Why most enterprises fail at cost effective marketing

Feb 17, 2020 | Management, Marketing

It is budget time again, that time of the year when planning comes to the fore, usually as an added job that is just a pain in the rear.

There is an easy way, and a hard way.

The easy way is to download a template and get the intern to spend a day filling in the gaps. About as useful as an umbrella in a cyclone.

Better than nothing, but only just.

Then there is the hard way, because it takes time, and requires you to use your brain, and the collective brains of others, and can be an emotional as much as analytical exercise, requiring time, energy, critical thinking, and collaboration, and making some really challenging choices.

Let’s define what we mean by marketing, useful if you are going to plan for it.

My definition of marketing is the ‘generation, development, leveraging and protection of competitive advantage’.

Not a definition you will find in any textbook, but mine evolved over 40 years of doing this stuff.

Competitive advantage evolves, and comes in many forms, but without it, you are in a commodity, price driven market, and you cannot win in that. The pace of evolution is these days frenetic, so writing a plan, and leaving it on the shelf for an occasional reference before the next budget session is useless. It has to be an evolving document.

If you can find a template that helps you do that, let me know.

Marketing is about the future, you are trying to shape it, so you are dealing with unknowns that can be qualified, but rarely quantified. With the use of various mental models, cause and effect, domain knowledge, customer intimacy, competitive understanding, tactical agility, and a whole range of other things, you can build a level of confidence that justifies the risks being taken.

It is a jigsaw puzzle, to which you do not have the picture, and many of the pieces you do have are wrong, and many are missing, so you have to experiment, make up your own, use someone else’s cast-offs, try making your own pieces to fit.

At the end, it is about making choices with imperfect information.

That is hard.

When faced with a choice that appears to be between two sub optimal outcomes, step back, and find another way. That is in itself a valid choice, and a very good one, and it makes you think.

The greatest two problems most corporates have in planning marketing are:

Extrapolation.

Confirmation bias.

Add 3% to last year, and, only seeing what they want to see.

That is what you get when you use a downloaded template in place of using your brain to critically assess options, information, domain knowledge, capabilities, resources, risk, and market and trend sensitive indicators.

How to make better decisions, more often.

Feb 13, 2020 | Governance, Management, Strategy

 

 

A decision is a choice, made in the face of a problem.

Problems, at their core, have only two sources:

Uncontrollable events.

Flawed processes and their application.

These two sources have entirely different paths to a solution.

Flawed processes need to be subjected  to some sort of continuous improvement program, resulting in a clearly articulated process that can be taught. This improvement process can become a normal part of activity, given the appropriate leadership and focus. A key part of the improvement process is the application of critical and creative thinking. Having a highly optimised process is not the same as having a truly effective one.

Uncontrollable events are entirely different, by their nature, are very difficult to unable to be forecast. They emerge with little if any warning, generally from the outside of an enterprise, so the solutions need to be arrived at in an entirely different manner.

Two factors contribute to the options facing us as we set out to address these random events:

  1. People put far more weight on the problem directly facing them, than even a much more serious problem that has little short term impact. It is also true that most people have a better idea of the dimensions of a problem that directly impacts on them, than others that may carry more corporate clout, but are do not directly affect them.
  2. We can only deal with a very few problems at once, we simply do not have the cognitive bandwidth to deal effectively with a number at the same time.

Therefore, considering these two factors, it makes sense to democratise the manner in which we deal with problems. In other words, enable those who face the problems to deal with them by giving them the resources and responsibility to do so, within clearly understood boundaries.

Two mental models to consider.

The first is a pyramid, full of problems. If the only person who has the power to address the problem, is the one or two at the top, only a few will be addressed at all. Democratising the power to address them enables others at lower levels to address those problems they directly face, so it follows that many more will be addressed. There may be some stuff ups on the way through, but overall the outcome will be beneficial. However, most corporate cultures make this very challenging, built as they are on a hierarchical structure.

The second is also a pyramid, but turned on its head. In this case, the base of the pyramid is facing outwards, towards the customer and various elements in the supply chain with whom the operating personnel have contact. This is where most of the operational problems occur, so give them the resources and power to fix them.

Do these seemingly simple things, and those usually seen as the bottom of the hierarchy have the opportunity to address the emerging problems as they are molehills, before they turn into mountains. It does however necessitate the devolution of power from the top of the organisations structure, and all the way down through and across the functional silos. This may be a scary prospect for most, but it enables the enterprise to be agile and efficient.

The impact of this sort of culture shift cannot be underestimated. It does however take a special and unusual strength of leadership to enable the change to evolve.

US general Stanley McCrystal achieved  stunning results in Iraq with one of the most rigidly hierarchical of organisations, the military, so you should be able to do it. General McCrystal’s experience is recorded in his book ‘Team of Teams’ which is a compelling account of a culture being turned on its head.

