Jan 13, 2022 | Customers, Marketing, Strategy
Google has been a revelation, all the answers you need at your fingertips, or so it would seem.
What is the consequence of this instant question gratification?
Do we ask better questions, or just more superficial ones?
Does the volume of questions we ask, to which there are instant answers, substitute for the value of the fewer but deeper questions we used to ask?
My clients and those in my networks hear me rambling on about what I regard as the key to success. That single characteristic I have seen in all successful people I have known, and watched from a distance. Yes, they are all smart, and yes, they are all motivated to success, but underlaying those two factors is a third characteristic:
Curiosity.
I have never seen someone who is smart, and successful, who is not also curious. I have also seen many who have both of those characteristics, but are not successful. Generally, they strike me as not being also curious.
I use Google and Wikipedia every day to answer questions that emerge as I service clients and write this blog, but neither offers the catalyst to a post. That catalyst is curiosity, sated by the deep but selective ‘backgrounding’ I do of books, podcasts, blogs, journals, and absorbing informed commentary.
They are where the catalysts are hidden, uncovered by curiosity.
Social media, Google and Wikipedia specifically have sated our curiosity at a superficial level. No longer do we have to search for answers to questions, they are dished out for us, making life easy, but reflecting the superficiality of the answers to the superficial questions we ask.
Are our lives better because of this ability to get immediate answers to questions?
Undoubtedly yes, but are the questions as useful, offering the deep insights found as we used to dig around for answers, often finding that the initial question was inadequate, superficial, or simply the wrong question.
I like books, my car is a mobile library from which I can consume from a menu of offers in the idle moments between the busy times out of my home office. The one I pick at any time is most likely the one that relates to a question on my mind at that time, or that throws light on a topic of current interest.
Thanks Google and Wikipedia, you have made my life easier, both because I can find the answers to superficial questions, and because most of my competitors stop there, at the superficial.
You need books to go deep.
Jan 5, 2022 | Analytics, Strategy
Question: What has enabled the geometric growth rates of Facebook, Google, Amazon, Atlassian, and other digital unicorns?
Answer: Wide and deep feedback from the market enabling them to aggressively focus resources on areas that deliver the best returns.
Technology is only the tool that has enabled this unprecedented level of feedback, in real time. It is the feedback itself that has been the driver of growth.
It has always been so.
Finding ways to build an understanding of the drivers of superior performance has been the goal of intelligent marketers, and management more generally, forever. The experts in the pre-digital age were the direct response advertisers, who were able to determine quickly which version of a magazine or TV ad caused the phones to ring and the coupons to be redeemed. Post digital, it is those who are able to collate and analyse the response in just the same way, except it can be done in real time.
They have become the masters of absorbing market and customer feedback, then being able to evolve rapidly and continuously by leveraging that knowledge on an ongoing basis.
Amazon started off as a bookseller, the plan was never to become the master of retail. This evolved with them as they quickly noted what worked, and doubled down on it, continuously. Meanwhile, they were prepared to invest in the adjacencies that emerged, several of which, such as AWS, have become monster businesses.
That process continues, even as Jeff Bezos invests in blue sky projects like satellite internet, drone delivery, electric cars, and space vehicles.
The hardest part is building the initial momentum. Once you have it, that momentum will drive other ‘flywheels’ becoming a virtuous cycle that is almost self-perpetuating.
Header credit: Scribbled ‘Flywheel’ diagram by Jeff Bezos on a restaurant napkin in 2001. It is driven by input metrics, specifically market feedback.
Dec 29, 2021 | Marketing, Small business, Strategy
At the end of the year, it seems sensible to have a look at the posts that generated the most traffic. Surprisingly, none are posts that have gone up in this most challenging year, not an outcome I anticipated. This demonstrates the long-term value of a blog of this nature. Collecting and curating ideas and perspectives over a long period becomes an investment, certainly for me as the writer, and hopefully for those who choose to follow, or just dip in from time to time.
