Sep 11, 2013 | Branding, Change, Marketing, retail, Strategy
As our cities continue to suck people off the land, and grow bigger, swallowing adjacent farm land, we face the challenge of how we feed ourselves into the future.
It may not be a problem now, or in 5 years, but it will be a problem. China’s urban middle class is currently around 400 million out of a 1.5 billion population. 20 years ago, there was little if any middle class, so the move has been dramatic, and is not slowing.
China is an extreme case, but one we need to consider in Sydney as we look to the future of our children. Marrying agriculture with urban living, figuring out how we can feed ourselves without destroying the landscape should be on the planners radar, so for those thinking about the challenges, here is my “two penneth” worth.
- Personalised. We are in a world of “i” one in which consumers expect to be addressed and marketed to on a personal level for clothing, cars, even shoes, so why should it be any different for the food we consume? Indeed, the food we consume is arguably more relevant to us than almost anything else. As I observe the strategies of the major supermarket chains, they are hell bent on removing consumer choice as a cost reduction strategy. This is working currently, but the rise of farmers markets, resurgence of specialist retail, and new net based business models may indicate a stirring at the edges that will at least partially disrupt this “efficiency over choice” business model in time. The opportunity for intelligent values based branding of food products has never been greater.
- Localised. As a kid in the late 50’s and early 60’s (yes, I am that old) there were a number of southern Mediterranean migrants living in the local area. Every single one of them had a back yard garden producing an array of vegetables and fruit for the table. I came to realise it was not a matter of cost, but availability, freshness, and a cultural imperative that drove them to grow in their backyard. Their children, the ones I grew up with, did not follow their parents, sacrificing the back yard garden for the convenience of the supermarket, but the pendulum has swung back, and our children, the grandchildren of the migrants, are returning to the notions of freshness, combined with low food miles, minimum chemical use, and product provenance that their grandparents had. The reasons may be a bit different, and more considered, but the preference for local product, with the inherent freshness and provenance is the same.
- Efficiency. The world has moved from being a place of plenty to increasingly a place of scarcity. Water, energy, labour, and available land are all becoming scarcer, and the increasing price of these resources is reflecting that scarcity. For many, the efficiency of their use of resources is often the difference between profitability and bankruptcy. The side benefit is that efficient use of natural resources also makes ecological sense.
- Intensity. We are seeing increasing intensity on every operational parameter you care to measure. Capital, IT, production, labour, all are far more intensely utilised than just a few years ago. In addition to the operational end, consumers are increasingly scrutinising the product they buy, looking for confirmation of the explicit and implicit claims made, and are unforgiving in the event that they smell a rat. This intense consumer scrutiny and selectivity that is emerging I have called elsewhere the ‘Masterchef effect”
There is considerable overlap between these four factors, and they are mutually supporting, but it seems to me that they reflect the foundation challenges faced by successful urban agriculture.
Aug 30, 2013 | Change, Marketing, Social Media
As a boy, I used to go to the local grocer with a few bob in a knotted handkerchief, get a standard bag of goodies, bread, butter, and a few chops in return. The grocer knew what my Mum had sent me to get, and she knew about how much it would cost, and any discrepencies were fixed up later.
Those days are gone, the days when there was a personal relationship, when people were the centre of business, and trust was not something we thought about, it just was there.
In today’s terminology, business was social.
What replaced it was an industrial model where scale and machines dominated. It does not matter much weather you are thinking about cars, supermarkets, or farming, the analogy holds, just the timing changes a bit.
Impersonal, disconnected, and trust has disappeared, which is perhaps the greatest loss.
Now however, the people seem to be making a comeback.
The advent of social media was at first just another “mechanical” thing, it offered scale and access with little humanity, but as it has evolved, and the platforms developed, so have our behavior patterns and expectations.
Social media is becoming a “humanity enabler” that offers the benefits of scale and automation, but that is enabling the reconnection of people. Trust is also making a comeback, just think about the value you put into the reviews on Amazon or Ebay, whilst you do not know anybody who has done the reviews personally, they are way better than a paid advertisement.
