Mar 23, 2015 | Collaboration, Innovation, Leadership, Management, Strategy
Plan backwards
All sorts of planning activity is aimed at defining the point where we want to be, then assembling the resources and capabilities to get there.
That is how planning is done, almost always, because by and large, it seems to work, and it keeps the spectator crowd happy.
Libraries have been written that describe all sorts of methods and models that can be used. They can be very useful and thought provoking, providing a framework to help articulate the factors that will impact the business, and the options you have in responding, but they rarely offer an antidote to the malaise affecting the development of really distinctive capabilities, genuinely new products, processes and business models.
The real innovations, the things that change everything seem to come from a different place, “left field” being the most common description.
Most planning ends up being just an extrapolation of the past, despite the well meaning and significant effort to make it something else.
Perhaps a better way is to put yourself in the future place, then work backwards, identifying the steps that need to have been taken to reach the point where in your mind, you are now.
Be specific about the end, articulate it clearly, and then “Plan Backwards” by considering the factors that delivered value for you. I generally call this process ‘Hindsight Planning’.
- What did you do that worked, and conversely, what might you have done that did not work?
- What capabilities did you need to develop?
- What trends drove changes to the industry you were able to leverage?
- Where did the technical innovations you leveraged come from?
- Which markets and customers were successfully addressed?
- What big customer issues were addressed?
- What did the business model(s) you used look like?
- And finally, How were you able to extract value for all these things?
This sort of analysis, if it is to lead to a positive outcome, requires that you recognise and deal with two types of barriers:
Management barriers.
People like consistency and predictability, so when the forecast future looks very like the past, just a bit blurry, they are happy with it, endorse it, and resource it. By contrast, being the harbinger of change that will affect the status quo is no way to get ahead in most organisations. However, it remains a truth that the future never looks the same as the past, no matter how much we would like it to be so.
- Idea averaging. Management absorbs and usually just “averages” or applies committee thinking to a good idea, but at worst, just rejects them for a range of reasons that sound absurd and utterly naive with the benefit of hindsight. Existing businesses are rooted in the networks and frameworks required to make them successful today, and are usually intolerant of new things that involve risk. Usually successful incumbents are well evolved, so are resistant to change, their current way has enabled the current business to be successful, why change? There are many examples of this phenomena, Kodak being a standout, Polaroid another, Cobb & Co another. The current attempts by the taxi industry to resist the encroachment of Uber in my hometown, Sydney, is an example unfolding, and the music industry prosecuting their customers for using their products is an example of one that is just about folded.
- New business models. The successful commercial execution of a real innovation generally requires some new way of delivering the value to customers and extracting value for the suppliers. In short, a new business model. Industry incumbents rarely completely disrupt themselves, by definition, they have too much to lose. Therefore, there needs to be new strategies and supporting business models developed by those outside or on the fringes in some way of an industry. Uber and Apple came from way outside the industries they disrupted, and can you imagine Hilton, or Accor funding that mad idea AirBnB that was gong to crucify their budget tourist dollars?
- The Profit paradox. Profit is counted by looking backwards rather than forward, rewards came after the fact. Forecasting profit, or “fortune telling” is inherently risky, as the only think you know for sure is that you will be wrong, the real question is by how much, but the consequences of getting this brand of fortune telling wrong are significant. However, in the long term, you are only truly profitable if your returns are greater than the cost of capital. If they are equal, you may as well put your money in the bank, because it is safe, less than that and you are long term destroying capital. This simple fact is ignored in almost every profit forecast, statement or review I have ever seen. The conundrum is that to generate a return greater than the cost of capital you must take risks and do stuff differently, some of which will not work out, or only work out in the long term, therefore risking the current profit. It is pretty easy to ramp up the profit made today at the expense of tomorrow, but in this case, tomorrow does actually come.
Creative barriers.
Creative barriers evolve around points of the assembly of ideas, where information, insight, experience, are mixed up to create the otherwise unlikely connections that are the foundation of a creative solution to a problem, situation, or challenge. These are the barriers that most businesses try and get around by the off site strategic planning sessions that rarely seem to be able to deliver the promise of the day. The energy and drive in the workshop room gets absorbed by the day to day of being back in the business. Removal of the barriers is a high priority challenge for management.
