Archive for November 29, 2014

business-plan

Posted: November 29, 2014
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Where smart marketers add to the value of a business.

Every now and then I come across a marketing services firm that has got it right. Cognition, a provincial UK agency with an international perspective are one of those that have made the transition I am always talking about, from a traditional advertising agency approach and proven beyond any doubt that a strategy-led consultancy that is able to provide the support today’s businesses need, is the road to success these days.

This week Cognition’s CEO Tim Witcherley in his rightly entitled Resources blog covers a subject that I encounter on a regular basis, and provides a useful guide to the basics of writing a business plan.

I mentioned in a post earlier this year that Ernst & Young had published a really useful guide to the IPO process in which they quoted research that showed that more than 40% of the factors that influence investors are non-financial. In fact, it transpires that after issues of compliance and finance the most important factors that influence investor decisions are marketing strategy and management team. No business should let the fact escape them that these days all organisations are marketing organisations and this means that marketing and business strategy are synonymous. Today’s business plan IS a marketing plan.

The problem with this is that there are still too many objections from executives on both sides of the operational/marketing divide. The nature of key executive positions is changing dramatically as the disciplines within an organisation converge and there are still a great many senior executives with incomplete or the inappropriate skill sets. Marketing people remain too creative and insufficiently business orientated and the finance usually think that marketing is all far too arty-farty. The solution to this lies in your processes. You need to create an environment and a way of working that enables you to bring together the skills you need without the culture of competition getting in the way. This is how successful organisations run and good business/marketing plan should reflect this.

Having just worked with an organisation to create a business plan for an IPO and being an advisor to a few start-ups, I’m acutely aware of what investors are looking for and my Brand Discovery programme and Full Effect Marketing approach have been designed to provide appropriate channels for the information that has to go into such a document. However, the perspective you need to take is logical. A business plan sets the scene, explains your objectives and how you identified them, then explains how you are going to achieve them and introduces the people who will be contributing. A real brand model is a critical part of this because we know without any doubt now that investors buy brands. A recent post on Investor Junkie gave six reasons why investors choose businesses with strong brands. They …

  1. have an established customer base
  2. enjoy a reputation
  3. have demonstrable staying power
  4. have positive cash-flow
  5. show strength beyond finances (It’s that 40% again!)
  6. prove they are marketing savvy.

So consider your integrated business plan from the point of view of the people who will read it and change your thinking and whatever else you need to, to enable you to deliver a plan that leaves investors in no doubt that you are a sound prospect. I’m sure you’ll find that as a by-product of this change your organisation will benefit anyway, so even if you aren’t looking to raise investment, it’s a good process to go through. Try it.


jackwelch

Posted: November 28, 2014
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Build a winning business on candor

Last week B&T published an article that asked “How can agencies create a culture for innovation“, a subject that those of you who have read my stuff before will know, is dear to my heart. The author of this post, Cassie Sacks, suggested that the key to creating an innovating environment is to remove the fear of ridicule that dissuades people from putting forward their ideas. I’ve said before “ideas” are more important than “the right ideas” and the sooner an organistion gets this the quicker they’ll achieve success, but there’s a deeper and more fundamental character trait involved here that influences far more than an organisation’s ability to innovate.

Back in 2005 Jack Welch dedicated a chapter in his book “Winning” to “candor”. An old fashioned concept perhaps and you may think an out-dated one. So out-dated, in fact that Microsoft’s spell-checker doesn’t recognise the word (or maybe that just says something about Microsoft?) However you’d be wrong because candor is as critical today to the efficiency that defines successful companies a it ever has been.

Jack’s point about candor was quite narrow. He was concerned with the honest expression of views and opinions, that determines the future of ideas and innovations. In this context, candor will reduce the waste of time and resources that accompany the pursuit of inappropriate ideas and enable businesses to focus time and attention on those that bring success. Obviously a business that is chasing product and process development that doesn’t lend anything to their brand model is wasting resources that could be more productively applied elsewhere.

However, this is only the tip of the iceberg of inefficiency that hampers the success of most organisations.  The key for any business is to eliminate this waste by identifying those projects and initiatives that don’t contribute to the delivery of the organisation’s brand promise as early as possible and bring them to a halt. Few businesses are good at this. I use my Brand Discovery programme to help businesses, not only define their brand, but introduce the structures, tools and processes they need to maintain its authenticity, and strengthen its appeal. The process starts with some soul-searching and a degree of self-honesty that few businesses achieve without help.

