Archive for February 24, 2014

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Posted: February 24, 2014
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Change while you are ahead

There’s a lot of talk about innovation being the key to business success, but so many businesses I see are still playing the old game and losing simply because they don’t really understand what this actually means.  This week I came across an article in which David Kerpen interviewed Jason Fried of Seven Signals that reinforced the message I have been giving my clients for years – “You are only as good as your NEXT big idea”.

Think back to the days when business life was as slow as retirement might seem today and you’ll maybe remember the way businesses used to go through endless cycles of famine and feast.  With the benefit of hindsight its easy to see what was happening.  A business would come up with a product or a model that resonated with the market (in those days it was often a matter of luck) and they would milk it for all it was worth.  They didn’t give a lot of thought to why they had hit this rich vein of success, they just scaled up and went for bigger numbers.

After a while (and in those days product development lead times were much longer than today) competitors would turn up and start making their life tough with similar propositions, improved in some way either cosmetically, technically or at a better price and from then on it was a slow slide back to the bad old times for the originator.  At some point on the slide, usually when they had hit rock-bottom, they decided to do something radical and re-invented the business, maybe developing a new product and off they would go again.

Usually these improvements in fortune were the product of management changes and clear management styles emerged.  There were what we called “transformationists” who, as the name suggests were the people who came up with the new stuff and engineered the revival of suffering businesses and there were “transactionists” to whom the business was handed over in order that they might perpetuate the new formula.  This path of boom and bust was generally accepted as the way things were done.  Transformationists and transactionists were separate and different and were hardly ever in the building at the same time.

Then things started to speed up and the cycles became so quick that barely had the transactionists got their feet under the desk than the tyransformationists were back in to do their stuff. True to Darwin’s theory a new breed of manager evolved, those who could both transform and manage on an on-going basis.  Not before time you might think. And that’s basically where we are today except there was a missing ingredient.

It took a very long time for businesses to understand that the products themselves were rarely the reason for the success of the business.  These were in fact a product of the real asset. Products were successful because they were new, different.  As the world emerged from the austerity of the post-war period products began to capture the imagination of customers because they were fresh and exciting rather than purely practical. A new phenomenon emerged – throwing away something that worked and replacing it with something that looked better or incorporated an additional function. Increasingly it was innovation that was driving business and that was driven by internal culture and that in turn was driven by branding. Eventually businesses were only as good as their NEXT big idea and to stay on top they needed to be in a state of continual change and reinvention.  In the intervening years businesses (ABB Brown Boveri being a case in point) reduced their product development time from years to months, switched-on businesses have big teams working on new ideas and as a result innovative new products are obsolete before you get them out of the box.

Kerpen’s piece reflects on this and makes the critical point that because the pace of business life is as fast as it is today no business can afford to wait until circumstances force them to innovate.  Apart from anything else changes made under duress are fraught with compromise, so your chances of success are greatly diminished. The time to change is when you are enjoying success.

This is probably the lesson that businesses I come across find it hardest to accept. Fear of the unknown and fear of failing to squeeze all the juice from an idea or product still combine in equal part to make managers reluctant to plan ahead.  Sure there are businesses out there with three or more generations of new products under development, but theses are the successful ones and successes are still the minority.  Its no coincidence that the vast majority of new businesses fail within the average lifecycle of products in their sector.

You might argue that these one-trick ponies are the incubators of new ideas and to some extent you’d be right. We are developing a new progressive model almost by default. In the tech sector start-ups with a great idea are often snapped up by the big players, but this has its weaknesses. The great new ideas generated by these small businesses are a product of culture and once the business is absorbed into a big corporation, that culture is usually smothered. The big concerns are consuming new businesses with an ever-increasing appetite. Besides, you can’t rely on being snapped up by a behemoth, which is why my advice to start up’s is focus on developing your innovative culture.  That, and not the product it created dictates your future.


door knob

Posted: February 16, 2014
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Unlocking the growth in a marketing services business.