The barriers to creativity are many and varied, often overlapping in many places. Following is a ‘brain-dump’ list of the ones I consistently find.
- No commitment from the ‘top’
- It is not OK to be wrong.
- Give up too easily. Edison’s famous quote “Now I know 999 ways that do not work” whilst experimenting to develop the lightbulb resonates still.
- Creativity is hard to quantify, and is therefore often not measured. The old adage what gets measured gets done is right, so creativity is extinguished.
- Lack of resources, time, equipment, money, are all used as excuses for being too willing just to accept the status quo.
- Enterprise culture eliminates risk as far as possible, and creativity is inherently risky and “out there”.
- Rules rule. Particularly in public enterprises, and creativity is not in the rules.
- Challenging orthodoxies, assumptions and the status quo is frowned upon.
- Lack of what I call ‘environmental intelligence’ or an understanding of the macro trends and individual movements in the commercial and strategic environment in which you compete. Seeing trends that impact an enterprise, and their intersections is a rich source of creativity.
- Lack of discipline. Perhaps counter intuitively, creativity includes a range of activities that if subject to some disciplined and focused thinking can deliver great results.
- Not having the right people. Creativity is perhaps the most collaborative of human activities, well, almost. Not having the right people is a commonly owned albatross.
- Everyone can say “no”. Formal layers of approval for ideas act on creativity like a wet blanket on a campfire.
- Creativity is not a required contribution from everyone, it is assumed to be the product only of the young, or the marketing department, of the boss’s wife. Creativity should be everyone’s job!
I could go on, the list is huge, it is a wonder that creativity survives at all given the barriers.
An idea is the outcome of all that has gone before, and the triggers around at any given time, rarely is it the ‘Eureka’ moment. Ray Kurzweil who has a stellar track record in seeing the future in technology believes we need to become comfortable with what he calls “Hybrid thinking” and I can only agree but see that the ideas he articulates have a far greater range than just creativity and innovation in technology.
Mar 16, 2015 | Branding, Customers, Innovation, Marketing, retail, Sales
Words spoken cannot be taken back
Gaining distribution in supermarkets is really hard, and more to the point, expensive.
Supermarkets control the key “choke point” between you as a supplier, and consumers. On occasions when you are pitching a “me too” product, a decision just comes down to the retailer margin and the amount of promotional and advertising dollars that are being thrown at the launch, which both reassures the buyer that you are committed, and offers some confidence that consumers may be receptive. Generally with a “me too” product, you need to be prepared to take something out of your own range to make space, or be able to pinpoint with data an under-performing competitors product that can be deleted.
New products are usually a bit more complicated. For a retailer to put a new product on shelf, in addition to their existing ranges, it is often more than just a simple one in one out decision, particularly if the new product claims to be opening up a new category or subcategory.
In either case, the simple fact is that retailer stores do not have elastic walls, and space needs to be made somehow.
Over the years, I have launched many new products, some category creating products that have been a huge success, and some not so much, and many line extensions of various kinds. However, in the launching of them, I have done hundreds, if not thousands of presentations to supermarket buyers, and found a number of things that should not be said of you are to be successful.
It really is important to recognise that even though you may think your new product is the best thing since sliced bread, supermarket buyers see hundreds a year, and have heard it all before, so your presentation must be sympathetic to that simple fact.
Some of the wrong things to say which have come out of long experience are:
- “Our research says that this product will increase the total size of the mart by $50 million in three years”. You both know that research is usually rubbish, and that everyone lies to supermarket buyers about theirs. If you cannot support the research claims with very solid data, just be honest about it, recognising that even supermarkets buyers cannot tell the future, and be realistic.
- “Our sales forecasts are conservative” See above, and the truth is that the forecasts are usually these days just spreadsheets with autofill, and are really meaningless. Speak more about the assumptions that are the foundation of the numbers rather than the numbers themselves.
- “You are the only chain that has yet to confirm their acceptance and promotional program for this product“. Nonsense. While someone is always last, it will not usually be one of the big retailers. They know you need them more than they need you, so better to honest, although being desperate is also the wrong tactic.
- “XY company, the current category leader is too slow and locked into their ways to react quickly, so we will have this new segment to ourselves for a long period”. Big companies do not usually get big by being stupid, they may be a bit slower than the small guys, but they do know their stuff, and can move quickly when necessary. A buyer will see your confidence as misplaced, and react accordingly.
