What price experience?

What price experience?

Jul 1, 2019 | Branding, Governance, Strategy

It seems to me that the development of robust, lasting, measureable and implementable strategy and marketing has gone to the dogs.

We are infested with short term rubbish that reflects the lack of experience of those doing the developing, and lack of understanding of those doing the commissioning, obsessed as they are with the short term.

Last week, Bloomberg revealed that the software in the Boeing 737 Max was outsourced to a bunch of recent graduates in India. Unfortunately, we all know the result of that exercise.

Not only were hundreds killed in the two crashes that followed, but the brand ‘Boeing’ took a dive with them.

How is that for the ROI on a few bob saved on experience!

You cannot put an old head on a young dog, all they do is yap.

Where does the ‘essential essence’ of marketing hide?

Where does the ‘essential essence’ of marketing hide?

Jun 21, 2019 | Branding, Marketing, Strategy

 

Great marketing is never entirely rational.

If it was we would call it economics, and be bored to death by its recitation.

‘Rational’ relies on precision, mathematics, and repeatability, not characteristics often seen in the behaviour of human beings.  We are driven by automatic things buried deep in our brains that have evolved to enable our relatively physically weak species, to become the dominant species on earth.

Individually our ancestors could not beat off a sabre toothed tiger, but together we saw them disappear while we prospered. We are disproportionally attuned to detect danger before we detect happiness, a foe before a friend, and are initially suspicious of anyone from outside the ‘tribe,’ and anything we do not understand.

Great marketing is the opposite to rational. It demands attention because it is different, it creates curiosity, because it is unexpected,  and interest because it is of value.

Creativity is the core of great marketing, as without creativity, every marketing strategy would be the same.  All marketers have access to the same data, can apply the same logic to a challenge, use the same models,  have the same distribution, so if logic reined, all would be the same for the same sort of product.

Instead, we have a cornucopia of strategies and tactical implementations, driven by some level of creativity. These days, sadly, most of the creativity has been squeezed out by the algorithms and demands of the rationalists running enterprises,  which is why there is so much poor marketing and advertising around.

If you want to be seen, be different, cause a stir in the bushes, build curiosity, be creative!

It will not always work as you expect, as creativity is about being first, which is usually bold and risky, it will not always win hearts and minds in the corner office, but as a marketer, it is your duty!

 

Header cartoon from the great Hugh McLeod at www.gapingvoid.com

 

 

Blowing up 5 myths about strategy

Blowing up 5 myths about strategy

Jun 13, 2019 | Strategy

Strategy sessions are often seen as an annual, 3 day bonding session at a nice spot away from the usual distractions, with little application to the daily business.

Nothing could be further from the truth.

Strategy is not just about the long term.

A robust and effective strategy is cascaded into a series of increasingly detailed plans with actions and accountabilities attached. A ‘waffly’ strategy stuck on the foyer wall will do nothing, but a strategy that works will not just drive everything down to the daily level, it will perhaps more importantly, tell everyone why they are doing the things they are doing, and what their role is in delivering success. This contributes to a culture of collaboration and performance.

Sustainable competitive advantage is a dead idea.

 Nonsense! Identifying your competitive advantage and doubling down on it is more important than ever, simply because the pace of competition is so much quicker, and your actions are transparent to those who choose to watch. This makes it critical that you have an advantage, but that you also continue to enable its evolution at a pace quicker than the competition.  The key is the cycle time of innovation in the orbit of your competitive advantage.

Agility trumps strategy.

Strategic clarity enables quick decisions about where, when and how to be agile. Agility by itself may look nice, but is useless unless used to deliver value. Strategy is all about delivering long term value, being agile is a component of a robust strategy. It is a capability that enables you to move quickly within the established strategic framework towards an explicit goal.  

A Digital strategy is essential.

Digital capability is increasingly critical to commercial success, but digital capability is not a strategy, it is a contributing factor to a sustainable strategy. Do you have a telephone strategy? Business would not be able to be done without a phone, how about an electricity strategy? No? you may have a renewable energy component in your strategy because energy costs are important, and managing the technology a make or break capability, but in itself is a part of the larger strategy.

Strategy cannot accommodate disruption.

