secondary to increasing the usage and ‘stickiness’ of their platforms. Linkedin’s successful extension of their blogging platform and purchase of Slideshare are one, Facebook is aggressively setting out to attract new users by making themselves attractive to developers and others, with the launch of FB techwire in an attempt to attract the really technically oriented including those writing about tech, Twitter appears to be trying to find ways of monetising their users and will probably apply controls to the currently uncontrolled stream in your feed, but there again, I thought that last year and they did not do it. Also, platforms will recognise the huge potential of the B2B advertising market, and find ways to exploit it. Many B2B businesses are reluctant to use social advertising as they see the platforms as essentially B2C and therefore  not appropriate for their products and services. This is a huge potential market for digital advertising businesses, and the social platforms will be cashing it in.

 

Rate of Technology adoption will continue to increase.

Ray Kurzweil’s 2005 TED talk on the rate of technology adoption is resonating louder now than a decade ago. Some of his observations such as the rate of cost decline of solar technology and battery technology efficiency are coming to pass. However, it is his basic thesis of the logarithmic rate of technology adoption that will engulf us over the coming short term. Think about the confluence of big data and machine learning. When you wipe away all the tech-talk and hyperbole, it comes down to a simple notion: the “friction” of information that has always existed is being removed at logarithmic rates, progressively revealing more stuff to see, and to do with the stuff we have. As we go online, and use technology throughout  the value and marketing chain, technology is reducing costs, speeding cycle time, and opening opportunities for innovation.

 

Evolution of the “marketing technology stack”.

For most small businesses this can be as simple as a good website with a series of resources available to collect email addresses, and an autoresponder series on the back. For large businesses it can be a hugely complicated stack of software running CRM, customer service and scheduling, marketing messages, integration of social channels et al.

Mar

 

 

 

 

 

Big data to little data.

The opportunities presented by big data are mindboggling, but even the big companies are having trouble hooking their data together in meaningful ways let alone introducing the third dimension of big data. Small companies will have to start to use little data better, or die. Data already available to them is becoming easier to use every day, to turn into insights about their niche, local market,  and competitive claims. Simple things like pivot tables in excel will be used, and tools like Tableau which brings a structure to  data from differing sources including big data, will  become more widely recognised by small business for the value they can deliver. Big data will have machine learning applied, and the data revolution will get another shove along. From a non technologists perspective, industrial strength  data systems such as IBM’s “Watson” must drive some sort of further revolution, but my crystal ball is too cloudy for me to have much of an idea of the impact beyond making what we currently see as advanced systems look a bit like a pencil and paper look to us today.

 

Technology hardware explosion becomes over-hyped but undervalued.

The volume and type of hardware that has become available is as overwhelming as the access to and availability of information. Driverless, wearables, AI, 3D, blah, Each of the developments has its place, and may change our lives at some point, but there is just so much of it that we are becoming immune to the hype. Who needs a tweeting washing machine anyway?

So, what is next?

Seems to me that we are on the cusp of an energy disruption driven by the combination of hardware and advanced materials science . The technology surrounding renewables is in the early stages of an explosion that will change the face of everything. Highly regulated and costly infrastructure distributing energy will start to be replaced with decentralised renewable power generation, much the same as when PC’s replaced mainframe computers 30 years ago. The catalyst to this metamorphous will be the combination of governments that are broke and no longer able to fund the institutionalised and regulated energy systems and the development of a reliable “battery” system. Elon Musk has made a huge bet on his “Powerwall” battery system and manufacturing plant currently under construction, and it would be a brave person that bet against him. However, looking well ahead, it seems probable that it is the beginning of the logarithmic adoption curve of renewable power following the path of Ray Kurzweil and Gordon Moore. The politicised and subjective debate about carbon and its impact on  the environment will become irrelevant as science delivers cheaper and more accessible renewable energy. All that will remain are the problems of the carbon clean-up. (I suspect this prediction is due to be a repeating one for some time)

 

Marketing has always been about stories.

However, somehow ‘content’ got in the way of those stories, and marketing became a different beast in the last 10 years. We will go back to marketing, and start to tell stories that resonate with individual targets. Storytelling will become again the core, and we will be looking for storytellers in all mediums, written, pictorial, video, as we all absorb and recount stories in different ways.

All the good journos displaced by the disruption of traditional publishing can find great places in this new world of marketing storytelling, if they are any good. The competition is strong, and the results immediate and transparent so no longer can you get away with rubbish. Organisations will change to accommodate the fact that everyone is in marketing

We will become more aware of the permanent nature of the internet, and the manner in which our brand properties need to be managed.