- “ABC Co do not have the will to risk their cosy positon by innovating” or some similar comment. Denigrating a competitor is a common fault, and should never be done, you just might be denigrating the people who give the buyer his most profitable products, and he will not take kindly to having his stocking decisions being questioned.
- “This product has been protected by patent” More rubbish. Only very few companies have the resources to develop something genuinely new, patent it, then be prepared to spend the megabucks to protect the patent. The last one I can remember is the Nestles cappuccino product in a pouch, a genuine innovation that gave them just a small amount of time before the copy cats arrived. If Nestles cannot so it, you almost certainly cannot, and the buyer knows it, so do not kid yourself.
- “We have first mover advantage“. This is sometimes true, but is may not worth all that much unless there are long lead times involved in equipment. When a new product can be made on existing plant, you cannot usually count on more than about 12 weeks start, after which the copy cats can arrive, correct any mistakes you have made, and capitalise on your investment with consumers to open up the new category. Sometimes it is better to be second mover, and step over the carcass of the pioneer, who gets the arrows in his back. Having said all that, First mover in a genuine innovation does give you a good chance at distribution.
- “Our plant is state of the art“. Retailers do not care much about your plant, so long as their orders are filled, the product is safe for consumers, and moves quickly off their shelves.
There are 40 years experience in these points, some of it painful, but there is no greater (commercial) feeling than seeing a product you have conceived, developed and successfully launched still on the shelves 20 years later, still meeting consumers needs and delivering profits to all concerned.
Feb 24, 2015 | Branding, Innovation, Small business
Today, February 24, 2015 would have been Steve Jobs 60th birthday.
All lives are valuable, few add as much to others as did that of Jobs. I can only guess he is currently hanging off his icloud lecturing St Pete on the shortcomings of the design.
There are thousands better qualified than me to comment on his achievements, but the lessons for those running small businesses are clear:
The value of innovation
Focus, focus and more focus.
Immoveable determination
The inestimable value of being different, bucking convention, and connecting the dots where others see no connection.
The great 1997 “Crazy ones” ad positioned Apple so powerfully in peoples minds that it remains today as perhaps the greatest pieces of positioning communication ever.
Apple under Jobs disrupted markets and created new ones. The music and telephony markets of 2015 bear almost no resemblance to those of 2001. Consumers globally behave differently as a result of Jobs insights.
Few companies or certainly individuals can claim to have had so much impact on the world as Jobs, and paradoxically, as he jealously guarded the proprietary nature of Apples digital ecosystem, he shared his insights and experiences widely, such as in the terrific Stanford commencement address, and captured on his death in these quotes and cartoons .
Seth Godin called Jobs a “ruckusmaker” in his post, but I think he made more than a ruckus, he made a hole in the universe.
Vale Steve Jobs.
Jan 5, 2015 | Branding, Change, Customers, Governance, Innovation, Marketing
Small business is at a crossroads as we move into 2015.
Either they embrace the opportunities and tools presented by the disruption of the “old ways” by digital technology, or they slowly, and in some cases, quickly, become irrelevant, obsolete and broke as customers move elsewhere.
Your choice, as much of the technology can now be relatively easily outsourced, and at a very reasonable cost, certainly less than most would expect. The two major challenges in outsourcing, snake oil salesmen and not knowing what you want and need, are little different to any other category of purchased service.
So, to the trends that will influence your business in 2015 that you need to be at the very least aware of, and in most cases take some sort of pre-emptive action.
- Marketing technology will continue its rise and rise. The thousands of small marketing technology players who are currently emerging will be forcibly integrated, as the big guys buy “Martec” real estate. Adobe, Microsoft, et al will spend money, and the little guys will be swallowed as the gorillas fill the holes in their offerings, and new segments emerge. At the other end of the scale, there will remain plenty of options for smaller businesses to step into the automated marketing space. The current rash of innovations to make life easier for small businesses will continue and as those smaller single purpose tools gain traction, and more are launched to fill the niches that exist to service small businesses.
- Peer to peer marketing will continue to grow at “Moores law” type rates. Jerry Owyangs honeycomb diagram and data tells it all. Almost any service I can think of has the potential too be disrupted in some way by the peer to peer capabilities being delivered by technology.
