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.

7 myths of marketing automation

7 myths of marketing automation

Nov 16, 2015 | Customers, Governance, Marketing, Small business

Like most interested in this topic, I see a lot of stuff published, and have gone to my share of seminars in an attempt to sort the wheat from the chaff.

Over 40 years marketing experience, and having seen the rise and rise of automation, along with the carpet-baggers flogging get rich quick, and “if I can do it, so can you”  schemes that would  make a gypsy blush, I am probably just a little sceptical.

Here are the myths I see most often, all flowing from the foundation “it is easy” myth

  1. Automation solves problems.

Without the basics being right, understanding the markets, your customers and competitors, how your value proposition and service levels resonate, you are still  nowhere, automation or not. An early lesson I learnt is that poor problem definition leads to poor decision making and even worse marketing. Crap marketing that is automated just generates a bigger pile of crap, quicker, with a second often larger problem that when it comes from a computer for some reason, it gains credibility, so your pile of marketing crap risks becoming a “truth” that has the potential to send you broke.

2. Automation provides the processes. 

Automating anything means that it is done automatically the same way every time. If you have process that deliver rubbish, marketing automation will only enable you to deliver more rubbish, quicker, to more people, Who wants that? Building robust, processes is essential, at every level of the marketing ‘stack’ (sorry about the jargon, the stack is the pile of various digital processes that together make up an automated system). No automation system is “Plug & Play” in isolation.

3. Automation enables a purchase mind-set.

Making a choice is certainly not something that automation can provide. Best it can do is give a rational analysis of the data to hand.  The nature  of the buying process and associated communication has been transformed in the last decade by digital tools. Buyers now accumulate information independent of sellers, and often make a final choice before a seller knows they are in the market, but the choice is human, subject to all sorts of considerations still way beyond the capability of automation to replicate.

4. Automation cannot respond other than by rote.

Consumers seek all sorts of subjective and referential information when researching even a modest purchase, switching between left and right brain without realising they are doing it. That process cannot be replicated digitally. Best we can do is define the range of personas we see in the market and tailor and continuously improve the communication strings to meet the anticipated and instinctive Q&A sessions happening in purchasers mind as they move through the “funnel” towards a decision.

5. Content is king.

I hear this all the time, “just pump out the content and they will come.” Rubbish. This may have been partially true at the beginning of the digital revolution, but no longer. There is now so much content around that the competition for potential customers attention is now far greater than it has ever been.  The challenge is now having the best, most relevant and timely content delivered in a personalised manner, as and when the buyer asks themselves a question. You need to be a marketing mind reader!

6. The number of leads counts.

This is only true when you consider the quality of the leads at the same time. It is easy to generate a lot of response to something, the key is the likelihood of a conversion to a transaction of the initial lead, not the number of leads. Quality wins out over quantity every single time.

7. Automation solves the “don’t know what you do not know” problem.

This goes back too my original point. Experienced, informed and creative  marketing thinking cannot be replaced by automation, no matter how much many who call themselves “marketers” would like it to be so.

 

Automation can be a hugely valuable investment, but it is not easy, not cheap, and does not replace the  skills, domain wisdom and experience of those who have been there, done that!

When a dose of ‘fair dinkum’ is required, call me.

The fundamental marketing things apply

Oct 21, 2015 | Branding, Governance, Marketing, Social Media

marketing fundamentals

Fundamental things apply

Great line for a song?

We all know the words, written by Herman Hupfeld from the song ‘As time goes by’, made famous in the movie Casablanca.

It also applies to marketing, particularly the explosion of techniques and tricks that have emerged with digital technology.

Despite all the rumors and offers of instant success, there is no algorithm for great marketing, no sure fire way of short-cutting the risks and uncertainty.

Great marketing takes time, effort, resources, curiosity  and a willingness to be different, to see things others have not seen, to create the uncreatable.

You do  not do that in front of a screen, the best you can do there is look at the results of stuff you have tried, get a superficial look at what others have tried, and manage digital development and deployment.

Instead of relying on digital bits to do the work, you have to get out and talk to customers, potential customers and others who may have an influence  on the way a product is produced, delivered and valued by customers, whether they be a consumer of a simple product or a major corporation making a significant investment.

The fundamental things apply, the same things that have always applied, they have not been replaced by digital tricks.

We can now deliver a message to a tightly defined audience, as small as one, but if the message is poor, wrongly targeted, the product fails to deliver value, you  may as well whistle in a hurricane for all the good it will do you.

Make sure the basics are covered, ensure the fundamental things that make a marketing program work are in place. There is no substitute.

4 steps to a positive cash flow for small business.

Jun 5, 2015 | Governance, Management, Small business

 

whoops!

whoops!

 

Do I have enough cash to……………….?

This is one the 4 fundamental questions for small business survival, and is the one I hear far too often. It is all to do with how much cash is available at any given time to pay the bills.

It is almost inexplicable to me that many operators of small business do not understand their cash flow, how it works, how it can be managed, and how to leverage it. After all, it is their lifeblood.

The sad reality was brought home again a week or so ago talking to a tradie I met casually who was hurting badly because a developer he had subbied for over many ears was not paying him, and he in turn was not paying his bills, as he had used up his overdraft. He was in effect funding the developer, and ultimately the receiver, and seemed unlikely to get any of his money back.

A common occurrence and all too easy to address with a bit of planning.

