What does ‘Priority’ mean to you?

What does ‘Priority’ mean to you?

Most of us would say in answer to that question “the one most important thing”.

The thing that we just have to do first, in preference to all others.

Priority is singular.

However, in most cases I see the word used as a plural, ‘Priorities’. It seems this is a new word, spawned perhaps by our instinct to cover our bets and our management arses.

We all get what ‘Priority’ means, but how do we separate the ‘Priority’ from the ‘Priorities’.

In most management situations, we do not do that separation job adequately. We end up trying to do too much, compromising the outcomes of everything in front of us.

Pick one priority, and when done, move on.

In 1997 when Steve Jobs (don’t you get sick of examples from Apple and Jobs?) returned from involuntary exile back to Apple, the company he started was on the verge of insolvency, having just lost over a billion dollars. A year later, Apple turned a $309 million profit.

How did he do it?

He focused Apple on the priority: selling the core range of two products, the PowerMac 3 and PowerBook 3.

Most of the huge range of products were discontinued, revenue did drop, but overheads dropped even further, so they made money, and were able to reinvest in the follow up innovations that changed the world.

Italian mathematician Vilfredo Pareto coined what has become known as the 80:20 rule by observing a wide range of totally unrelated situations where 80% of something was generated by 20% of the generators. The truth of this principal was observed by pioneer management consultant Joseph Juran who popularised it as the Pareto Principal.

In 22 years of consulting and contracting, mainly to medium sized manufacturing businesses, I have only ever seen evidence that the Pareto principal holds. In some cases, it is more like 90:10, so the challenge is the same one faced by Steve Jobs.

Which 80% of what you are currently doing do you no longer do?

Never an easy question, there are always reasons for everything that is being done, but survival is often about establishing the priority, and doing just that one thing better than anyone else.

 

 

 

Case study: The pros and cons of PR in a B2B market.

Case study: The pros and cons of PR in a B2B market.

PR can be a remarkably effective tool in the marketing arsenal, but most of it is just wasted, simply because it is not delivering any message of value to anyone who cares.

What can you expect when you have a combination of PR agencies who get paid by the word, various supposedly credentialed dills with a barrow to push who like to see their names in print, and politicians who will respond to the smallest of pressure groups who make a big noise?

The latest target of the word churners is sugar, specifically sugar in soft drinks,  but more broadly, sugar in everything.

Tax it and the problem will go away.

Nonsense.

While it is true that in economics 101 I learned that when you increase the price of anything, you sell less of it, this is a logical outcome based on an assumption of rational behaviour.

If I have learnt anything about consumer behaviour in the 45 years I have been in the marketing game, it is that it is rarely just rational, and unlikely to be altered by well meaning press releases, full of adjectives and promises of better days, written by those with a dog in the fight.

I was recently asked by a former client who supplies high value but very low usage ingredients that have the  potential to replace some of the functionality of sugar in food products for an opinion on a couple of different PR approaches they were considering in response to the discussion about a sugar tax.

Following is the reasoning I offered on PR as a marketing tool in this situation, sanitised for more general consumption.

  • There is a political problem, we are all too fat, therefore there is pressure on governments to regulate. Some of this regulation is warranted, such as the disclosure of the calorific value of products, in this case soft drinks, some is just nonsense.
  • We all (should by now) know that soft drinks are full of sugar, and drinking them to excess makes you fat, as well as having other health impacts. Therefore ensuring that label regulations are clear and understandable to laymen is a good thing, resisted by the beverage companies, as they do not want to scare the horses.
  • We cannot expect (in my view) governments to regulate for our behaviour, to be the gate keepers on our fridges. However, the tendency seems to be to seek to regulate to protect people from themselves. This is the guts of the move to have a tax on sugar, but underneath, there is a revenue measure for government that they will not talk about, but remains.