In a commoditised world, where the transparency of price makes competition really aggressive, the value of a brand is increasingly important, and fragile.

These 5 extraordinarily stupid examples of how not to do it  should be a wake-up to the CEO’s who leave marketing to the junior  marketers, often a transient bunch who have no investment in the business or brand, they are just there for a good time, and usually a short time.

One day I will do a study that compares the realisable value of the tangible assets of businesses compared to their value as calculated by the market. My instinct tells me that in many stock market categories  the biggest item as calculated  by the difference between those two numbers represented as  goodwill and a realistic assessment of the realisable values, will be the biggest item on  the asset side of the balance sheet. In short, the current and future value of their brands and customer relationships expressed in dollars. Managers and boards need to deeply consider the nature of the people that have managing their brands, or risk losing them, often before breakfast, as the speed of disruption and change continues to increase.

 

As we go into 2016, the 3 questions every board and management should be asking themselves are:

  1.  “If  I was starting in this business today, what would I be doing to deliver value?”,
  2. “If a leveraged buyout happened, what would the new management be doing to unlock the value in the business?”
  3. “What do I need to do to implement the answers to the two above, today?”

 

Have a great 2016, and thanks for engaging with me.

Can the government’s innovation initiative innovate us out of the funk?

Can the government’s innovation initiative innovate us out of the funk?

Dec 18, 2015 | Collaboration, Governance, Leadership, Strategy

Peter Drucker said something like “innovation is the only truly sustainable competitive advantage”.

Having just re-read his 1985 musings on Innovation and Entrepreneurship, after 20 or so years, the degree of his foresight is truly astonishing. It is great to finally have a Prime Minister who actually understands how to make a buck, and the strategic, commercial and competitive challenges of bringing new products to market. He may be one of the few in Canberra who do, but at least it is a fair start.

With much fanfare the Government on December 3 tabled in parliament a Senate  report on ‘Australia’s innovation System‘  However, with the exception of Professor  Roy Greens valuable contribution as an appendix, I see little of real  value in the report beyond a few worthwhile observations and some useful changes to the tax treatment of entrepreneurial endeavours.

Our venerable Senators have had summarized for them documents (I wonder how much consideration these busy important people actually gave to the detail of the submissions) that may have started with some valuable ideas but which have been sanitised into a document long on rhetoric and disturbingly short on anything of value, which can only be delivered when someone asks the question “What now”?

As someone who has run an agency outsourced from the Federal bureaucracy charged with identifying and delivering innovation to a specific sector, I can attest from first hand just how powerful the cultural forces are against anything with even a hint of risk, change, or long term thinking in the now politicised public sector.

Successful innovation takes all three, plus a clear definition of the problems to be addressed.

There is little evidence of anything in the report that encourages me to think that the status quo will be truly challenged.

It is useful to look to successful models, and there are none more successful than the US since the second war. Most will now assume I am jumping to Google, Apple et al, but no. if you look deep enough you will see the hand of government at a deep level making very long term investments in basic science, building knowledge that the private sector then leverages with innovation into commercial products delivering new value.

A scientist named Vannevar Bush (no relation to the Bush pollies) was commissioned by President Roosevelt just before he died to report on what needed to be done to promote research and development and the commercial innovation it drives, just as this senate inquiry has done. Bush reported to president Truman in 1945, delivering his report, “Science, the Endless Frontier” which laid out the proposition:

“Basic research leads to new technology. It provides scientific capital. It creates a fund from which the practical application of knowledge must be drawn”.

Directly resulting from this report was the National Science Foundation. Defence Advanced Research Projects Agency DARPA  and several other institutes charged with the charter to do basic science, of discovering new knowledge.

When you look at all the products disrupting industries up to today, and changing our lives, many if not most of them have their roots in the various agencies spawned by Bush’s farsighted ideas, and the ability of the scientific agencies concerned to outlive the political cycle.

Now compare that to Australia’s situation.

CSIRO used to be a great agency, capable of developing technology like the wireless technology in the 90’s now in every mobile phone after years on the shelf until a commercial use with smartphones was found. Scientific Capital at work.

Now CSIRO is a politicised dysfunctional rump of its former self, with a little of the funding ripped out over the last 20 years of hubris restored via this latest in a long line of Innovation “initiatives” to the sounds of grateful clapping. I see few practical remedies for the past 20 years of innovation vandalism being actually addressed, although at least a real start may have been made.

As I always say in workshops, “the best time to start an innovation initiative was 10 years ago, the second best time is now”.

Lets hope it is not too late for Australian manufacturing.