 

There are some pretty simple things that can be done to assist in the management of cash, but like all things it takes a little bit of work up front, and a disciplined process

1. Routine.

The steps to a positive cash flow are simple, if you make them a part of your routine, you can follow them with little effort, although at first, it can be a bit confronting.

  • Have robust, enforceable and explicit terms of trade. For anything that requires credit terms to be extended, make sure you have a signed agreement that specifics all aspects of the terms under which you agree to provide your goods and services. These terms are an enforceable contract, and in the event it is necessary, is actionable. There are templates available that can be personalised for your needs and used without cost or with just a small charge. Some service providers such as EC Credit Control will assist in the preparation, as will your bank, although your bank has a vested interest in lending you money, not making what you have work harder.
  • Do credit checks. By giving credit, you are effectively lending someone your money. It makes sense to check if they have any history of fraud or default, which can be done easily for a modest fee. You pay for access to a database that is in effect a credit footprint of everyone who has applied for and been given credit, and the data includes their credit history, and any outstanding judgements. Veda is one of the agencies that provides this information as a service, there are several, most banks will provide the service for a fee, often they wholesale services like Veda. Often if you choose to outsource your debtor management in some way, these sorts of checks are a part of the service.
  • Issue invoices immediately and follow up politely but persistently and in a highly predictable manner. Most businesses wait until  they receive an invoice before they initiate any consideration of a credit period, let alone get around to paying, so the sooner you issue the invoice, the earlier you have a chance to be paid. A client of mine about two years ago instituted a process of sending a polite “thanks in advance” for payment on the invoice due in a couple of days. He thanks his clients for the expected payment, indicating being paid on time is one of the ways he manages to maintain the high value he is able to deliver. It had a significant impact on his debtor days, and served a marketing purpose to highlight the quality of  the service he provided, and as it was highly automated. After the initial set-up and a few teething problems, the process became virtually automatic, and a boost to his business.
  • Keep the credit period ASAP. In this case, the acronym is As Short As Possible. Generally the negotiation on credit terms will take place at the beginning of the relationship, and that is the best time. Make it as short as possible,  I always advise starting with 7 days from invoice date, be very happy with 21, and if it is in your interests, give a bit more, but if you start with 30 days from the end of the month, watch your sales bunch into the beginning of  the month, which effectively gives a customer up to 60 days to pay, before the invoice is overdue, and you can start chasing payment. This is a gap you are funding, bankrolling your customers, and generally people in business are not there to be a philanthropist, leave that to Bill Gates.
  • Do a weekly rolling 13 week cash forecast. This is a simple exercise, but knowing what is coming at you offers the opportunity to manage it with the least pain, ignoring it can be terminal. Generally this cannot be automated, but most bookkeepers and service providers can do it simply, although most would say monthly is sufficient. I strongly recommend weekly for small businesses.

 

2. Automate.

One of the more innovative automations I have seen is the one noted above, but most of the basic bookkeeping routines are now highly automatable via mobile connections into software that can manage all the recording and  invoicing processes. For a tradie, assembly and issue of an invoice via email against a signed and dated acceptance of the cost can be done on site the moment a job is complete. No paperwork to end a long day. Automating can cost a bit to set up, and ensure it all works, but the expense is well worth it.

 

3. Outsource.

Most parts of the process can be easily outsourced if you choose not to do it yourself. Think of this outsourcing cost as insurance, and the cost of buying back a bit of your own time and peace of mind.

  • Book-keeping. There are many book-keeping services available, and whilst they may vary in quality and cost, it is pretty easy these days to find one you are comfortable with, who provide the mix of services you require.
  • Debtor  and debt management. There are many service combinations possible from the straight invoice financing where you in effect sell your invoices to a finance broker who then owns the debt, to more relationship sympathetic arrangements where a third party undertakes to be your accounts receivable function, and often do some of the risk assessment functions noted above. Selling your debt, or “factoring” still smells of desperation, but outsourcing accounts receivable is pretty sensible and often very cost effective.

 

4. Leverage.

Most understand the concept of leverage when it comes to moving a physically heavy object, but have never thought of it in relation to their business, and particularly their two most crucial resources, their time and their cash.

  • Closely managing terms and collections so that your average debtors is shorter than your average creditors means you are collectively enjoying having your creditors fund your business. However, I recommend paying your bills as they come due, as a history of reliability can pay big dividends when things suddenly go pear-shaped.
  • Inventory. In many businesses the greatest consumer of cash is inventory, and closely managing it can save considerable sums. For a retailer like a fruit and veggie market, they take most of their revenue by cash or credit  card, for which they get paid within 24 hours, but often pay for their stock on 21 or 30 days, by which time they have turned the stock over several times. Lovely. Measuring stock turn is a great metric if you have inventory.

 

Finally, there is a further measure not usually recommended that I particularly favour, Net Cash Consumption  or NCC. It is a simple measure you can apply over any period, simply the difference between cash in and cash out over a time period. For small businesses I usually exclude capital items, so it is a measure of trading cash generation, or destruction.   If the measure is positive, that is a good start, if it is negative for any extended period, trouble. I usually recommend a rolling 3 month measure, short enough to be sensitive, long enough to accommodate the operational vagaries that occur like paying the receptionist long service leave. Adding it as a graph on the bottom of your cash flow forecast automates it. Easy.

If you would like more information, or the opportunity to discuss any of this, just give me a call.