 

How do you reconcile conflicting statements by geniuses?

Feb 10, 2020 | Governance, Strategy

 

‘If you cannot measure it, you cannot manage it.’ Peter Drucker.

‘Not everything that can be counted counts, and not everything that counts can be counted.’  Albert Einstein.

How can both be true?

The first is half true, the second is absolutely true, which leaves us with a problem, if it is not measured, how can we manage it?

A lot of things cannot be measured, good parenting, the enjoyment you get from watching a great game of football, business culture, the likelihood of a new product succeeding in a non-existent market.

Take that game of football, the statistics tell one story, the game as watched may tell another entirely. The stats do not reflect the quality of the game.

What about the future, how do you measure that?

Tough call.

You cannot measure what has not happened, but you can draw inferences from all sorts of variables, quantitative and qualitative.

Digital has driven a bias towards quantitative, all we hear about is A/B testing to the point where we feel diminished if we do not do it. However, this mad reliance on the quantitative is a nasty illusion,  a mirage, leading many astray. Qualitative has a huge place in telling the future,  it is a way to fill in the behavioural blanks, to imagine what may happen  in a given situation.

Qualitative research can be an aid to the intuition born of experience, and domain knowledge, factors not able to be quantified. It is also a great way to surface the questions that need to be asked in a following quantitative process, which is useless without the questions that go to the heart of the drivers of the behaviours being quantified.

Qualitative research when done well, and unfortunately I have seen it done poorly more often than well, digs into  the psychological and motivational aspects of behaviour. Not just what we do, but why we do it, and what might we do in the future.

The missing ingredient in most ‘future-telling’ exercises, usually called ‘forecasting,’ is the wisdom born of experience. Frederico Fellini once quipped that ‘experience is what you get while looking for  something else’.

It seems to me that wisdom, and the insights that emerge from that wisdom, come from a lot of experience.

 

The biggest broom in town: #Scotty

Feb 8, 2020 | Personal Rant

 

Occam’s Razor is now a relatively well understood term, coming from the 14th century philosopher and monk William of Ockham. It is a discipline that demands that facts about a situation be distilled down to their simplest form, and the extraneous cut out.

Just prior to the last election that saw #scottyfrommarketing scrape in to retain the government seats by one seat, I wondered at the emergence of ‘Occam’s Broom‘, the phenomenon of anything but facts being shunted around, and any politically unhelpful fact, smelly deal,  or outright dodgy behaviour, ‘broomed’ under the carpet.

Some of my friends thought my association with inner city, soy latte and chardonnay sipping  lefties had finally got to me.

Now we seem to have the broom working double time, sweeping away the things we should be thinking about in a welter of activity seemingly designed to help us settle back and think #scotty and his crew have it all under control, and it is OK to go back to being apathetic.

Let’s look at the list.