- Content creation as a process. The next evolution in marketing, the move that I think “content” will start to make from being individual pieces of information produced in an ad hoc manner to being a process that is highly individualised, responsive to the specific context, and informed by the behaviour of the individual recipient scraped from the digital ecosystem. It means that content creation needs to be come an integrated process, more than a “campaign” . The term “content” will become redundant, it is just “marketing”, focussing on the individual customer.
- Marketing will evolve even more strongly as the path to the top corporate job. Functional expertise is becoming less important, what is important is the ability to connect the dots in flattened organisations that work on collaborative projects rather than to a functional tune. This trend is as true for small businesses as it is for major corporations. There will still be challenges as many marketers are really just mothers of clichés, but those relying on the cliché and appearances for credibility are becoming more obvious as the marketing expertise in the boardroom increases, and the availability of analytics quickly uncovers the charlatans. This will make the marketing landscape increasingly competitive on bases other than price.
- Recognition that marketing is the driving force of any successful enterprise will become accepted, even by the “beanies”. Seth Godin has been banging on for years about the end of the industrial/advertising model, the old school of interruption, but many enterprises have continued to deploy the old model, but I sense that the time has come. 2015 will be the year that sees marketing finally takes over.
- Video will become bigger part of marketing, particularly advantaging the small businesses that have the drive to deploy it and the capability to manage the outsourcing of the bits that they either cannot do, or cannot do economically. The old adage of a picture telling a thousand words is coming to life in twitter streams, instagram shares, and all social media platforms. The video trend will be supported by increasing use of graphics in all forms, but particularly data visualisations as a means to communicate meaning from the mountains of data that we can now generate. The density of data on the web is now such that new ways to cut though, communicate and engage need to be found, and I suspect those will all employ visuals in some form, perhaps interactive?
- Pay to go ad free is a trend that will evolve suddenly, to some degree it is an evolution of subscription marketing. Free to date platforms will charge to be ad free, whilst new platforms and models such as the Dollar Shave Club will probably evolve.
- The death of mass and the power of triibes will become more evident. The “cat pictures ” nature of content of social media platforms will reduce as marketers discover smart ways to package and deliver messages that resonate and motivate action. The agility of digitally capable small businesses will open up opportunities for them their bigger rivals will not see, or not be compatible with their existing business models.
- Local, provenance, and “real”. Marketing is about stories, so here is a trend made for marketers, and you do not have too be a multinational, just have a good story, rooted in truth and humanity. ‘Hyper-local” will become a significant force. Marketing aimed at small geographies, such as is possible by estate agents, and “local” produce, such as the increasing success of “Hawkesbury Harvest” in Sydney, and the “Sydney Harvest” value chain initiative.
- Paid social media will evolve more quickly than any of us anticipate, or would be forecast by a simple extrapolation. Twitter will go paid, travelling the route Facebook took to commercialize their vast reach. Some will hate it as it filters their feeds, others will welcome the reduction of the stream coming at them from which they try and drink. Anyway, twitter et al will set out to make money by caitalising on their reach.
- Social will grab more of the market in 2015 than it has had, even though the growth has been huge over the last few years. Small businesses will either embrace social and content marketing, in which case their agility and flexibility will put them in a competitively strong position, or if they fail to do so, they will fall further behind, and become casualties.
- The customer should always be the focal point of any organisation, but often they fail to get a mention. It is becoming more important than ever that you have a “360 degree” view of your customers, as the rapid evolution of social media and data generation and mining is enabling an ever more detailed understanding of the behaviour drivers of consumers. The density of highly targeted marketing, both organic and paid is increasing almost exponentially, so if you do not have this 360 degree view, your marketing will miss the mark.
- Treat with caution all the predictions you read, keep an absolutely open mind, as the only thing we know for sure about them is that they will be wrong, as with this ripper from Bloomberg who predicted the failure of the iphone. However, as with statistical models, quoting George E.P. Box who said “Essentially, all models are wrong, it is just that some are useful” perhaps some of the predictions you find around this time of the year will be useful, by adding perspective and an alternative view to your deliberations for 2015.