If candor is genuinely a component of your business culture its influence will and should spread way beyond your office walls. Candor and honesty go hand-in-hand. Businesses that are transparent and honest are generally those that enjoy long-term success. Don’t get me wrong, there are, unfortunately, many businesses out there that make short-term money on false promises and downright lies. However, you can be sure they are eventually found out. If you are planning on taking that route yourself you should also know that it’s also usually unrepeatable. Once you’ve screwed a bunch of people the reputation tends to stick and hamper any plans you may have to try a similar scam again. It’s harder to be a serial scammer than it is to build a sustainable business, so you may as well just take the honest route. Gain a reputation for being straight and even if you fail, you’ll more than likely get a second chance.

I know of many entrepreneurs who have failed a few times, but eventually achieved success by following this mantra and their success has been possible only because they enjoyed support from people who mattered. Just like your customers, suppliers, financiers, distributors and partners will all gravitate towards businesses they feel they know and can trust. They’ll also favour you with better deals, go the extra mile to keep you happy and stick with you when times are tough.

So, give some thought to what candor could do for your organisation and start making changes today. Get used to the idea that business isn’t about screwing people, but working with them. Organisations that understand this are always the eventual winners.


SmartWings Airbus 320 edit

Posted: November 26, 2014
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SmartWings and the balance between brand focus and commercial viability.

The most powerful brands are true to themselves. Their personalities are vivid, and honest. You can’t fake it, you don’t get anywhere by pretending to be what you are not, but it’s a fine balance and the quirkier you get the narrower your appeal.  When you are distinctive you will undoubtedly put some people off, but you’ll also tend to make the relationships you have deeper and more enduring (read valuable) and it works with brands in just the same way as it does in our personal lives. 

It’s up to you to establish whether your appeal is broad enough to be viable. If its not, you can fix this over time with a well defined and managed brand development programme, but, as I said, you can’t fake it and filling the gaps in your armoury is definitely not a quick fix.

Against this background I was intrigued by a new brand among long-haul airlines that despite their cosmopolitan destinations are remaining staunchly and unashamedly narrow. The 10.5million people in the Czech Republic are already well-served by airlines from around the world as well as a national carrier CSA that has been a dead man walking for years. However, the subject of my focus is the quirky Czech airline SmartWings and their foray into long haul to Dubai.

The experience I had flying with SmartWings recently was unmistakably Czech and with the British-managed and very polished FlyDubai due to launch their cosmopolitan brand on the same route next month SmartWings’ single-minded branding will be put to the toughest test.

From Ryan Air’s customer abuse to EasyJet’s uncouth passenger manifest, budget airlines are all lacking in some department. It’s all a matter of value choices. In fact when you consider that I spent more in the duty free shop at Dubai airport than my round trip from Dubai to Prague and back cost me on SmartWings, it seems a bit churlish to complain about anything. The carrier has clearly aimed squarely at the Czech traveller. Probably those with shallow pockets who are looking for a more exotic destination, but lack the sophistication to step outside their Czech cocoon. The give-away here is that the cabin crew were all Czech and the passengers applauded when the plane landed! They will also have to have very small wardrobes to comply with baggage restrictions – 15k plus 5k carry on. (I think my carry on usually weighs 15k!). There are absolutely no concessions made to travellers of nationalities other than Czechs.

I was actually relieved to find that, at the equivalent of £180 for a route I’d pay Emirates closer to £500 for, we had seats to sit on, but having not flown on an aircraft that didn’t offer proper in-flight entertainment since the seventies, I feared, when I discovered there was no customary back-of-seat entertainment centre on these aircraft, that, as Czechs are very much into amateur entertainment, the cabin crew might be planning to put on a little show. However, there was free (as well as charged-for) in-flight refreshments and I was delighted to find that my nose was not pressed against the back of the seat in front.

While SmartWings have taken the bold step of placing their little country’s culture front and centre it is a bit esoteric and will definitely not resonate with many of travellers on this route. I’m reasonably familiar with Czech culture, having had a base there for fifteen years and even I felt excluded, so I wonder if it makes good business sense to alienate so many passengers of other nationalities. Dubai is a place of many cultures where everyone (Including the Czechs) speaks English, yet, the only newspapers available on the six-hour flight were Czech. The in flight movie, shown on drop down screens the size of my smart-phone every three rows was also a very esoteric Czech production (There were subtitles, but they were so fast I couldn’t read them).