I have helped more marketing services firms than I can recall achieve success they hadn’t previously considered possible, but if I were honest it hasn’t been rocket science.  In fact the principles I have applied and the initiatives I have introduced have mostly been pretty straightforward.  Often, the biggest challenge has been changing the mindset of the agency’s decision-makers and the key to my success, apart from my tenacity, I believe has been in avoiding the short-term opportunist approach that agencies seem increasingly to be adopting and creating instead a strategy for the agency that takes a broader perspective, like those they should be providing for their clients.  All this is a bit of a condemnation when you consider, if nothing else, a marketing services business should be the fountain of new thinking.

Everyone wants to live forever.  Especially advertising agencies and businesses of every kind these days are discovering the answer to the perennial question “If it ain’t broke’ why fix it?” is “Because, in this fast-paced, ever-changing game of musical chairs, what works today is almost certainly not going to work tomorrow and you don’t want to be still looking for the answer next time the music stops”. To sustain their growth a business needs agencies that are ahead of the game.  I was therefore interested to see an article by Reid Carr from the agency Red Door in iMedia Connection last week that explored some of the challenges and dilemmas facing an agency these days when they consider their proposition.

Marketing is such a big subject, touching, as it does, every area, at every level of a business, that no agency could hope to cover all the disciplines required of a modern marketing strategy.  My advice to any agency is “get over it!”. Reid highlights the proliferation of gimmicks being adopted by agencies in their quest for the mother load and it’s clear that too many have jumped on the integrated marketing bandwagon despite the fact that their lack of skills means they have no hope of delivering an integrated strategy. Similarly, loads of design agencies have decided to call themselves “brand consultancies” when they have no clue what a brand is nor the wit to create one.  The missing ingredient in both cases is strategic capability.

There are two kinds of marketing services business – those that are implementers and others that are strategy-led and there’s no doubt that agencies that have made strategy their thing have a greater chance of sustaining relationships and business. However, the bandwagon-jumpers are out in force here too, with many agencies choosing to promote themselves as “marketing strategists” when at best they are only delivering communications strategies – different thing entirely.  In his book Space Race Jim Taylor  was pointing out, way back in 2006, that advertising agencies rarely understood marketing strategy and not a lot has changed.  He demonstrated that marketing services agencies, despite being already in the district, had failed to own the strategy real estate, when clients started to adopt a more thought-through approach and the business consultancies had moved in, making it their own and leaving traditional marketing services firms to scramble around for profit in the “implementation” sector.  These days, my competitors are often PWC, KPMG, Boston and the like.  If I come up against a marketing services agency their proposals are likely to be weak and often naive.

The problem with being an implementer is that its commoditised. Once you get past the original concept the mechanics of a campaign are pretty … well… mechanical. However, there’s hope, because a smart client (and these are the ones you want) can tell the difference between an agency that is going to deliver their component of a strategy smoothly and seamlessly and one that’s going to muddle-through, make mistakes and waste your time and money as has often been the case in the past.  They will also pay for it.  I worked with a German agency who made execution an art form. They were expensive, very, very profitable and growing at an eye-watering pace until they were acquired by WPP who promptly killed the golden goose.  But that’s another story.  My point is that implementation isn’t just a poor-mans game, so you don’t have to pretend to be a strategist, but you do have to make your offer special and that’s the challenge. There’s no place for mediocrity in any sector of any market these days, so unless you are at least aiming to be best-in-class you are voting for the scramble for the Dutch auction.

A lot of my work is with marketing services firms who are happy to play the implementer, but know that they have to have a robust strategy to operate in, so they call me in to partner with them on pitches. Clients who issue half thought-out briefs get a total solution that they weren’t expecting with a great concept based on a sound marketing strategy that resolves the real issues.

I’ve been working with a creative agency on a typically narrow pitch brief that effectively asked them to devise an advertising campaign that would wallpaper-over the client’s business failures. The client believed (as so many do) that making, what was effectively an empty promise, was the solution. Undoubtedly they would gain some short-term benefit from a campaign that persuaded a few prospects to take a second look at the brand, but that wouldn’t last and they’d be back to square one as soon as everyone realised that nothing has changed. What’s more, we all know that crying “wolf” represents the start of a downward spiral that would prove difficult and maybe impossible for them to pull out of.

