Oct 6, 2022 | Innovation, Marketing, Strategy
We all understand what a post-mortem is: an analysis of why something after the fact. It deals with history, then usually when something has failed. We review the drivers of success less often than examining the reasons for failure, then allocating responsibility.
Planning a marketing program is in effect a ‘pre-mortem’, a plan of action that will, with good management, robust analysis, and a bit of luck and timing, deliver the anticipated outcome.
Logically, it makes sense to ask the sorts of questions typically asked at a marketing post mortem, when a plan has failed, before the failure, as a means to anticipate and answer the questions, offering an opportunity to fix the problems before they happen.
Based on the many marketing pre and post-mortems I have done, following is a list of the 10 essential questions to ask yourself and your team before pushing that great big ‘Go’ button.
Where did the revenue come from?
Growth is not possible in the absence of revenue, where did the revenue come from, and almost every marketing plan I have ever seen calls for growth. Less often do they articulate where it will come from., and the consequential reactions of those who might be losing out.
Current customers, new customers, channels, business models, products, technical achievements, geographies, and so on. However, do not just list them, articulate in some detail how it has happened. Again, that past perspective adds real ‘grunt’ to the conversations.
I used to refer to ‘Share of Throat’ when planning for FMCG. It implies that competition is not just the alternative products in the category, but everything that is competing at the consumption occasions. For example, a hugely successful new product was Ski Double-Up, launched in the late eighties. It brought new consumers, older men, into the market. It did not compete for a place on the breakfast menu, it was a healthy, convenient, and tasty snack product that filled a need in older men that frankly we did not fully recognise before launch. It opened up an additional avenue into men’s throats replacing pies and sandwiches.
Where did the capital come from?
Growth is a veracious consumer of resources, particularly capital. How did you fund that growth? Reinvestment of retained earnings, capital raising from friends and family, or from the markets, public and private, debt finance considering the necessity for assets as collateral? What alternative uses for the capital consumed were considered, and why is the investment in marketing a superior choice?
What is the dominant business model?
Are you a middleman, retailer, on-line item sales, subscription sales, did you achieve a position to monetise arbitrage opportunities, and so on. Digital has delivered a host of new and emerging business models to us over the last decade, but one thing that has become clear, if it was not already, is that differing business models do not live comfortably in the same house. Therefore, if your revenue streams come from different business models, the structure of your resulting business needs to be decentralised by those differing business models.
What is the ideal corporate structure?
Have you remained private, are you publicly owned, a partnership, Joint venture, franchise system? There are many options, and as in the previous question, siblings rarely successfully live in the same house.
What capabilities were required to succeed, and where did you find them?
This is a question in two parts. Firstly, what capabilities were required from individuals, technical, strategic, financial, and all the other factors that make human beings able to contribute? Secondly, what were the organisational, leadership and cultural factors that enabled the organization to leverage the capabilities the individuals brought in each morning as they turned up to work.
Which customers, markets, products, technologies, relationships, were critical to the success? The answers to these questions are at a ‘must know’ level. Why did those customers come to you, choosing not to go to a competitor? What is the factor that differentiated you from the others?
Which competitors proved to be the most potent?
Anticipating competitive action, and planning to accommodate the impact is a necessary part of every plan, as noted previously. This is perhaps the most common failure amongst marketing plans I have seen, and to be fair, written.
A long time ago I was with Cerebos, one of the brands I managed was Cerola muesli, at that time a successful brand, and I was keen to expand the brand footprint. I saw a gap in the market between muesli and corn flakes, this was 35 years ago, and there was not the wide choice we have now. We developed a half way product we called ‘Cerola Light and Crunchy’ and launched a test market in Adelaide.
At first, we did remarkably well. The logic we employed was well accepted, the retailer sell in easily achieved targets, and consumer off-take was strong after the initial burst of advertising.Then in came Kellogg’s with a look-a-like product, ‘Just Right,’ and their resources just blew us away, Light &Crunchy never had a chance in the face of the weight of the competitive reaction by Kellogg’s.
That is a lesson I did not forget. With the benefit of hindsight, it was obvious, poke a bear in the arse and he is going to turn around and give you a whack, and I did not anticipate the power of it, and I should have. Never made that mistake again.
Where did the new competitors come from?
New competition almost always comes from the fringes, and often outside the normal scope of most extrapolative planning. Looking widely at what is happening in other markets, and other technologies may offer insights to where new, and probably more potent competition may come from. Honda started in motor bikes with the Honda 50, selling it to students in California as cheap local transport. None of the incumbents, Triumph, Norton, Harley, saw them coming, they thought they were toys, being bought by people who would never buy a big bike. Blockbuster ‘owned’ video, and could have bought Netflix for $50 million, but thought them irrelevant, not even an irritation. 5 years later Blockbuster was broke.
What is the emerging source of customer value in the market?