In order, from the most viewed, the 10 were:
5 key factors to consider when planning your budgeting process. January 2020.
https://wp.me/p5fjXq-2sN
This post was the first of 2020, and did generate some traction early on. However, in the early parts of 2021, when suddenly businesses had to rethink their budgeting processes in the face of Covid it took off. It will no doubt kick along again in the early part of 2022, which is unlikely to be much more predictable than the year just finishing.
3 essential pieces of the supermarket business model. November 2014.
https://wp.me/p5fjXq-1pd
First published way back in 2014, this post has been number one or two in the most read posts every year since. Clearly the elements of the supermarket business model retain an abiding interest. Retail is also the core of my corporate experience, now 25 years behind me. Many of the illustrative stories in these pages come from that time, as the lessons are timeless. The tools have changed, the behavioural foundations remain very consistent. Even amongst the massive switch to online retailing in the past year, the foundations of retailing have remained consistent. The pace has increased geometrically, and the logistics are new, but the basic requirement for success, to add value to the consumer, remains exactly as it was.
The 4 dimensions of project planning. August 2017.
https://wp.me/p5fjXq-1Gz
Every business is a mass of individual and group projects of various types and importance. This post offers a framework to consider when going about the planning processes. Planning is another form of predicting the future, and as we know, that is not a reliable process. However, planning ensures you are better prepared than just relying on being reactive as circumstances change. As Eisenhower noted just before the Normandy landings in 1944 ‘In preparing for battle, I have always found that plans are useless, but planning is indispensable’
The 5 strategic dimensions of price. October 2018.
https://wp.me/p5fjXq-2ba
To my mind, this is one of the more important posts I have written amongst the 2100 over 13 years. How to set and maintain optimum price is a challenging, even confronting task, too often not given the strategic importance it deserves. After all, every added dollar of revenue you can extract from the marketplace falls straight to the bottom line, and it is the one driver of profitability over which management has absolute control. It is one of a number of posts around price that are in the archives.
A marketer’s explanation of Net Present Value. February 2018
https://wp.me/p5fjXq-20v
Net Present Value, or NPV, is an accounting term thrown around with gay abandon by accountants, assuming everyone understands what it means. Over the years, very few marketers I have known had a clear understanding of NPV. Hopefully, this post helped some in those conversations with their accounting peers, trying to get their own back for all the jargon marketers habitually use, by using a bit of their own.
A private note to the chairman. April 2013
https://wp.me/p5fjXq-10x
This one was a surprise. It is an old post from 2013 that paraphrases a conversation I had with the chairman of an organisation on whose board I sat at the time. We had failed to agree for some time over a series of questions that could be characterised as the priority list against which the board should have been making resource allocation decisions for management to execute. At the time I was pretty fired up, and subsequently resigned the role. On rereading the post, I would not resile from any of the items listed, and would offer the same advice were I to be in a similar situation again.
How to wield Occam’s Razor to build robust strategy. June 2016.
https://wp.me/p5fjXq-1Rd
Occam’s Razor seems to have become a bit fashionable recently which is perhaps why this post got a guernsey in the top ten, after languishing with the ‘also-rans’ for 5 years. The advice however is sound, seeking the simplest possible explanation that fits all the facts, no matter how unexpected it may be. In a complex and volatile world, simplicity is one the hardest things to achieve.
Classic Marketing Strategy: Before and After. September 2016.
https://wp.me/p5fjXq-1Il
The title says it all. Marketing is about delivering a value proposition to those who may engage and make a purchase. Showing how the outcome of the purchase delivers a positive outcome has always been, and will always be a powerful way to communicate. I used myself as the example, having just had a couple of ‘headshots’ to replace the one I had been using, which was ‘homemade’. It might be time for an update, although the years and inactivity of Covid have not done me any favours.