For a business to successfully leverage the public discussion for their commercial purposes requires some sort of strategy, and what I often see is a strategic vacuum, into which a PR release is sent. Some thoughts on the value of PR in these circumstances to a business that has some sort of vested interest in product formulation in the beverage market :

  • The target market for information is the marketing and technical people in beverage manufacturers, and they require different messages entirely. If it was me, I would have a plan with a few simple elements, and execute on the plan.
  • Create a list of the beverage manufacturers in each market, along with the relevant information about their ownership, location of factories, brands, strategies, etc, all you can reasonably glean from the combination of public documents and what your sales force knows. This is part of what marketing departments in businesses  with these sorts of interests should be doing.
  • As part of the above, ensure there was a list of the personnel in each business, their role in an organisation chart, and more importantly their role in the marketing, procurement, and product formulation decision making.
  • Develop ‘content’ with credibility to support all sides of the debate, and make all the data available, not just the bits that may support your commercial objectives. Research by the likes of Tate and Lyal, and CSR will be viewed with suspicion, irrespective of the science of it, because they have a vested interest, unless they discuss all the data and both sides of the debate.
  • Use the lists developed above to target selectively the people you need to speak to with the commercially agnostic data (content) you have developed. Do this digitally to create MQL’s (marketing qualified Leads) which are then passed to Sales and Technical services to follow up in person to make your formulation and commercial arguments.
  • Pick a small number of real target companies and devote resources specifically to the task of selling to them.  I would pick the challenger brands in each market, the ones you can sell to without the regional head office being involved, those who do not  have the big marketing budgets and brands, so they have less to risk. Once you convert a small number, and they have success in the market, the rest will follow.

This is pretty basic marketing 101.

Recognise that your target market is specific, and sales intensive, not marketing intensive. You are not selling toothpaste to a consumer with a low transaction value and regular small transactions, where marketing is vital. You are selling high value ingredient to customers where there is a high degree of specification, complication, and a long term relationship at stake. The challenge is different. Wasting time and effort, as well as money on consumer PR is useless in this context except as a strategy for keeping the wallies who do not understand the basics of the sales and marketing of their businesses quiet.

 

How did I do in 2016?

How did I do in 2016?

 

 

Following is a re-run of the post from January 2016 when I again rubbed my crystal balls and made some predictions for the year.

Let me know if you think  the scores I gave myself are reasonable.

 

7 trends driving business in 2016.

Like everyone else who sees themselves as having a useful view of the train coming at us, I have again tried to articulate the things I see as important to businesses, particularly the smaller ones that make up my client base.

 

  • The density of digital content is becoming overwhelming.

Businesses  have always generated and distributed ‘content’, but it was called ‘advertising’ or ‘collateral material’. Since we all became publishers, and the marginal  costs of access to markets approached zero, there has been a content explosion, and we are now being overwhelmed. It has become pretty clear that video will take over as the primary vehicle of messaging, and I expect that trend to consolidate over the coming year, and see a bunfight for eyeballs between social media and search platforms

Ad blockers will change the way the so called pay walls work, as well as ensuring that the density of content is replaced by less but better stuff. Ad blockers may be come discriminatory, allowing through stuff that the algorithms know you have been searching for.

The focus on content will be on the sales funnel and conversion metrics, much more than just pumping the stuff out, which will be a good thing for those who manage their inboxes.

Commentary Jan 2017

I think I got this fairly right, although video has not surpassed everything else as I expected, and I have not seen ad blockers becoming discriminatory as yet. Still might happen in 2017, but it is a bit like sticking a finger in the dam wall if you think it will stop the flow. 3/5.

 

  • Existing digital platforms will extend themselves competitively to attract new users, increase the usage and ‘stickiness’ of their platforms. Linkedin’s successful extension of their blogging platform and purchase of Slideshare are one, Facebook is aggressively setting out to attract new users by making themselves attractive to developers and others, with the launch of FB techwire in an attempt to attract the really technically oriented including those writing about tech, Twitter appears to be trying to find ways of monetising their users and will probably apply controls to the currently uncontrolled  stream in your feed, but there again, I thought that last year and they did not do it.