I persuaded the agency to offer their campaign to the client only on the proviso that the client fixed the real issues. Sure, its a bold step and maybe somewhat unusual for an agency to say to a client who loves their idea (and we knew they would because its awesome!) that they can’t have it unless… but it makes a few valuable statements about the agency, the contribution they could make to the future of the business and the kind of relationship that’s needed to really make a difference.  Not to mention adding perceived value to the creative solution.  The bottom line is that the client buys the agency because they love the idea and the proposition it contains is valid because I’ll work with the client to fix their internal issues.

Reid suggests that clients have learned the error of short-termism and, these days, are increasingly looking for long-term relationships with marketing services partners. I tend to agree, but if this is so and you are going to fit the bill, you’ll need the balls to be able to tell a client that what he is asking you to do isn’t going to produce the results he is looking for. After all, he’s, at best, a generalist, you are supposed to be the expert. That’s what he’s thinking of paying you for, so show him you can do the job! A client worth having will always respect you for it and, as I put to my agency clients, “do you really want to work with a client that doesn’t respect you and is going to force you to do things that you know are wrong?”

When Saatchi & Saatchi (The original one) were rocking and rolling their way to superstardom, we used to turn down invitations to pitch on a daily basis.  In those days a weak Marketing Director or a company under pressure could take the heat off themselves by announcing that we’d been appointed to do their advertising. We recognised there was no merit for us in working with people who just wanted us to put our name to the same old solutions that had got them into trouble in the first place and every pitch we turned down added to our value.  It also meant that the work we were doing was pretty-well always ground-breaking, news-worthy and effective and that made us even more desirable.  We had the best clients and the best people.

Whether you choose to set out your stall as a strategist or an implementer you still need to distinguish yourself of course and as Reid again points out this is largely a matter of expressing your philosophy in a unique and distinctive way.  For a marketing services firm with all that pent-up creativity this shouldn’t be a problem, but I’ve seen a few horrors in my time.  If the best you can do falls into that category, I think the writing is probably on the wall and you should pack up and get a window-cleaning job. If you can’t do it for yourself then you aren’t going to manage it for your clients, but again this goes back to having a sound strategic base.

Growing an advertising agency is the same as growing any business.  It requires commitment and integrity and a load of hard work, but, as those of us who have done it know, there’s a particular satisfaction in growing a business by growing businesses for others.


Broken chain edit

Posted: February 13, 2014
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Optimising the retail sales process

I was recently discussing with a retail CEO the need, his business has for pre and post awareness research to measure the effect of their new TV campaign.  The campaign had been brought into the communications mix to raise brand awareness, so you would expect that he’d be interested to know how it had performed.

Sadly, this retailer doesn’t have traffic counters and was resisting the idea of post awareness research. Until I started challenging them their sole measurement of success was transaction data – the number of sales, the size of the basket and the revenue generated. The CEO attempted to justify this omission with the oft-heard, but nonetheless misguided  rationale “If we aren’t going to get sales from it there’s no point in advertising”. Of course, sales volume and value are important measures of a retailer’s performance, but without a load of other insights this data alone could be at best a fools paradise and at worst, leading them in an entirely inappropriate direction.

Advertising, other than possibly direct marketing, isn’t intended to deliver sales directly.  What advertising can do however, among other things, is deliver people who are ready to make a purchase.  From that point it’s up to the stores, the product and the sales staff to close the deal.

The process varies, depending on your organisation, market and channel, but generally the first step is to establish awareness, then generate visits to physical stores, websites etc. where the prospect will get a feel for your brand and your offer.  Next comes the request for more information and finally the sale.  This is a chain of events.  A filtering process, at each stage of which a percentage of the original entrants will drop out.  The trick is to maximise the number of those entering the process and minimise the drop-out rate.

In this case the company concerned should check post awareness to compare it with pre-campaign levels. It should count the number of visitors received at each or at the very least a representative sample of stores, before, during and after the campaign. Then its records of the number, content and value of transactions makes sense.