Problem solving continuum. June 2010.
https://wp.me/p5fjXq-k3
This post was a very early one, proposing the idea that every problem sits somewhere on a continuum that describes the way in which management goes about finding and executing a solution. At one end workarounds are common, to the other end where difficult problems are subjected to continuous improvement processes. There is much more that could be said, and a number of subsequent posts addressed some of these items, but given the interest, this idea will receive greater consideration in 2022.
The 7 mental models for Successful marketing. June 2017.
https://wp.me/p5fjXq-1Rw
This 10th inclusion reflects on a very personal experience that highlighted to me the simple fact that while the tools of marketing have changed radically over the last decade, the foundations have not changed at all. It is one of the longer posts in the archives, running to almost 3,000 words, and includes an audio version delivered at a small business seminar tagged on the end.
To those who have followed, commented, or just ‘dipped in’ occasionally, I extend my thanks, and hope that you continue to draw some value from my musings.
Have a great 2022, it can only be better than 2021.
Nov 17, 2021 | Leadership, Strategy
Strategy is an essential ingredient for success. Without a clear, unambiguous, and well communicated strategy, there will be wasted effort, sub-optimal decision making, lack of alignment between functional responsibilities, and any number of other problems.
Therein lies the problem with strategy.
You spend time and money researching, developing, road testing and implementing strategy. You build a deep commitment to it, the CEO if he/she is doing their job well spends a significant percentage of their time building the engagement of all stakeholders in the strategy.
What if it is the wrong strategy?
What if one of the core fundamentals suddenly turns against you, or becomes irrelevant to the customer purchase decision?
Not only have you wasted the resources getting to that point, but the whole point is also to generate commitment. It is very hard then to turn around and say, Oh Crap, we got it wrong!
The inclination is to double down, work harder, not throw the sunk cost against the wall and change tack.
Blockbuster did not survive this challenge. Suddenly the core assumption that people would rent videos from a central location, then incur late fees when they finally brought them back, failed. When Netflix emerged as a subscription DVD by mail service, Blockbuster management saw it as an odd, fringe product that would never take on. Netflix management, virtually broke, offered to sell the business to Blockbuster for $50 million, an opportunity they declined. Technology caught up with Netflix, streaming became a viable option, and Blockbuster took only 3 years to go from king of the multi-billion dollar castle to broke.
Blockbusters strategy sucked. It assumed no change to the business model that had made them successful, could not pivot to a new model, and disappeared, because their strategy was wrong.
Kodak made the same mistake, and so did a local bottle shop that set out to compete with Dan Murphey’s on price and range.
Consider the strategic foundations of the current Australian Government’s commitment to the continuation of fossil fuel. Despite the spin of the last few weeks, their actions display that continuing commitment to the ‘Gas led recovery’ and options such as Carbon Capture and Storage, dismissed as fantasy by serious scientists. Business on the other hand recognises the inevitable failure of this strategy, and have been taking steps for the last few years to pivot their own operations. Now even the business lobby groups have publicly stated the government’s strategy sucks.
Tesla by contrast, founded in 2003, went public in 2010 for $17 a share. It took a few years before the strategy became an evidently powerful one. You could have bought a Tesla share in early 2020 for $70. That same share today is hovering around $1100. Tesla holds almost 80% of the US market for EV’s, 20% share worldwide. The market for EV’s is about 3% of total vehicle sales, but has doubled for the last three years: compounding is at work. All the major car manufacturers are fighting for a share, but I wonder if they missed the boat, In the US at least, you do not buy an EV, you buy a Tesla. A bit like Hoover, the brand becomes the verb describing the category.
The problem with strategy is that when it is well locked into the decision making and performance measurement of an organisation, it is very hard to change. Vested interests, personal, professional, and institutional all get in the way, and actively work against the change until too late.
To be effective, strategy also must be agile, subject to continuous evolution, as well as being the ‘North star’ of decision-making. The alternative is that you follow it into irrelevance at best, but often extinction.