Also, platforms will recognise the huge potential of the B2B advertising market, and find ways to exploit it. Many B2B businesses are reluctant to use social advertising as they see the platforms as essentially B2C and therefore  not appropriate for their products and services. This is a huge potential market for business, and the social platforms will be cashing it.

Commentary Jan 2017.

Again, not bad. Microsoft bought LinkedIn during the year for 26 billion, which proves the point of the potential for B2B of social platforms. Microsoft will want a return pretty quickly, so expect the free version of LinkedIn to be stripped back, with features being transferred to the paid versions. Got it wrong, again, about the monetisation of Twitter. 3/5

 

  • Rate of Technology adoption is still increasing. Ray Kurzweil’s 2005 TED talk on the rate of technology adoption is resonating louder now than a decade ago. Some of his observations such as the rate of cost decline of solar technology and battery technology efficiency are coming to pass. However, it is his basic thesis of the logarithmic rate of technology adoption that will engulf us over the coming short term. Think about the confluence of big data and machine learning.  When you wipe away all the tech-talk and hyperbole, it comes down to a simple notion: the “friction” of information that has always existed is being removed at logarithmic rates, progressively revealing more stuff to see, and to do with the stuff we have. As we go online, and use technology throughout  the value and marketing chain, technology is reducing costs, speeding cycle time, and opening opportunities for innovation.

Commentary Jan 2017.

Chances of getting that wrong were pretty slim, so a fair score is warranted, although the specifics of a prediction were not what I would expect of a soothsayer, way too general. 4/5

 

  • Evolution of the “marketing technology stack”. For most small businesses this can be as simple as a good website with a series if resources available to collect email addresses, and an autoresponder series on the back.

For large businesses it can be a hugely complicated stack of software running CRM, customer service and scheduling, marketing messages, and the integration of social channels.

Commentary Jan 2017.

If anything I underestimated the speed of Martech adoption, and the rapidly increasing options. Scott Brinker continues to be the thought leader in this space, and I look forward to his 2017 Martech landscape graphic.  4/5

 

  • Big data to little data. The opportunities presented by big data are mindboggling, but even the big companies are having trouble  hooking their data together in meaningful ways let alone introducing the third dimension of big data.

Small companies will have to start to use little data better, or die. Data already available to them is becoming easier to use every day, to turn into insights about their niche, local market,  and competitive claims. Simple things like pivot tables in excel will be used, and tools like Tableau which brings a structure to  data from differing sources including big data, will  become more widely recognised by small business for the value it can deliver.

Big data will have machine learning applied, and the data revolution will get another shove along. From a non technologists perspective, industrial strength  data systems such as IBM’s “Watson” must drive some sort of further revolution, but my crystal ball is too cloudy for me to have much of an idea of the impact beyond making what we currently see as advanced systems look a bit like a pencil and paper look to us today.

Commentary Jan 2017.

Small and medium companies still have a huge and increasing capability gap when it comes to the management of data. While it is powering ahead in large enterprises with the resources and energy to pursue digital, SME’s are floundering. Over the course of the year several clients I started working with did not even use the most basic data analysis capabilities of their own data with  simple excel tools. 3/5

 

  • Technology hardware explosion becomes over-hyped. The volume and type of hardware that has become available is as overwhelming as the access to and availability of information.  Driverless, wearables, AI, 3D, blah,blah. Each of the developments has its place, and may change our lives at some point, but there is just so much of it that we are becoming immune to the hype. Who needs a tweeting washing machine anyway?

So, what is next?

Seems to me that we are on the cusp of an energy disruption driven by the combination of hardware and advanced materials science . The technology surrounding renewables is in the early stages of an explosion that will change the face of everything. Highly regulated and costly energy infrastructure distributing energy will start to be replaced with decentralised renewable power generation, much the same as PC’s replaced mainframe computers 30 years ago. The catalyst to this metamorphous will be the combination of governments that are broke and no longer able to fund the institutionalised energy systems and the development of a reliable “battery” system. Elon Musk has made a huge bet on his “Powerwall” battery system and manufacturing plant currently under construction, and it would be a brave person that bet against him. However, looking well ahead, it seems probable that it is the beginning of the logarithmic adoption curve of renewable power following the path of Ray Kurzweil and Gordon Moore.