Every chain has a weakest link.  One where a disproportionately high number of people drop out.  When you have identified and fixed that, all you will have done is revealed the next weakest link.  But that’s the name of the game – refining your chain by addressing, one by one, the issues that make it weak. Its a bit like painting the Fourth Bridge, because there is always a weakest link and, in theory at least, you never get there, but you can get as close as you need to the perfect path to purchase.  There’s a little more detail in the explanation of my “Sales Process Optimisation” tool.


Business Plan graphic

Posted: February 9, 2014
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Are business plans old hat?

According to William Husu, co-founder and managing partner at start-up accelerator MuckerLab, business plans are a thing of the past.  I can think of a few businesses in this part of the world who will be pleased to hear that.  They will be able to get back to throwing money down the black hole of disorganisation and chaos without me driving them crazy to keep to a plan.  But of course, life isn’t that simple and although these bold statements make great headlines Mr. Husu’s, like many others, is a bit more over-simplification than insightful.

I’m all for Husu’s ideal of flexible businesses responding to market changes and opportunities as they arise, but he seems to be forgetting that in reality the fast-trackers he may be used to working with represent the tiniest segment of the new business sector.  The rest, frankly, aren’t so smart or quick-witted that they don’t need a plan.  So, maybe the question is, in these times of fast-moving targets and win-all-lose-all gambles what does a business plan have to look like?

Firstly, a scanty plan only works when the people driving the business have the skills and experience to be able to respond sensibly to issues that arise through the life of a business.  It would be great to think that business leaders were all switched-on and clued-up to the extent that they could busk their way to global success on the basis of a plan drawn up on the back of an envelope, but in the real world that’s not the way it is. Secondly, investors may be ready to take a risk, but not one as big as that of a business with no plan.  This would require absolute faith in the abilities and instincts of the business founders or leaders.  Sure, as an investor I would need to be as certain as I could be that the people I was entrusting with my money could think on their feet, but that doesn’t mean they shouldn’t have a road-map in the first place.  There is so much that can go wrong with any plan that flexibility, responsiveness and creativity are all pre-requisites for any leader, but as with any journey you start with a map and a route.  Business skills come into play when you find the road blocked or spot an out-of-the-way attraction that may be worthy of a look-see.

A business plan today is probably little different from one of ten years ago.  Maybe the emphasis has changed and perhaps there needs to be more emphasis on the vision and mission than there used to be, but you still need to set out in writing the mechanics and financials of the business; the former because it is a good discipline for you and the best indicator to your investors, partners and employees that the idea is do-able and the latter, apart from being reassurance to third-parties that you appreciate the implications of your practical plan (I’ve seen more financial plans with critical costs omitted than I could possibly count), as a bench-mark to measure your progress by.  Sure, you’ll miss things and you can be certain that eventualities will arise that mean you have to modify areas of your original plan, but that is no excuse for not having one in the first place.

On the question of vision and mission.  I’ve recently written an extensive plan for a sizeable business and in explaining the make-up of our vision and mission to the business owners I looked to the definition that other people apply to these two readily banded-about  phrases.  The disparity of views among people who you would expect to be of one mind, is pretty surprising.  So, at the risk of adding to the confusion I’ll state my definition of “vision” and “mission”.

“Vision” to me is clear.  It’s where you see your business in three or five years, or longer if you think its safe to look that far ahead. “Mission” is a list of things you have to accomplish in order to reach that goal.  The list doesn’t have to be long.  Five or six short-term objectives are probably plenty for any business to focus on, at least at the top-line level.  You also need to remember that like everything else in business, these are not tablets of stone.  Your vision may remain intact, but because of the ever-changing landscape of world markets the mission is almost certainly going to change.  That’s why (and this is where I fear most businesses miss the trick) you have to revisit your vision and mission every year when your executive board are preparing their annual report, measure your achievements against your mission, remove those that you can tick off as done and add those whose necessity has emerged since last year.

So, while I get the broad principle that a written-down plan isn’t the whole story, I can’t buy the idea of setting out on a new business journey without a map.