Header cartoon credit: Scott Adams via the wisdom of Dilbert
Nov 3, 2021 | Sales, Strategy
Your pricing architecture should be driven by your business model.
Your tactical pricing decisions should be driven by the immediate competitive and market pressures.
They are different, and while not mutually exclusive, are, or should be, largely separate.
Business models generally evolve slowly, so pricing architecture changes slowly with them, but the tactical needs can vary daily.
Get the two mixed up at your peril.
Years ago I was in a meeting with the MD of the business I was working for, the GM of sales, and a senior manager of one of the retail gorillas, who was trying to extract substantial trading term concessions from us. The sales personnel had been under extreme pressure for some time, but had resisted successfully. The MD was ‘summonsed’ as a last resort by the retailer. Towards what became the end of the meeting, the retailer played the ‘ego card’. He observed that he had thought the MD had the authority to make decisions, but it seemed he had been wrong. The MD, sensitive to challenges to his ego, responded that he was indeed the man who had the veto authority, and proceeded to agree with some face saving but essentially useless caveats. This changed in a moment the pricing architecture of the business for the worse.
It proved to be a profound strategic mistake.
Sales people are often given the authority to vary prices tactically, but should never be given the authority over the architecture. Not because they cannot negotiate, but because they should be kept entirely separate to maintain the integrity of the pricing architecture and the connection to strategy.
In the story related above, the Sales manager had been explicitly denied the right to offer changes to the architecture without agreement of others in the senior management group, but retained complete tactical authority. This meant that there were agreed limits and trade-offs that he, and those who reported to him could make during a negotiation. This tended to hamper potential (read ‘promised’ by the retailer) volumes, but cushioned margin and ensured similar customers were receiving the same terms, within which the sales force was able to vary tactically to leverage our position as best they could. The MD by contrast had the power over the architecture, and the concession on the architecture completely moved the tactical ‘needle’ against us.
It is very hard in a highly contested market to move prices up, and very easy to move them down. The change in architecture moved the whole field for negotiation down which substantially impacted on long term margins. In addition, it also confirmed in the retailers mind that the ‘bottom line’ for the sales force could be further moved by challenging the architecture.
That business, sadly, no longer exists.
Nov 1, 2021 | Culture, Governance, Strategy
A gem of insight from Microsoft CEO Satya Nadella happened in the last minute of this interview by HBR editor Adi Ignatius:
‘What do you think is the biggest source of innovation and why? Is it diversity, technical skill, humanity, employee equity, something else’? Ignatius asked on behalf of a listener to the interview.
SATYA NADELLA: Empathy. To me, what I have sort of come to realize, what is the most innate in all of us is that ability to be able to put ourselves in other people’s shoes and see the world the way they see it. That’s empathy. That’s at the heart of design thinking. When we say innovation is all about meeting unmet, unarticulated, needs of the marketplace, it’s ultimately the unmet and articulated needs of people, and organizations that are made up of people. And you need to have deep empathy.
So, I would say the source of all innovation is what is the most humane quality that we all have, which is empathy.
Empathy. There you have it, from one of the most successful CEOs of the last 20 years.
Being able to put yourself in the shoes of someone else, seeing their problems, motivations, opportunities, hopes and dreams from their perspective.
Satya Nadella has completely rebuilt the culture of Microsoft from the ground up since becoming CEO in February 2014, following Steve Ballmer. In that time, the share price of Microsoft has risen from $36 to $332 today, making its market capitalisation a few billion short of 2 trillion $US, and second only on the share market popularity contest to Apple. Nadella seems to know a bit about what drives success.
Empathy.
It was a really simple answer to what can easily be treated as a complex question requiring a long and detailed answer, employing technical terms, cliches and jargon to impress and further complicate. Instead, he used one simple word, with a short and simple explanation of why he used it.
If I asked your employees and colleagues how much empathy you displayed, what would be their answer?