I do not see the pendulam swinging back again, as we are becoming so re-engaged with people, but I guess it will, and those that see the inflexion points first will be, as usual, those that have the opportunity to make the most of them.
Aug 26, 2013 | Branding, Change, Demand chains, Marketing
Lean thinking, evolving from the Toyota Production System is changing manufacturing world, but agriculture has a long way to go.
Just as building cars used to be a production oriented operation until Toyota turned it on its head, so too is agriculture production led. Grow it, then try and find a market.
Well the world has changed, and demand is as big a pull factor in the world of agricultural produce as it is in cars, so the challenge is to leverage it. Just grow it and they will not necessarily come.
This does not mean that you have to find a way to manipulate the genes of an apple tree to give peak production in 2 or 3 years instead of seven, remove the impact of the seasons, or grow product out of its natural environment, which we can do for some products in greenhouses, but it does mean that change is urgent.
There are some things we can do much better that will help:
- Collect inventory data, and make it transparent and available. Agricultural inventory is not just what is ready for sale, but what is in the ground and likely available in the future days, weeks, months and years. Understanding the dynamics of agricultural inventory is even more important than manufacturing inventory because the cycle times are often so long, and the shelf life is limited, in some cases to days.
- Remove price as the purchase determinant. Sellers of produce have lost sight of the value that fresh produce delivers, and have lost any semblance of control of the chain, and the opportunity to brand. As a result, price is the overriding determinant of a sale, it is a race to the bottom, a race that does not have a happy ending for anyone. Having lost the initiative, it will not be easy to get it back, and any progress will take years, but it is a crucial challenge.
- Energise marketing. Easy to say, but extraordinarily hard to do. The agricultural “marketing” bodies that exist via levies have demonstrably failed in the marketing part of their charter. All that is left is for producers to take back some responsibility for marketing, and start to build their own branding and business models. Logically this can happen at the fringes, in the corners, rather than in the mainstream. The emergence of Farmers Markets is to my mind an precursor of this activity.
- Create new business models to accommodate the points above. Existing structures have led to the current poor situation, so it is unreasonable to expect them to be able to change into something radically different. These new business models have great challenges, great opportunities, and the cost of failure will significantly impact on our food security, and cultural roots.
Without the evolution of an agricultural version of a lean value/demand chain, the volume and value of our agricultural output will decline over the long term. Increasingly we are becoming uncompetitive in global markets, we currently import more than half our packaged food and groceries, our capability base built up over generations is leaving, and once gone, will not return.
We appear to be at some sort of inflexion point, getting it wrong over the next decade will leave our grandchildren poorer than we have been, reversing 250 years of improvement.
Aug 15, 2013 | Branding, Change, Marketing
I talk to a lot of farmers, and have done so for a long time. Not much has changed over that time, it is just that there are less farmers, bigger farms, and corporatised farming, with deep capital resources is taking over from the family farming enterprise.
The topics of conversation however remain the same:
The weather
The banks
Cost increases imposed by shiny-pants in office towers who never see a farm
The Aussie $
Regulatory and interest group interference
The value chain duopolies: grain handlers, logistics providers, processing works, and supermarkets.
How little they get from the value of the end product.
When you lay it all out, there are some things a farmer cannot control, but there are others that they could, should they choose to do so. However, to date, they have largely chosen not to, or paid a levy so some industry body can do it for them. Generally the results of this strategy have been pretty poor, the biggest beneficiaries being researchers, bureaucrats, those who control a choke point in the supply chain, and paper bag manufacturers.
Now however, the time has come for farmers to take control of the supply chains that they feed, and turn them into something different where they can extract the margins that accrue to those who make markets.
Not an easy task, not a short term task, and not one without cost and risk, but one that must be done if Australian farming beyond corporatised broad acre grain and perhaps beef, is to remain commercially sustainable. The tools and capabilities are now far more easily available, it just takes the vision, guts, determination and patience to make it happen.
Aug 1, 2013 | Change, Governance, Marketing
The first post on this “StrategyAudit” blog was on March 30, 2009, and I wondered at the time if there would be a second.
