Feb 19, 2021 | Branding, Marketing
We human beings are hard wired to be social, to belong to a group that reflects in one way or another, the view we have of ourselves.
We belong to a family group, for better or worse, then many ‘satellite’ groups of varying importance to us.
A brand is the flag of a group to which we may belong, aspire to join, have no interest in at all, or indeed, may hold in contempt.
Buying a product with a brand is a signal that we are a part of that group. If it is a brand of yoghurt, it is probably a pretty loose group, the alternatives are almost as good, price and availability on shelf play a significant role in the choice. By contrast, buying an expensive branded handbag, a tailored and branded suit, or an expensive car means a whole lot more. We are saying overtly to others, we are a part of that group, holding the perceived values of the group as being personally important.
For those marketing a brand, the challenge is to find those who may be interested, and then to remove all the friction that may stop them becoming a part of the brand group, assuming they meet the ‘brand qualification’ standards. For example, unless you have a lot of money, you will not be admitted to the Louis Vuitton handbag owners group, or the Rolls Royce owners club.
There are some tried and true ways of engaging ‘brand members’.
For example, describe the members using a noun, rather than a verb. Describing a ‘brand member’ as a ‘user’ is more effective than saying they use the brand. Simple, more personal, and it makes the invitation more compelling.
Encouraging someone to take an action they may not have otherwise taken is also simple. Suggesting that ‘75% of people like you do this,’ dramatically increases the chances that your target will also do the action you require. Being told that number by someone they know, and trust is a powerful catalyst, even when they know that person is just a paid celebrity of some sort.
For the owner of the brand, it enables more specific communication that is likely to resonate with current and potential owners, attracting those who are not currently ‘users’ and cementing the value of being a user to those already in the club. This enables more productive use of marketing funds, and greater margins.
Usually there is a trade-off between volume and margin, very few brands can pull off the double of high volume and high margins. The only one I can think of is Apple with their iPhone, that still has 85% of the profitability of the mobile phone market on the back of their astonishing ability to get people to pay a significant premium for the device.
Building a brand is a tough, long term task, at which few succeed.
Feb 17, 2021 | Governance, Strategy
The key difference between a successful strategy, and an unsuccessful one, is that the former is implemented.
That simplistic statement does little to acknowledge the challenges in the implementation process.
The purpose of this post is to offer a few observations and recommendations that come from extensive experience, and the mistakes that go with that experience for you to consider.
Two essentials for a successful implementation.
- What and Why. What you are doing and why, should be clear to everyone at every level in the organisation. When the bottom of the organisational pyramid has no idea of the role they play, and how that role fits in and complements others, the strategy is doomed.
- Performance management. Performance feedback loops at all levels and importantly across functions are essential. This requires both good communication, and the processes by which the people in the organisation can learn from mistakes, and adjust processes to avoid repeating the same ones.
In addition, following are 4 observations that may be useful, in no particular order.
- Sunk cost avoidance. Being prepared to recognise early when something is not working, being willing and able to acknowledge the misstep, and back away is a key component to the process of improving the productivity of the resources deployed. This is equally applicable to the detailed operational levels as it is to the executive suite, and requires that ego be left at the door. I have seen this called a ‘batwing’ mentality, like the batwing doors in a western saloon. When you walk through and it is welcoming, keep walking, but when it seems to be filled with gun fighters, back out quickly. Such a culture enables experimentation, and the devolution of decision making to those on the ‘front line’ of any decision, enabling a positive and productive work environment.
- Matryoshka doll. Implementing strategy successfully always reminds me of those Russian dolls that fit inside each other, smallest to the largest. Successful strategy implementation similarly has smaller pieces fitting progressively inside the larger, next level up. While it does not cover the cross functional requirement for strategic success, it has proven to be a useful metaphor.
- Rolling performance management. It is getting harder and harder to forecast anything, the longer the time frame, the more suspect any forecast becomes. The answer is to be focused on the strategic objective, while managing progress towards that objective on a rolling basis, making tactical adjustments based on the context and learning that happens on a continuous basis. This runs counter to the prevailing practise of managing to annual budgets, so creates the need for leadership in the place of management.
- People. Finally, while we are running businesses, the real game is all about people. The way to engage with people is with stories, so ensure that your story is clear, engaging, and known by all employees so they can repeat it, with commitment, at every opportunity.
How can I bring the experience of the years to your challenges? Just give me a call.
Header credit: Tom Fishburne at Marketoonist.com. Again.
Feb 15, 2021 | Change, Management
I expect 2021 will be a year where there is a lot of M&A activity as businesses weakened by the impact of the Corona virus are snapped up by rivals with a bit of cash.