Nothing new will be bought in the absence of a strong reason to switch from the incumbents, which always means new value has been created, somehow. How did your create yours?
What did we do wrong, and what did we learn?
You learn more from your mistakes than you do from the things you got right. Make sure ‘learning is part of the cultural DNA of your business.
When you have the answers to all these questions, found with the benefit of the virtual hindsight, you will be in a very powerful marketing position, able to write the plans that double-down on the things that will deliver the objectives and success
In other words, execute the plan.
Header credit: Talisa Chang via Medium
Sep 21, 2022 | Innovation, Operations
Yesterday, Tuesday Sept 19, 2022, I went along to the Modern Manufacturing Expo at the Sydney showground.
Expectations were high that I would be able to see the emerging technologies, techniques, product, and service innovations that might support the re-emergence of manufacturing in this country. Specifically, I was also looking for ideas for my clients.
Perhaps I was too focussed, and saw just what I wanted to see when I registered some time ago.
It took a bit to find the expo, as there was no signage at all. Instead, there was signage for the ‘Workplace Health and Safety show’. Confused, I wandered in to ask directions to the manufacturing show to find they were the one and the same.
So, I went into the pavilion hoping to find some of the inspiration and conversation I was looking for.
The manufacturing part of the show was in the back corner. A discarded program I found indicated the manufacturing part had 25% of the floorspace, but it seemed more like 15%, and then, there was not much to see.
My question, hopefully not too frivolous is, do we not need a vibrant and successful manufacturing sector in order to support the plethora of OH&S products, services, and associations? Where are their revenues going to come from if the manufacturing sector remains as constrained as it is currently? Judging from the exhibitors yesterday, OH&S has become the end, rather than a vital means to the end, which should be a vibrant, innovative, globally oriented manufacturing sector.
This is not to throw rocks at those who turned up, made the investment, and were there to generate awareness and leads from those in attendance, in addition to the obvious networking opportunities. It is simply a commentary on the lack of support from across the broad base of manufacturers and their suppliers, education, government, and service providers.
Perhaps it was just a lousy marketing effort by the organisers, the costs were too high (although the OH&S crowd fronted), or maybe it was just one too many expos?
At least my effort was rewarded by running into someone with whom I had a useful conversation about a topic that had nothing to do with manufacturing, and as he lives two streets away, I tend to see him around a bit anyway.
To my mind, the old question of which needed to come first was clearly answered yesterday, and sadly, we seem to have it the wrong way round.
Sep 5, 2022 | Customers, Innovation
Some weeks ago, I found myself as a participant in a workshop touted to be one that was focussed on solving a problem by use of ‘design thinking’
Unfortunately, it was a waste of everyone’s time. Partly this was because the problem we were supposed to be solving was inadequately and inaccurately defined, and partly because the person running it had no practical idea of what ‘design thinking’ really was.
Spoiler alert: it has nothing to do with the visual definition of ‘design’
‘Design thinking’ is no more than a process that starts and ends with delivering value to the customer.
The typical stages are:
- Understanding of customer behaviour.
- Ideation based on that understanding
- Prototyping and testing of solutions to the challenges faced by customers
- Continuous and Intense feedback during testing and prototyping
- Integration of the finished prototypes into the final product offering
- ‘Shipping’ the solution to customers.
The greater the involvement of customers during this process the better.
Simple to say, very hard to do well.
PS. The fails in design thinking are rarely as obvious as the example in the header.
Aug 31, 2022 | Innovation, Marketing
Processes are the means by which things get done. From the simplest thing like cleaning the coffee machine in the lunchroom, to launching a major new product, it happens by way of a series of activities culminating in the objective being achieved.
It makes sense to do the same thing the same way every time, assuming you get the desired outcome. Doing so delivers stability, reduced errors, and makes the processes transferrable between people.
Process stability is a fundamental foundation of being able to scale a business.
However, processes do not innovate. They can replicate the past with great productivity benefits, they do not take risks. They squeeze out creativity, as it is variation to the process, and therefore not allowed.
Let’s look more closely at innovation, which can be broken down into a series of repeatable steps, and thus becomes a process.
There are two types.
Incremental. This is where there is continual improvement, the adjustment of processes to deliver benefit. The preconditions of incremental innovation are twofold:
- First, you need stability to be able to execute on CI, and
- Second, you need the culture of experimentation, continuous A/B testing to prevail.
Break-through. This second category is, to me, real innovation. It can create new markets and demand, of the type Apple deployed with iPod, iTunes then the iPhone, and Henry Ford did with the Model T. You need to be able to see where there is new potential, new markets, new demand, and be prepared to throw the baby out.
The culture and processes that support these two types of innovation are very different, effectively mutually exclusive, so you must make a choice. Trying to do both inside the same corporate ‘shell’ rarely works.
The former requires alignment, stability, continuous improvement, and several other popular management cliches.