Where were the ideas going to come from?
Would I have the discipline to just keep at it?
Would anyone care?
Now, a thousand posts, and four and a half years later, at least one of those questions has been answered, and much to my surprise, I have stuck at it. The ideas still come, mainly because I see things, read things, make connections that previously I was unaware of, but now I write down, and sometimes they turn into posts.
Does anyone care? Well, a few do. Several hundred subscribers get an email every time I post, and a good proportion get opened, although the rate varies with the headline. (you can always tell an interesting headline) and more are open via twitter, LinkedIn, and other social media. Thanks to you all, and more reposting, and retweeting would be appreciated.
So, What has changed over the life of StrategyAudit?.
Marketing has changed, absolutely. The world is now digital, and the practice of marketing. has been radically transformed, and by observation, many of Australia’s enterprises have missed the boat, so far.
Mobile has not just arrived, but now dominates many net usage categories, particularly social media. Overall mobile now delivers 25% of web traffic, and growing at warp speed.
Marketing ROI. You can now calculate the ROI of most marketing investments based on data, where previously it simply was not a reliable calculation. For the first time, the old adage of “50% of my marketing budget is wasted, just wish I knew which 50%” has become nonsense. It can now be calculated with considerable accuracy using free web analytics. Given that data is free, there is no excuse not to use it.
Crowdsourcing. Creative input, money, advice, as well as crowdsourcing routine clerical jobs. No longer is Intellectual Property king, Intellectual Capital has taken over, as it is what you have between your ears that can influence tomorrow that really counts. It is now much less about what you did yesterday, and are protecting in the hope that it can be a win again tomorrow, than what you can do now that counts.
Visual has arrived, from the growth of YouTube, to Vimeo, slideshare, visual podcasts, instagram, Vine, the list goes on. Content is now visual, a picture replacing a thousand words writ large.
Fragmentation has overcome social media as it has matured, just as the manner in which we get news fragmented a decade ago when suddenly the newspapers, radio and evening TV news became almost redundant. There are choices you now make about which social media for which purpose, the way you use it, the content, et.al. Social is now part of our commercial world, not the habitat for our teenage children, and smart organizations are starting to understand the nuances, and use it well, rather than just chasing “Friends”.
Marketing automation is upon us. Everything from consumer CRM, to social media posts and content bait is combining to disrupt the sales and marketing processes that evolved over last century. It is particularly potent in B2B sales and marketing, removing the demarcation that is the base of so many organisation structures and cultures.
Transparency has evolved from operational and logistical environments into marketing. There is now huge volumes of great info on the net aimed at helping people to think about and measure the impact of their marketing. It is the age of helping, in the hope of gaining a customer for life, rather than just creating a transaction. Jay Baer has just written a second book, “Youtility” on the topic, and last week put up a long post that includes slideshare presentation on “how to” publish, doing exactly what he advocates in the book.
“Big Data” has arrived, although most have no idea what it is, and so are missing the opportunities that evolve from the mass of data now available to those with the capabilities and tools. Apart from the academic interest driven by the challenges of analysing zettabytes of information, enterprises across many categories are looking at ways to leverage the potential. It has also spawned a new job description,” Data Scientist” those who do this mining. Wonder how our universities are coping with teaching something only 3 years old, that is rapidly becoming a defining discipline of the 21st century?
Mortar to virtual retailing has arrived, along with the “Showrooming” whereby people use bricks retailers to touch, feel, test and size products they then buy on line a bit, sometimes a lot, cheaper. However, the research still evolving tends to suggest that the “showrooms” that get visited are first “webroomed”, increasingly from mobile, social media connected devices, and the total of sales is increasing, stimulated by the available information and marketing, while bricks retailers are missing substantial opportunities by concentrating on price as a competitive tactic. In effect, to be successful retailers need to be “Omni-channel” retailers. However, as noted below, we still go to the local store for much of what we buy.