Commentary Jan 2017.

The action has replaced the hype in several areas, with the IOT dropping down the list, and VR and Augmented VR rapidly becoming a reality.

I expected to see Musk’s Power Wall  start a huge adoption curve which appears not to have happened, although his Tesla cars have proved to be a smash hit. However, Governments around the world, and certainly in Australia are profoundly gun shy when it comes to actually doing what they say they will do about the digital and power infrastructures we rely on. Their inability to move beyond the simplistic populist bullshit, self- interest, nonsensical press releases, and  immediate electoral cycle is profoundly disturbing. 3/5

 

  • Marketing has always been about stories. However, somehow ‘content’ got in the way of those stories, and marketing became a different beast in the last 10 years. We will go back to marketing, and start to tell stories that resonate with  individual targets. Storytelling will become again the core, and we will be looking for storytellers in all mediums, written, pictorial, video, as we all absorb and recount stories in different ways.

All the good journos displaced by the disruption of traditional publishing can find great places in this new world of marketing storytelling, if they are any good. The competition is strong, and the results immediate and transparent so no longer can you get away with rubbish. Organisations will change to accommodate the fact that everyone is in marketing

We will become more aware of the permanent nature of the internet, and the manner in which our brand properties need to be managed.

In a commoditised world, where the transparency of price makes competition really aggressive, the value of a brand is increasingly important, and fragile.

These 5 extraordinarily stupid examples of how not to do it  should be a wake-up to the CEO’s who leave marketing to the junior marketers, often a transient bunch who have no investment in the business or brand, they are just there for a good time, and usually a short time.

One day I will do a study that compares the realisable value of the tangible assets of businesses compared to their value as calculated by the market. My instinct tells me that in many stock market categories  the biggest item as calculated  by the difference between those two numbers represented as  goodwill and inflated realisable values, will be the biggest item on  the asset side. In short, the value of their brands and customer relationships. Managers and boards need to deeply consider the nature of the people they have managing their brands, or risk losing them, often before breakfast, as the speed of disruption and change continues to increase.

Commentary Jan 2017.

Marketing is still about stories, always will be, the challenge increasingly is getting the stories seen. There will continue to be money wasted on stupid, irrelevant and sometimes offensive marketing, nothing to be done about that, the gene pool is still pretty shallow when it comes to marketing decision making.

 

As we go into 2016, the 3 questions every board and management should be asking themselves are:

“If  I was starting in this business today, what would I be doing to deliver value?”, and

“If a leveraged buyout happened, what would the new management be doing to unlock the value in the business?” and

“What do I need to do to implement the answers to the two above?”

 

Have a great 2016, and thanks for engaging with me.

 

Addendum Jan 2017.

These three are still great questions, and I suspect will be in another 50 years irrespective of technology and all the other distractions. People will still be people, and we will still behave in ways dictated by hundreds of thousands of years of behavioural evolution, not the tech of the last 20.

Have a great 2017, and thanks for engaging over the course of the year.

 

Allen Roberts

 

Where are your OSZ boundaries?

Where are your OSZ boundaries?

We are all familiar with the term ‘Comfort zone’ as in ‘that is outside my comfort zone’.

When most people speak publicly to a large audience for the first time, it is way outside their comfort zone. That discomfort manifests as fear, they sweat, the knees are rubbery, voice goes up a few octaves, and sometimes nausea takes over, but for most, they become increasingly comfortable with being on stage with practice.

In effect the limits of their comfort zone have been expanded. What was previously in their discomfort zone has become comfortable.  The ‘fear’ of being on stage has lessened, you learn to work with it, manage it, and often turn it to your advantage.  For some it becomes an exciting and stimulating experience.