Budget airlines, of course, need to leverage any opportunity for revenue and in-flight magazine advertising is one revenue stream they can’t afford to ignore. I’m no stranger to magazine publishing having created a number of magazines for clients myself over the years and I was pleased to see a thick SmartWings magazine printed on paper which is thinner and poorer quality than would be required to attract Arab passengers, but was nonetheless a pretty good reflection of the carrier’s positioning.  However, it is definitely missing a trick or two. Pretty well all the ads were in Czech and the editorial (which was in English and Czech) was very Czech-centric. It didn’t seem to be designed to introduce Czechs to the customs, idiosyncrasies or other delights of the countries they were heading to and if it was intended to present the Czech Republic to an international audience it failed by talking too much like a Czech person. These inconsistencies will limit Arab advertisers and possibly international ones, but it also highlights the underlying question. Are SmartWings aiming at a Czech traveller to Dubai, or foreigners heading to Prague. And if its just Czechs, how sustainable is this exclusive strategy, particularly in the light of competition from FlyDubai.

The in-flight food, which I have admitted was a pleasant surprise, maintained the confusion by being typical of the Vietnamese faux-Chinese “bistros” that have taken over the Czech capital. This may possibly have been a naive attempt to appear cosmopolitan and it was OK, but they might have done better by maintaining the “Czech culture showcase” theme and serving up svickova or goulas even adding a story to the menu (possibly printed on the lid) to explain the origins and history of the dish.

Cabin crew were typically Czech, which means not as rude as their Ryan Air counterparts nor as in-you-face over-familiar as the crews on SouthWest Airlines and they were definitely pressed for time, routine-driven and not prone to tackle passenger needs that weren’t in the schedule. They were also conspicuously male, on my first leg, but maybe that was just a coincidence of the flight I was on. I’m still trying to get my head around the refreshment regime. Apart from the free meals and accompanying drinks, there’s a menu of refreshments listed in the in-flight magazine with prices, but I was told they weren’t available on the leg to Prague. Instead, if you wanted anything you just asked for it and it was served up for free! That one definitely goes on my “weird but welcome” list!

With no real in-flight entertainment for six hours there were times when I almost wished for the cabin-crew theatre. As I have said, there’s nothing wrong with the “cultural experience” but if you are going to take that approach on a long haul flight you really need to provide an opt-out option and in this case I think a wi-fi broadband provision would be welcome. I certainly didn’t expect to travel on a plane without the usual entertainment options, but I would have been happy to pay a nominal fee to stream video on my notebook. At the very least, I think an English language newspaper should be available, even if its Gulf News or Al Jazeira.

However, as I said, it’s a bit mean to find fault with an airline that is so obviously putting in some effort and, as my readers will know, I’m a big promoter of vivid brand personalities that appeal unequivocally to a clearly defined market. Given that Czechs are still tuning in to what international travellers consider right and proper, if the choice is between a limited offer delivered well and a failed attempt to compete with a major carrier on every level, I think I would probably choose SmartWings’ no frills simplicity again, although maybe next time with a fully-loaded i-Pad!

PS: In searching for an image to accompany this post, I discovered that SmartWings currently have four plane liveries. Surely that’s an indication of a business that’s not too sure of its own identity, but its also an opportunity for someone who knows what they are doing to tidy this up.


h

Posted: November 12, 2014
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Avoiding the usual pitfalls in your transformation programme

Last week Rob Llewellyn published an interesting article on Pulse about his specialist subject, transformation management. We all know that most transformation programmes fail to some extent, either by just not delivering the kind of benefit to the organisation that warrants the blood, sweat and tears, not to mention the cost, of implementation, or even by actually bringing a business to its needs.

To illustrate the issues Rob used a great piece by Chris Bradley, Martin Hurt and Sven Smit that appeared in McKinsey Quarterly and added a useful eleventh point of his own to that article’s ten tests that you put a transformation strategy through to give you an idea of whether it will succeed. Rob’s addition was the consideration of whether your organisation has the resources to execute your transformation strategy in the first place.