Disruption has become almost a cliché, an excuse for just about every failure around. Strategy is all about building a framework that will enable sustainable commercial success, and if that is  not about anticipating and leveraging disruption, amongst the other factors that drive long term success, I am not sure what is. The challenge is that disruption has suddenly emerged as the executioners block for those who fail to change at the radically increased rate over that required just a generation ago.  Pick any disruption you like, and you will see elements of it that  were both predictable and within the capability of the legacy businesses to leverage, if they had the foresight and capability to disrupt themselves. Being the big incumbents, arguably they are the best resourced to be the disruptors, but almost never do so. The bigger the ship, the harder it is to change direction. It is not disruption that leads to failure,  but the strategic failure to anticipate, lead, and leverage the disruption that leads to the failure.

 

My antidote to all this is to be continuously discussing and refreshing strategy by having it on the agenda at all times. Ditch the notion that it is set in an annual 3 day gabfest, and make strategic thinking a crucial part of your standard operating procedures throughout the enterprise. Strategic thinking should be on every agenda in an enterprise, and a general responsibility, not one reserved for the few senior managers.

Need some outside assistance, which most do, give me a call.

 

Photo credit: wiki commons.

 

 

What is the value of habit?

What is the value of habit?

Jun 11, 2019 | Customers, Strategy

Yesterday I filled my car with petrol. There are a number of petrol stations near me, but I tend to use the same one, by habit, without any real form of comparative pricing with other stations in the area.

It is convenient, is in a backstreet, the bloke who swipes my card is pleasant, it is an independent, so I just assume the price is OK without checking. None of that stupid discount applied if you have a supermarket loyalty card, where you know the price is inflated to accommodate the discount, a practice I find is as irritating as it is immoral, so avoid them like the plague.

I wonder how many of his customers just use the place habitually, without checking prices as I do?

Consider the implications of pricing on the profitability of the station.

I will not try and do the maths, as I do not know the costs or the volumes involved, but two questions are relevant:

  • How many of the customers are regulars, like me, who do not check prices?
  • At what point do regulars, like me, check prices, weigh up the other factors that influence our behaviour, and move elsewhere?

Would it be worth knowing the answer to these questions, and managing price accordingly?.

At some point, you will lose the price checkers, those who  chase the cheapest price on the day, and seem to be prepared to drive around looking for the cheapest petrol.

How many added cents/litre will motivate a habitual user, like me, to actually check the comparative prices, and move to a less convenient station?

If I was running this petrol station, I might consider putting in a system that in some way recorded the regulars, those who seemed always to use the station, and those who just used it occasionally, and then experiment with the price elasticity of the regulars, assuming that the price checkers will never come in unless you are the cheapest  on the day

An added cent to the price would probably not be noticed by the regulars, not drive any of them away (poor pun there) but would drop straight to the bottom line. If the regulars were 60% of your sales, it might well be a great strategy. It gets rid of the lines at the pump, increases the chances for interaction at the cash register, and that extra sale from the grocery and confectionery lines, which is after all, where a lot of the profit hides. 

Every business, no matter what it is, should consider deeply the drivers of profitability in their business, and pricing strategies should be number one on the list of considerations.

 

 

Why does ‘Hindsight Planning’ really work?

Why does ‘Hindsight Planning’ really work?

May 6, 2019 | Communication, Small business, Strategy

For years I have used a process I call ‘Hindsight planning’ with clients to conceive then execute  a strategy that delivers sustainable prosperity. 

Put simply, rather than planning forward, as it usually occurs, from an  analysis of the current situation towards a goal,  I seek to have them articulate the goal in great depth, and from a range of perspectives so that they ‘internalise’ the goal as if it has been achieved. They have absorbed an  emotional attachment to the goal as if it was the current reality, rather than a goal.

I always thought it was a bit of a semantic trick, but it turns out I was wrong.

Hindsight planning is rooted in psychology.

Daniel Kahneman in his book ‘Thinking, Fast & Slow’ said it best: ‘Once you adopt a new view of the world, or a part of it, you immediately lose much of your ability to recall what you used to believe before your mind changed’

In other words, hindsight planning is more than a semantic trick, it is a process of replacing the current reality with a new one, that just happens to be the goal you set out to achieve. Once you believe the new reality, it is easier to look backwards and articulate the things you did right, and those you did poorly, the resources you needed, the timing, capabilities, and all the other things that require assembly for the achievement of a stretch goal.