The latter will die under these constraining circumstances, it requires insulation, a ‘skunk-works’ of some sort to succeed, a culture that enables experimentation and the attendant risk, giving the efforts immunity from corporate ‘sameness’.
Scott Adams reflects this pardox beautifully in this 2012 cartoon used for the header.
Aug 29, 2022 | Change, Innovation, Strategy
For some years academics have been mumbling to themselves about an observed phenomena they generally called ‘Flattening‘. The discussions have been centred around technology, but the impact can be seen in a much wider context.
The idea is that technology acts as the rising tide in the old saying that a rising tide lifts all boats. By rising the average level of the ‘water’ the differences between individual companies and industries are removed, that the offering becomes increasingly homogeneous until a new technology arrives, lifting the owner clear of the competitive debris.
There are numerous examples.
The emergence of the Internal combustion engine wiped out long established industries and companies in the horse drawn wagon, whip, and horse breeding and breaking industries of the time. As they disappeared the automobile industry and its supply chains emerged, now in the early stages of being ‘flattened’ in turn by electric vehicles.
Before the internet, information existed in small silos and did not move much, and then only slowly. Industries that relied on those characteristics were ‘flattened’ out of existence. Yellow pages, classified newspaper ads, and in their place emerged new industries. Google, Facebook, and the plethora of other communication and search platforms.
Let’s consider energy production.
For thousands of years people used wood or coal to heat their houses and water. In 1698 Thomas Savery patented a machine that drew water out of flooded mines by using steam pressure, then in 1784 James Watt patented the steam engine, which for the next 150 years powered most industrial development. In 1831 James Faraday created the first very simple electrical generator that converted mechanical energy to electrical energy.
So what you ask.
Look at the current environment with the concept of ‘Flattening’ in mind.
Internal combustion automobiles are in the early stages of being ‘flattened’. This has been initiated by Tesla, in parallel with the batteries required to run the cars, but which will have huge implications across the energy sector.
Coal, the dominant world source of energy has suddenly become a pariah. It is polluting the atmosphere with the attendant changes in climate, leading to rapid growth of renewables, both personal and commercial scale. New fossil fuel projects, especially coal, are now being locked out of capital markets as they see their investments being stranded. Only idiot governments with an eye to donors is keeping them alive via subsidy and barriers to entry of renewables.
The tide however is inexorable, and fossil fuel will be redundant soon. As Hemingway noted in the Sun also Rises, when one of his characters was asked how they went bankrupt: “Gradually, then suddenly’ was the response.
That is what is happening in power generation.
Renewables have been around for 25 years, slowly evolving as the technology improved. It seems to me we are at, or almost at, the ‘Suddenly’ point. In the absence of being in front of the wave of changes, we will be left behind in the technical race to build the new industries that will emerge, again.
Flattening is also happening in some way in your domain, it is the normal course of development. the challenge is to see the elephant and react to it in time.
Aug 19, 2022 | Innovation
Usually the term ‘gestation period’ the time between conception and birth, is used for mammals, but it is just as relevant for innovation.
In the animal world, it is a fixed and consistent period for each species, varying from the 12 days it takes the Virginian opossum, to 22 months for the Indian elephant.
The definitional complications of using the term for commercial innovation come from the uncertainty in fixing the time of conception and birth.
The best definition I have seen of innovation is the one used by Sir Ken Robinson: ‘Innovation is an original idea that has value’. It is however just one of many.
Is that new flavour of product ‘A’ touted by the marketing department really an innovation, or just a line extension?
Is that fascinating scientific phenomena observed for the first time an innovation, or just something interesting to scientists that is waiting around for a commercial use to be created?
I remember seeing for the first time in 2006 the TED presentation by Jeff Han of the multi-touch interface. He had fun playing with it on the stage, but seemed unsure of the direction to commercialisation. Since then, the technology has been incorporated in every smartphone. Was the gestation started when Eric Johnson published a paper and was granted a patent in 1969, when Bell Labs Bob Boie first created the transparent multi-touch interface in 1984, when the PhD student in Jeff Han’s lab mastered the maths to make images interactive, or when Apple decided to apply the technology to the first touchscreen iPhone in 2007.
The gestation of market changing ‘Innovation’ is typically long, much longer than is easily recognised when you look at the end product.
The angst created by the sudden emergence of mRNA vaccines for Covid is widespread. However, it is misleading when you know that the mRNA molecule was first theorised in the early fifties, isolated in the lab in 1961, and worked on continuously at a low level by some major players, particularly after CRISPR technology was developed. Covid was just the catalyst that enabled 70 years of work to be brought to market at a speed that appeared to be unprecedented.
On the other hand, the marketing team I led in the late 90’s brought ‘Dare’ flavoured milk to market in 12 weeks. While it was and remains a commercial success, there was nothing new involved, just a smart rearrangement of existing packaging and market positioning in the large and then undeveloped flavoured milk market.