You need all kinds of resources to make a strategy work. It’s not just about numbers of people, but the skills (hard and soft) and experience they possess as well. That’s why when I get down to execution, I assemble a team comprising my client’s people supplemented by specialists brought in from outside, but there’s still more to it than that because you have to also have management model that enables this mix of personnel to work seamlessly as one team.

Some years ago I partnered with Experian Clarity Blue on a project for Sky TV. The project was headed by Clarity Blue’s Tony Mooney who has gone on to become the CEO of Sky IQ. Clarity Blue were developing strategy based on complex data analysis and Tony and I frequently discussed the principles of the transformation that these strategies usually represented for the companies concerned. Tony’s view at the time was that the large corporations they were working with, by definition, lacked the flexibility or imagination to change. This is the same principle that prevents large organisations from innovating (a subject that I’ve covered in this blog extensively in the past). The larger the organisation the more dependent it is on process and process is the enemy of change and innovation.

Tony’s idea was to take the responsibility away from the organisation by creating a parallel universe. Duplicating, in effect, the structure of a business and using the alternative resource to bring the strategy to life, before finally re-introducing the original team to the transformed organisation and allowing them to run it. This is a simplification, but in Prague the innovation consultancy Creative Dock adopts a similar approach with some of its projects. I guess you’ll get the idea.

It’s my personal belief though that you can’t expect a business team to adopt a strategy that they haven’t been involved in the creation of with the enthusiasm or deliver it with the speed you need to maintain seamless progression of the business. My approach of a combined team of experts from within and without the organisation is designed to overcome this problem and affect a seamless transformation in the shortest time possible.

I recommend everyone reads the McKinsey piece. The ten questions it poses are valid and largely reflect the elements of my Brand Discovery programme. Including …

Will your strategy beat the market? which explores the need to be different one of the subjects encompassed in my “You are only as good as your next big idea” philosophy as does the McKinsey question “Does your strategy put you ahead of trends?”.

“Does your strategy tap a true source of advantage?” is about avoiding making promises that you aren’t equipped to deliver, itself a cornerstone of Brand Discovery philosophy. Improve and fill in the gaps in the resources you need to be a leader in your market, but don’t promise until you know you can do it. The Brand Discovery programme will help you with this all the way.

The new marketing #101 is about being smart with data. Collecting the right information and analysing is thoroughly. Its also about interrogating your business and understanding why stuff happens. Once of the most common causes of new business failure is over optimism, so be brutally honest with yourself, you’ll thank yourself later! Remember every business is unique and there will be things that you know about your market that nobody else does. Leverage these insights to your advantage and you can check off question 5 on McKinsey’s list..

Their sixth question is a source of challenge to many businesses that rely on process to make things happen on a day-to-day basis. “Does your strategy embrace uncertainty” emphasises the need for strategy to be flexible, which, as I have already inferred, is tough to achieve when you are process driven. In today’s customer centric organisations processes have to be flexible to achieve tailored responses to customer needs. This means a totally different approach to HR and a radically different training agenda, but it also makes giving employees the elbow room to deliver what you have employed and trained them to do. Don’t over process and ensure that any processes you do develop are flexible and constantly monitored to facilitate adaptation as the need arises. This is also touched upon in question seven “Does your strategy balance commitment and flexibility” which in turn reinforces the importance of good timing.

I question eight the article introduces the issue of optimism. This is a subject I’ve been exploring lately in connection with my work with start-ups and incubators in Europe. One of the greatest threats to the success of a new business is over-optimism. Every entrepreneur believes they have a gold-plated product and much of my work and that of the incubators and investors I encounter is concerned with testing the viability of ideas. A while ago I mentioned in another post that one of the incubators in the Czech Republic that I was talking to in the summer assessed 800 applications from entrepreneurs, but only found eighteen viable ideas among them. This is where an outsider’s perspective is invaluable, but the weaknesses in so many ideas become obvious when you take off the rose-coloured specs.

I love question nine. To me this is often the reason for failure of a strategy. Far too many CEOs are happy to talk about transformation, but in my experience, most are not willing to commit to execution. I am very often asked what parts of a strategy are optional and the answer to this is either “all” or “none” depending on your perspective. Every element will play a part in the success of your business and in today’s competitive environment no business can afford to aim for anything but the number one slot in their sector. To get there you simply have to be the best. There is no pretending, no quick fixes or Sellotape solutions. To be the best you just have to do the graft. People throughout an organisation will look to cut corners as the process rolls out and it’s the responsibility of the CEO to ensure that they are kept in line. The CEO simply has to be prepared to get stuck in on the hard stuff.