The simple equation of M&A is that the price to be paid for an acquisition will be determined by the assessment of the risk and reward by the buyer. The seller can influence the equation, by managing the perceptions of the future risk and rewards, but at the end it is the buyer who determines the price they will pay. It is then up to the seller to accept or walk away.
Risk and reward are determined by the buyer as the assessment of future cash flow from the acquisition, together with any strategic benefit or cost advantages that may accrue.
Often when there is a disparity, there is an arrangement of an earnout period with KPI’s attached to payments.
This is in effect, a risk reduction strategy of the buyer, at the expense of the seller.
It is often the case in SME’s that the enterprise is apparently dependent in some way on a few individuals in the business, and their relationships with customers. The transfer of these relationships is often the key to the future cash flow.
However, it remains that an earn out is the buyers risk mitigation at the expense of the seller.
The seller may choose to take a lower price as an alternative and go sit under a palm tree rather than working in the business he/she previously owned.
Maximising the price for the seller therefore becomes a marketing task, completed prior to any detailed negotiations.
This is no different to tarting up your home before you put it on the market.
Your real estate agent will tell you to fix the fence, paint the interior, do a bit in the garden, make sure all the light fittings work, remove all the clutter to make the place look bigger, and perhaps rent some designer furniture to maximise the price. When selling your business, the advice will be similar.
Do a Due Diligence process for yourself. Anticipate every question that will be asked, and answer it before it is asked, thus removing it as a potential stumbling block.
It is never too early to polish the assets of the business, and work at reducing the liabilities, irrespective of whether or not it is on the market. You never know who might blow in for a look, and everything is for sale, for a price.
Why do SME owners with a valuable asset for sale so often ignore common sense advice?
Feb 11, 2021 | Change, Communication
Pretty obviously, ‘Free’ is the most powerful word in marketing. It is the best way to get people to trial a product, make the trial free, no risk, no commitment, no money. However, it is hard to make ‘free’ commercially sustainable.
The second most powerful word is ‘because’
‘Because’ gives people permission to do something they would not normally do, it provides the reason to change behaviour, it removes the discomfort of the change, we can always revert, we just did it this once ‘because…’
Next time you want to go to the front of the line in a supermarket, try asking politely, and using ‘because’ when you ask. The addition of some emotive reason after the because will increase the likelihood of an ‘OK’ even more.
E.g. ‘would you mind if I go in front of you‘ success rate about 20%
‘Would you mind if I go in front of you because I only have a few things” success rate about 40%
‘Would you mind if I went in front of you, because I only have a few things and my sick mother is waiting in the car‘ success rate about 80%.
Try it the next time you want someone to do something for you.
Header cartoon courtesy of Scott Adams, and Dilbert.
Feb 8, 2021 | Leadership, Management
From time to time we all must deal with those difficult people, the ones who believe absolutely in something that is clearly nonsense. They just know they are right, and are hellbent on ensuring that everyone else knows it.
I have learnt to feel sorry for them, although it did take the best part of 45 years to reach that point, from one of anger all those years ago, evolving into contempt, then progressively dismissing them as nutjobs, then ignoring them.
Occasionally I still fail, as in the case with Liberal MP Craig Kelly, whose ignorance combines with insistence that black is actually white, makes my blood boil.
However, these days, I recognise that their certainty of an outcome blinds them to the facts that might lead to a different conclusion, they become so wedded to their own narrative that any contrary suggestion is dismissed as irrelevant or insignificant.
When you believe you know everything about a topic, how can you learn?
You simply stop listening. We believe we have all the relevant ‘facts’, our analysis of those ‘facts’ delivers a conclusion that becomes, in our own mind, self-evident and absolute.
However, when you are a rabbit that believes there are no foxes around, you are destined to be fox shit.
Failure to recognise the holes in our own thinking makes us blind to an alternative.
The alternative of course, is that occasionally, just occasionally, the apparent nutjob has a point, but it is so far out of the current accepted narrative that he/she is dismissed and in times gone past, punished for those views.
Such a person was Ignaz Semmelweis. He was a Hungarian doctor working in the Vienna General hospital in the mid 1800’s. Semmelweis proved the massive incidence of infection in the obstetrics ward was caused by the practises of doctors. Despite having masses of confirming data, and publishing several papers and a book, he was rejected by the medical community, so aggressively, he ended having a nervous breakdown and being committed by his colleagues to an asylum for the insane. Unfortunately he died in the asylum about the time the medical profession recognised the truth he had spent his life and health trying to deliver.
In this case however, I do not think Craig Kelly is any sort of Ignaz Semmelweis, just a nutjob who needs to be put somewhere quiet and ignored.