Local. This is an emerging trend that leverages technology to disrupt at a local level by providing services specifically tailored to the individual. Airbnb, just a couple of years old is busily disrupting the hotel business, and from nowhere Uber, disrupting taxi and limo services is now a billion dollar baby. (Just how the absurdly regulated taxi industry in Sydney reacts will be an interesting exercise in the status quo Vs common sense). Nowhere is this trend more visible than in the growth of local growers markets in urban areas. Web strategist Jeremiah Owyang is calling it the Collaborative economy, and it is just getting started, but what a huge baby, at a current estimate of $26 billion.
Empowered consumers. Consumers now have enormous amounts of information at their fingertips, and this has removed from sellers much of the power they used to have in the selling process, weather it is paperclips or power stations that are being bought. This means that an ordinary value proposition is simply not good enough any longer!
Bullshitting the boss. Marketing was always a balance between art and science, but the pendulum has swung decisively in favor of the boss. The “black art” component has been removed, senior management have been around this stuff long enough, and are smart enough, to now be able to discriminate between the real marketers and those who just know the jargon. Baffling the boss with marketing bullshit no longer works, Full stop!
And, what has not changed.
The net has not turned all of us into wise, super informed consumers, and few of us are hyper connected, yet, and most of us are just a bit confused at the array of choice. However, if the pace of change continues, and I expect it will only accelerate, another decade will see us living in something akin to a sci-fi movie as Gen Y takes over.
Our behavior has not changed all that much, just because the tools have changed. We just have a bigger choice of tools, many of which most of us cannot, or choose not, to use. What we like and dislike, the people we choose to share a meal with, and how we spend out time have not changed all that much, human behavior is too hard wired for rapid evolution. The exception to this sweeping generality is social media, which has been adopted in the manner of a starving man being presented with a feast.
The web has not replaced our old buying ways completely, despite the hype. Most of our shopping (95% depending on whose numbers you use) is still with bricks and mortar retail, and much of the so called lost 5%, the B&M’s would not have made anyway, as the demand is a creation of the information and choice available via the new tools.
The web is not a cure for the disease of crap advertising and communication we suffered last century. If anything, it has multiplied the opportunity for us to be bored, turned off, and just plain aggravated. Were it not for our innate ability to ignore that which does not interest us, we would all be bonkers by now.
I’m glad you stuck with me this far, thanks, I hope I have scratched your brain. And so, on to the next thousand.
Jul 24, 2013 | Change, Governance, Management, Marketing
In this time of marketing abundance, huge opportunity to connect with consumers, understand their behavior and its drivers, both physical and psychological, not just the demographics of big groups who fall within arbitrarily nominated boundaries, why is the general standard of marketing so crap????
It seems to me that the defining skills of great marketing, the insights, creativity, compelling articulation of a proposition, empathy with a problem and its solution, and indeed asking question not asked before, have all been drowned in a deluge of marketing mediocrity coming from the abundance.
The Australian Marketing Institute recently published a paper wondering why the marketing profession is underrepresented in Australia’s boardrooms, and came up with a bunch or pretty treasonable reasons. However, to my mind, they missed the seminal one: most marketers, and hence their output are crap.
Many of the youngsters I see coming through who have a marketing degree chose marketing because it was the lowest UAI entry requirement. Whilst this may not be a good indicator in every individual case, on average, is it any wonder the level of real marketing skill is disturbingly low.
It seems also that anyone over 40, who has accumulated some life and management experience, and has the experience to have developed some instincts and insight, is seen as too old, too set in their ways, and unable to accommodate the fragmentation caused by digitisation, not “hip” enough.
What a waste this is!
People who run large businesses are smart, smart enough to see through the clichés and jargon of superficial so-called marketers, and the nonsense they hear erodes their confidence in the contribution real professionals can bring to bear.
I was just listening to a commentary on the productivity challenges facing Australian manufacturing on the radio, and the focus was on the old battleground of wages and benefits. If that is to be the central arena of the productivity improvement debate, we cannot expect any improvement at all, indeed, we will continue to slip down the greasy international productivity pole.
An improvement in our marketing and strategic productivity, although hard to measure in the quarterly reports required by our institutional masters , would make a huge difference.