As a final thought, if you think your kid may be good at marketing, be sure they learn maths and statistics. “Maths & Stats” will increasingly be the basis of marketing, and the source of highly paid jobs and service business start-ups.
Have a great 2015.
Allen
Sep 4, 2014 | Governance, Innovation, Leadership, Small business, Strategy
The post on the 2 tools SME’s need in early August led to a comment that, whilst the headlines of focus and discipline made sense, the challenge is in implementation.
Fair comment.
So, how do you build the needed focus and discipline in the face of increasing complexity and competition?
Over 40 years of doing this stuff with SME;s, there have been 6 common factors that lead to successful implementation that have emerged.
- Ownership leads to commitment. In an increasingly complicated world, the hierarchical organisations that worked for us to date now fail, they are too rigid and process driven to be responsive to the chaotic input from a connected world. Leveraging what Clay Shirky calls “Cognitive surplus” becomes the competitive challenge to be won.
- Prioritisation and planning. There is a fine line between prioritising and planning a set of activities, and procrastination and doing the easy stuff that does not really matter. Two rules of thumb: 1. if it is easy, it probably does not matter, and 2. An extra minute spend planning will save an hour later on in the project.
- Accountability. It is one thing to “make” someone accountable in a top down organisation, it is easy for some boss to just say “you are accountable” but that does not make it so. It is really only when the person takes on the accountability as their own that the motivation kicks in, that they really care beyond the protection of an income or position.
- Outcome measurement. Do not measure the activities, just the outcomes. It is good to have the activities visible, so you can see what is being done, but only the outcomes really matter, activities do not contribute to success in any way other than they are just the means to the end, so measure for the end.
- Failure tolerance. The “scientific method” applies to management as well as science, it spawns a fact based decision making culture, rather than one based on ego, status and hubris.The story of the most successful inventor in history, Thomas Edison, on failing for the 999th time to create light from a bulb saying: “Now I know 999 things that do not work” is a lesson for us all. The 1,000th experiment was successful, and the world was changed.
- Persistence. Never giving up is crucial, with the proviso that you learn from your mistakes, and apply the learning.
These 6 are a great start, to which I would add “Sweat”. My dad used to reckon nothing worthwhile was achieved without some of it being shed, and I think he was right.
Aug 19, 2014 | Communication, Innovation, Marketing, Small business
As everyone will tell you, (including me here) marketing is about stories, stories that resonate, are remembered, that generate empathy, and lead to an action, and hopefully if your effort is to be rewarded, a transaction.
So what are the elements that make a good marketing story?
It is instructive to look to the stories we all read, from books we read to our kids, to the fiction we read as adults. All seem to share elements of 6 common traits:
- They are written for an audience. Kids love stories, and reading to my kids was one of the joys of being a parent. They would have loved last years best seller, Jeremy, the story of the kookaburra chick that fell out of the nest and as reared by a family until he could look after himself. Great book for my kids, as kids, but not my choice for my personal reading.
- They have a hero and a villain, and the hero always wins after a seemingly unwinnable struggle, usually at the last moment, and unexpectedly.
- They have a beginning, a middle, and an end. The beginning sets the scene, the middle tells the story, and the end does a recap, and reinforces the message of the story.
- They all have a message, something worthwhile taking away, and that takeaway is the point of the story. Aesop, a Greek slave had this part nailed.
- They all have dramatic tension coming in waves through the story. The hero is confronted, and prevails, then is confronted again and prevails again by being smarter, more helpful, inventive, and resilient than the villain. The rhythm of the story builds to the climax, with the hero again, prevailing in some way that demonstrates the traits of ingenuity, resilience, and “goodness”.
- The story has a plot. Pretty obvious, but the plot is what ties it all in together, and provides the context for the hero to beat the villain, to achieve the unachievable, and deliver the message.
A good story gets remembered, and can be retold. That is not just luck, it is the way we have evolved, storytelling is the way we related information vital for survival in the first couple of million years as we moved from caves to the present, passing on the strategies for staying out of the way of all sorts of risks to life and limb along the way. Recently there has been a lot of sophisticated research searching for the mechanics, this post from Chris Penn includes links to several.
Point is, the sophisticated research is simply telling us the mechanics, Aesop just knew the formula, and it remains the formula today, from writing a blog post to making a presentation, you may as well use the formula to your benefit.
How did I do?