I would propose then that we go one  step further.

To our own comfort and discomfort zones, which are well populated in our minds, we add a third option.

Our ‘Oh Shit’ zone, or OSZ.

This is not just an increased level of discomfort, the jelly-knee, voice cracking experience of that first gig on a big stage, where you are able to add rational thought and know that whatever happens, you will go home that night at about the same time.

The Oh Shit Zone implies a level beyond  psychological discomfort to one of physical or psychological danger. Manageable but nevertheless, danger, with the attendant fear that has to be managed if you are to get through to the ‘other side’ of the event.

For me, it would be jumping out of a perfectly good aeroplane with a little sack on my back that promised to float me to earth safely.

However, once done, having conquered the fear the first time, the second time would be easier, and the third, easier again.

The uncomfortable things we all need to do, but often do not are the things that hold us back. I am as guilty as anybody, that fear of failure, of public censure or even pity is strong. Those that push through, conquer their fear and get the job done despite the obstacles, are the ones who will be successful.

Considering you OSZ puts a different perspective on  bit of discomfort.

 

How to easily solve the strategy jigsaw

How to easily solve the strategy jigsaw

Imagine, your task is to complete a 1000 piece jigsaw puzzle with one of your kids, but the puzzle is an old one, in a bag, so you do not have a picture of the end result to work to.

It is further complicated, as some of the pieces in the body of the picture  are also missing, some are faded beyond recognition, and others have been bent to be ‘force-fitted’ to other pieces that they were not designed to fit.

Not easy.

Building a strategy is not dissimilar.

The jigsaw is a good metaphor, because the steps to solve the jigsaw puzzle are the same as solving the strategy development puzzle.

Have an objective. Start by knowing what the end result should look like, or in the vernacular ‘start with the end in mind’. As they say, ‘without a clear destination, any road will get you there’. Without the picture of the completed jig saw, you are working in the dark.

 Find the foundation pieces. In a jigsaw they are the 4 corner pieces, in a commercial strategy they are your Customer Value Proposition, cash flow management, profit and loss account, and break even point.

Define the limits of activity. These are the sides of your jigsaw, obvious because one side is straight, and defines the edge beyond which there is nothing, but you still have to define the manner  in which they fit together. For your strategy development exercise, the side pieces are determining who your ideal customers are, how will you engage and service them, the manner in which you will be paid, what offer you will deliver them. In other words, your business model.

Functional grouping. The next step in assembling a jigsaw is to group like pieces together, Even without the picture, you can put together all those that seem similar, for example the blue of the sky, green of a field. It will take some experimentation and shuffling to get it right, but slowly, a few pieces will  start to be fitted together. Developing and executing on a strategy is again similar, but the pieces are generally functional. The manufacturing pieces all go together, as do the financial, sales, marketing, and other functional pieces, they fit together, but they also progressively fit as groups into the larger picture.

Build the whole. As the jigsaw picture emerges in front of you, it becomes possible to fit groups of similar pieces together, and you see the ranges of possibilities opening. Those 3 that you found that were blue, and fitted together, are not sky, they are the blue of the house that is emerging on the other side. Again the strategy development process is the same. You will progressively find points where groups of pieces fit together, where sales and marketing merge, the financial reporting systems  are adapted to offer performance metrics on the factory, and you measure customer retention and share of wallet.

Make it scalable. Throughout the construction of the puzzle, once you have found two pieces that fit together, that are a part of the bigger picture, you never take them apart, you move them around until you find others that similarly fit and together make the picture easier to see. In a business this process is more like the development of procedures that are repeatable and scalable. Once you know something works, don’t take the risk of breaking them up and losing a piece, make sure they stay together. Creating standard operating processes for everything that gets done regularly, so it is done the same way every time, is the commercial equivalent. Standard procedures remove variation, creating stability and predictability.