Finally question ten asks whether you have an action plan. In fact, the simplest initiative requires some kind of action plan, so it shouldn’t be a surprise to anybody that a major initiative like a transformation programme needs one too. There are action plans and action plans and those that are most effective are realistic and have some kind of process attached to them. Some years ago a strategy that I created for a major organisation was brought to its knees when the guys from a top international consultancy firm came in to manage the transformation. They had a good enough management tool, but lacked both the ability to be realistic and the tenacity to keep the process rolling. Subsequently a good proportion of the potential benefit was lost.

If nothing else, I hope that together with Rob Llewellyn and the McKinsey guys I’ve managed to raise some awareness of what transformation involves. I especially hope that we haven’t put anybody off the idea of transformation. Most businesses I come across need it to some degree. In fact every business should be in a constant state of change if it is to keep up with the rate of change in the marketplace, but please don’t enter into such a process without understanding the implications of what you are doing and before you take your first step be certain that you have all your ducks in a row and make sure that you organise your transformation process around a detailed programme. It doesn’t have to be complicated, in fact the simplest processes are usually the best, just be sure that, like Brand Discovery, it covers all the bases.


chameleon-1

Posted: November 1, 2014
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Why brands can’t afford to behave like chamelleons

An interesting article in The Drum this week set out to explore the reasons why supermarkets like Morrison’s have a chameleon-like approach to their brand. In fact this was really all about Morrison’s rather than “supermarkets like them” and deservedly so. Morrison’s are desperate to find their customer and have been running around trying to be a friend to everyone for ages. However, even previous to this they didn’t exhibit the discipline required to build a strong brand. In fact, this may have been the root of their current problems.

Although the article focussed on Morrison’s, there was some truth in the headline. This isn’t just about them it’s a common weakness among businesses in all sectors and stems from a fundamental failure to understand how brands work.

The recent success of budget supermarket chains like Lidl and Aldi has been used by many to argue that brands have no value and if you want to be a retail star you just have to cut your prices. In fact this isn’t so. Sure, price is a factor, but there are others including the inalienable fact that we are and always will be emotional about purchases and that’s where brands score.

Let’s just start with the “trying to be a friend to everyone” issue. Forget it! You can’t. It doesn’t work like this in any context. Even the most well-liked people have enemies and certainly not everyone likes them. Brands work the same way. You are always going to have friends, enemies and a lot of people who fall somewhere in-between. What you have to do is decide who you want to be friends with and court them. By definition, many of the things you do to befriend your chosen group will alienate others. That’s the way it goes.

There’s another factor too. Look around you. Its undeniable that people with the most vivid personalities have the closest friends and strongest friendships. Shy retiring violets don’t get a fan club I’m afraid. That’s another fact of life. Apply this concept to brands and the relationships I called “brandships” and its obvious that the more extreme your brand personality the more likely you are to attract loyal friends, but also alienate people. The question then becomes “What is most important to you, the depth or number of relationships you have?”. The answer generally is that the depth of the relationship or customer loyalty has to be your priority, because your ROI will be higher and companies that invest in relationships are most successful long term.

The worst thing a brand can do is be “woolly”. Once you have defined your brand and created your brand model (which should be an thorough and well-defined process like Brand Discovery, that accommodates all the variables) stick to it. Not only maintain consistency, but constantly up the intensity of the things that you do that are representative of your promise.

Morrisons’ problem isn’t that they don’t have enough brandships (customers). It’s that their business model is based on volume that the market just can’t sustain. It seems that they devised this model during their brief moment of success, when they were moving from a regional operator to become a national player by acquiring the vacant Safeway stores (Which incidentally failed for Safeway largely because they didn’t have the floor space a modern supermarket requires, so this may not have been the wisest move).  It was a bit of a false dawn, but compounded by their inability to keep up with and adjust to events in the rapidly-changing marketplace.

Maybe there’s only one way that Morrison’s are going to escape ultimate oblivion and that’s firstly to define their brand once and for all, then build on it. They need to do this using a dynamic internal-marketing campaign, during which they will begin to address the real issues of structure and practices and possibly even down-size. It’s not what investors like to hear, I know, but a slice of a smaller cake is better than no cake at all.