  • There will be a royal commission on the cause of the fires. Hello, we already know because there have been previous royal commissions and senate reports that told us. We also had Ross Garnaut in 2008 nominate 2020 as the point of great inflexion, when the climate forces he saw would coalesce into an inferno. Our governments response: Activity for the sake of activity to misdirect attention.
  • Angus Taylor. Dear Angus, son of the  born to rule class who can do no wrong, except send off dumb, really, really dumb emails based in falsified information designed to throw dirt on a political opponent. The police inquiry has been dropped, and Taylors statement included the words ‘The Leader of the Opposition and Shadow Attorney-General’s pursuit of this matter is a shameful abuse of their office and a waste of our policing agencies’ time.”  What abject hypocrisy when the Federal Police are still investigating several journalists for publishing stuff the pollies  wanted to keep secret, presumably at the direction of those same pollies.
  • #Scotty will now meet with the group of former fire commissioners, lambasted as irrelevant just a few months ago. Meanwhile, Scotties language has subtly changed to recognise the reality of climate change, but not enough to do anything more that try and rort the Paris agreement for so called carry over credits. What is he going to do with that pesky and sometimes terminally idiotic group of back benchers who seem hell bent on building a few new coal fired power stations?
  • The Royal Commission into the aged seems to have been swept away by the fires, but I am sure will come back to haunt pretty soon. Having an ageing and now frail mother, this item is of close, personal interest.
  • Adani has been fined $20,000 for lying to the QLD environmental agencies assessing their applications to dig a big hole in central Queensland, and flog off the coal. It seems they are running true to the form set in India, where Mr Adani is regarded highly as a dodgy dealer, but 20 grand will barely make a dent in petty cash. Laughable. At least their chances of commercial funding appear to be dim to zero after Larry Fink, chairman of Blackrock had his say. This debacle of Yes/No/maybe that  has plagued this project, weather you support it or not, is a symptom of our collective inability to make a decision based on principal and fact, and then stick to it. Federal and State governments duplicate each other endlessly, then point fingers, while capital markets shake their collective heads.
  • Then there is the National party. What a party they are, now Mr. Invisible has seen off the challenge (for now) that was never going to happen from Barnaby, hell bent on a resurrection. Meanwhile the Senator who caused the kerfuffle, former Nats deputy Bridget McKenzie, while on the back bench in disgrace, remains the Nat’s leader in the senate, with all the benefits that entails. Go figure.
  • Now we have the son of sports rorts, $150 million bucks to the Female Facilities and Water Safety Stream program, details of which are still emerging, but it seems the whole lot went to marginal seats the Libs had to win, sometimes for things they did not know they had asked for, needed, or in a few cases, even wanted. I guess the only saving grace is that the public outcry should be so loud that much of the money allocated will be withdrawn, and put towards saving the Treasurers much vaunted surplus.
  • I simply cannot believe that #scotty and his henchmen did  not know intimately of these two ‘sports rorts programs’, as they all seemed to have had their snouts deeply in the trough I am surprised they did not drown. I will admit to being a bit more than usually narky, as a sporting club I chair missed out.  I wonder if it is because we are in a safe Labor seat?
  • The economy is in the shitter, and circling. Our trusty treasurer continues to tell us that all will be well, the plan is working, there may be some short term aggravations because of the fires and the money needed to help, but they are on the job. Groan: I suspect they need a new plan!.
  • What about the ongoing poor management, seemingly across the board? The NDIS, costing billions, but many of those it was supposed to help are still in desperate need of help. And, what about the submarines, again, billions over budget already, and probably a decade behind, meaning the Collins class will remain in service until well after I am dead. Not only that, the whole sub program as it stands was created to shore up a few seats in Adelaide, which will end up costing probably 10 billion a seat. Puts a few swimming pools and unwanted change rooms to shame, a lousy 250 million, petty cash to this lot. Remember ‘Robodebt’? State and Local government and its agencies are no better, they all seem to think the  tax revenues are for their entertainment and to purchase votes, rather than improving the lives of those from whom it was ripped. Need I go on, I will just depress myself.

Listening to the statements coming from the government about all this, and the other stuff going on, you would think they are utterly confident that it will all be swept under the carpet. Occam’s Broom doing some great work. However, their credibility is so terminally damaged, I cannot see how they can possibly recover. Unless of course, the other lot really stuff it up, as they did last time.

I am reminded again of Churchill’s observation that: “Democracy is the worst form of government, except for all those other forms that have been tried from time to time”, but am tempted to reconsider my agreement.

Mistaking growth for optimisation can be terminal

Feb 5, 2020 | Change, Strategy

 

Generating rapid growth in a business entails a constant choice that simply must be made, but is usually missed.

It is the choice between ‘growth’ and ‘optimisation’.

They require different skills, strategies, and resources.

Let me explain.

‘Growth’ implies something less than a double digit year on year increase. While that may stretch resources, it is often  ‘Doable’, while very challenging. ‘Rapid growth’ is much harder,  requiring the acquisition of many new customers, assets, movement into new markets, product or geographic areas, and a higher risk profile. It is often aspired to, even budgeted, but is relatively rare.

‘Rapid growth’ is also usually very scrappy, you are fixing things on the run, adding resources, are short of cash, and so it requires people comfortable with ambiguity, uncertainty, and a drive to do new stuff.

By contrast, optimisation is taking what is currently done, and improving it, bit by bit, on a continuous basis. The scrappy, seemingly undisciplined and almost random frenetic activity of a rapid growth enterprise makes them uncomfortable.

Think about Olivetti, the king of the typewriter market.

They made wonderful typewriters, best in the business, optimised continuously for 75 years. Into this mix comes a scrappy unreliable substitute, the word processor and attached printer, that costs more than an Olivetti, and does not deliver the same quality of output.

To Olivetti management, it was less than a threat, more of a nuisance, that would soon go away, so they continued to optimise their machines, rather than recognising that the scrappy, word processor would rapidly steal not only their market, which was typing pools, but destroy them, and create new ones. The word processor was an entirely different  tool, one that gave everyone the ability to type and print from their desk, a much quicker, more flexible, and hugely democratising change in organisational life. Olivetti was obsessed with their machine, not seeing the customers as anything more than users. Word processors gave everyone a power that had been concentrated in the executive suite, creating a terminal strategic change that Olivetti failed to see.

Is your strategy clearly making the distinction between optimisation and growth, as they are different beasts, requiring different capabilities.

 

Header photo courtesy Paolo Bpnassin via Flikr