Of course, when you have the picture of the completed jigsaw in front of you, the task is 10 times, perhaps 100 times easier.

Strategy development is exactly the same. Start with the picture, define and progressively build on the foundations, then fill in the holes as you go.

Be prepared to iterate and experiment as you go, just like testing the fit of the jigsaw pieces until you find 2 that are just built for each other, then another 1, then group of several.

Where now for the two big supermarket retailers?

Where now for the two big supermarket retailers?

What a fascinating time to be an observer of FMCG.

The speed of strategic evolution is ramping up, and the risks to the investors in the two retail gorillas must be increasing as a result.

15 years ago FMCG retailing in Australia  was a two horse race. Coles or Woolies, there seemed to be no other options. While there were other options, independent retailers of varying types, particularly in SA and WA, their profile and strategic relevance was generally lower than a dwarf in a game of basketball. They could be annoying, and occasionally useful, but would never change the outcome of a game.

The net result is that Coles and Woolies concentrated on their short term game, with Woolies winning hands down in the shareholder returns stakes until recently. However, in the process, they lost sight of those who made a difference to their strategic numbers as distinct from their immediate financial ones: Customers.

They used their power to belt suppliers, and ignore customers beyond the land grab to put stores in every place where more than a footy team could congregate.

They ignored the opportunity to innovate beyond optimising what was already there, in other words they ensured innovation could not happen, or at least, ensure they carried absolutely no risk in the process.

The world has evolved since then, and panic has set in.

Woolworths botched Hardware in spades, demonstrating an astonishing lack of strategic insight, closed down Thomas Dux after strategically emasculating it just as it was gaining traction, is closing the Metro stores, and now it has been reported over the weekend, that they are considering selling the petrol retailing business. All that and declaring a $1.2 Billion loss for the 2015-6 year.

Meanwhile Coles has renewed itself, and announced a $1.86 billion profit for the year amongst some large write-downs in other parts of the Westfarmers group, particularly worryingly, Target.

Relative newcomer Aldi has upset the comfortable duopoly by grabbing market share and shopper penetration at a rapid and continuing rate. On top of all that you have alternative and web enabled retailers taking an increasing share of mind and attention that will over time convert to sales share. 15 years ago you could not find a Farmers Market, now they seem to be everywhere, and doing great business, and the net retailers seem to be able to actually deliver, sometimes.

For Woolies and Coles to fight each other, and invader Aldi on price makes no sense at all. The logical outcome of a battle on price is that Aldi will win simply because their business model is aligned to accommodate low margins and the gorillas are not, but if they do win that race to the bottom, the real risk is that they will go broke in the process.

No joy there.

So Woolies and Coles are left with where supermarkets started back in the thirties, delivering value to customers.

What an interesting notion for the gorillas, to be competing on the basis of the total value they deliver to customers, not just on price.  They might even have to collaborate in a meaningful way with suppliers, invoking  Joy’s Law, named after  Sun Microsystems co-founder Bill Joy who noted ‘No matter who you are, most of the smartest people work for someone else’.

Clearly, very few of the smartest people work for the gorillas, although there are some more left in their supplier base. However, those suppliers of any real scale who remain locally owned could together just about fill a phone box.

There is plenty of room in the demand chain left for innovation. The first step is to recognise the necessary change from a retail optimised supply chain that implies screwing suppliers for margin in any way you can dream up, while maximising margins at the checkout, to one that puts the consumer front and centre.

A demand chain.

This change requires recognition that the consumer has a reasonably certain amount of money to spend on groceries and household supplies, and will allocate those dollars in the ways  that best suits them and their circumstances.  Economists will call this phenomenon ‘Customer demand”. The name of the game then is to share out those consumer dollars in the best way that serves the whole supply chain based on that actual and latent demand.

Plenty of room for collaboration through the chain, enabling innovation and sustainable profitability. You just have to see the competitive game completely differently. I wonder if the gorillas are capable of that sort of strategic renewal or if I should sell my (very few) shares ASAP.