When you need help with this challenging idea, call me, and challenge me to do for you what I have done for others.

Header Photo: the last known photo of the Titanic as it left Queenstown Ireland, on April 12th 1912. A little but of hindsight would have gone a long way!!

How to assess the value of information

How to assess the value of information

May 1, 2019 | Governance, Strategy

The term ‘monetisation’  is thrown around like confetti at a wedding. It almost always refers in one way or another to the process of squeezing money out of information of some sort. The real key to monetisation success is to identify who may have value created for them by  the access to, and use of, the information and the outcomes it can bring.

Think about the differences between an X-ray and a CT scan.

An X-ray is a one dimensional ‘picture’, and you only see the bones with any clarity. It is the ‘first port of call’ in a diagnosis, offering a limited view of the location and orientation of a skeletal injury. By contrast, a CT (computed tomography ) scan is multidimensional. You see not just the bones, but the soft tissue as well, and you can see it from a variety of perspectives. it is a far more complete picture.

This is a fine analogy for the value of information.

Financial information is just like an x-ray. It cannot tell you much beyond a one dimensional analysis of a current situation, and it is incomplete. A strategic analysis of information is more like a CT scan, you can see a dramatically increased information set, and examine it from a range of perspectives. This depth of information can deliver understanding and insight about the connections and interrelationships that exist. 

An x-ray capability is relatively simple and cheap, whereas a CT scan is more complex and requires a far greater commitment of resources to deliver that far more detailed picture.  CT scanning equipment costs in the region of 3 times as much as an X-ray set up, and in use, delivers perhaps 100 times the radiation of an x-ray. Not something to  be undertaken without due consideration. A CT scan also requires a far better trained staff than an x-ray, generating greater operational and fixed costs. 

So it is with the information you gather and analyse in your business.

Information is the currency of success these days. Various studies identify in excess of  80% of the market valuation of listed companies coming from intangible assets. Considering this fact,  it makes sense to have an information strategy.

Leaving the IT department to develop such a strategy fails to recognise the importance of information as an essential foundation of success.

Our standard accounting processes include an asset register, on which all assets are recorded, often down to the pens and pencils in the stationary cupboard, but I have yet to see one that puts a rationally articulated value on the information held in the data files of an enterprise. Is it just because it is hard to do, or is it because there is  no place for it on our balance sheets and in our statutory accounts?

There appears to me to be 4 parameters for considering the value of your data.

  • Leading indicator: a source of information about what may happen
  • Lagging indicator: a record of what has happened
  • Focus is improvement of management discipline
  • Focus is creating new value for stakeholders

Creating metrics for each of these is challenging.

Metrics are usually financial, and then usually only one dimensional, based entirely on the costs incurred as recorded. This data is available in some form in every business, but only tells a part of the story. There are opportunities to record and measure costs in other ways.

Elsewhere I have considered the 5 types of cost in every business, direct, indirect, opportunity, transaction, and short cut costs, and noted the challenges of putting numbers to some of them.

Financial data can also be ‘fattened up’ by consideration of  several other parameters:

  • The value of the information by understanding the costs that would be incurred if it was suddenly unavailable.
  • What someone else might pay for it, particularly a competitor
  • The extent to which this information contributes to the bottom line.

For example, these metrics could be considered in the context of the value of the customer and lead information in your CRM, how much does that information deliver to margins? These days that is often a readily available metric.

The additional valuation parameter is strategic:

  • How complete is the information in delivering a picture of how the competitive environment in which you compete is evolving?
  • How does that information inform your strategic decision-making, and what would be the costs of not having it measured considering the 5 costs?
  • How does the information articulate the key drivers of performance?
  • How well does the information contribute to the strategic outcomes being sought?

Tackling this challenge of quantifying intangibles, recognising the truth of Peter Drucker’s throwaway that ‘what gets measured gets done‘ is not easy, and not cheap, but like the difference between an X-ray and a CT scan, the results are worth the effort when done well.

Header photo from: https://www.oceantomo.com/2015/03/04/2015-intangible-asset-market-value-study/. This is the second time I have used this graphic to make a crucial point about the value of intangibles in your business.