Jul 20, 2023 | Change, Customers, Innovation
Contrary to the myth, the customer is not always right.
However, the customer should always be heard.
You learn a lot from customers, particularly the ones who leave, are dissatisfied and complain, or who exist at the fringes of your market, or even in a market you had not considered.
As a marketer I have always advocated the notion that the good stuff happens on the fringes. As the saying goes, ‘every good idea starts as a heresy’, so hearing the heresy is a core part of being able to respond to new stuff.
There are a lot of tools the hear what is being said on the fringes, tools to track every interaction with your brands, good and bad, and everyone should be heard.
Years ago, I tried to persuade the people in the pork industry’s peak body that they should be spending some time and marketing resources engaging with those growing organic, and heritage breeds of pigs, and got laughed out of the place. They noted that 99.9% of the pork grown was the result of intensive farming, where cost was the absolute driver.
The real competition to the domestic industry was located in those well-known cheap labour countries of Denmark and Canada, and these fringe Australian organic and heritage growers were irrelevant. Besides, the existing major Australian producers were contributing most of the industry marketing funding via matched levy.
Those few loonies with different ideas out on the fringes with tiny volumes only contributed a dribble to the kitty funding advertising and a nice lifestyle for employees in Canberra. This is close to the sources of part of their funding, and political power, but totally removed from growers and the markets they served, but very comfortable.
As a result, an opportunity for growth and profitability has been missed.
Or has it?
Jul 5, 2023 | Change, Demand chains, Innovation, Strategy
All the recent focus of industry development, Control of IP, and sovereign manufacturing, has been on High tech.
Should we, or perhaps why don’t we, look to areas where we have dropped the ball in the past, but still have the opportunity to shape world markets, built capability, and diversify our economy.
Should we be looking at some of the obvious, but perhaps boring stuff that can make a significant difference, and where we already have a huge head start.
This race towards the newest shiny thing is fun, generates a lot of press releases, is exciting, attracts attention, as well as capital and competition, but is it the whole game?
In years gone past, Australia supplied a huge percentage of the world’s wool.
We grew it, and processed it through the many stages to the production of yarn, and exported the highly value added product to the world.
No more.
We have been supplanted as the number 1 producer by, you guessed it, China. We proudly, for now, occupy second place in the production stakes. China also is the biggest importer of Australian greasy wool, which they then process and gain the huge value add that the processing stages contribute.
I do not have all the numbers, but the current mean fibre diameter of the Australian clip is 20.8 microns, (AWPFC numbers) which is significantly less that the average of other major producers. At the extreme, production of wool at 13-15 microns is very small, requiring very considerable skill, animal husbandry, and investment in genetics. However, that investment is returned with huge price premiums paid by high end fashion manufacturers. That fine wool sells at auction for up to and sometimes more than $150/kilo, 15 times the average.
Australia’s share of world fine wool production is upward of 80%.
Why is it beyond our capability to capitalise on such a premium position, based as it is on 150 years of experience, a continuing production advantage in the preferred raw product, and many millions of dollars on R&D?
Australian Wool Innovation has been pissing around for the 30 years I have been watching, and from time to time dipping a toe into the water. They have wasted growers money and matched funding from the public purse, while failing to build a sustainable industry value chain that builds Australia’s competitive position. Making excuses, and generally having a fine old time has been the outcome of their efforts.
Having just read the latest strategic plan I can find, that sorry situation is not going to change.
As part of the National Reconstruction Fund, should we revisit old friends like wool that despite the best efforts of the last 40 years, we have failed to kill off? Surely that level of resilience requires some examination and consideration for rebuilding the supply chains that delivered many of the foundations of the prosperity we still enjoy. Such an effort would tick 5 of the 8 priority areas nominated in the reconstruction fund legislation.
13 years ago in a post I asked ‘Where next for wool‘. The question needs to be asked again, and this time we should be expecting some sensible answers.
The header graph is the average price of greasy wool over time. You can see the impact of the wool industry pricing model that ended in tears in July 1995, leaving a huge inventory of unsold wool that screwed the market for a decade. As with all averages, the graph hides the huge opportunity that has been facing us for years, which we continue to ignore.
May 30, 2023 | Change, Innovation, Marketing
In this new world of marketing, being reshaped by Artificial Intelligence, how should those concerned with the longevity and salience of their brands respond?
Innovate.
AI is really good at looking at what has happened in the past, but has yet to develop a crystal ball to tell the future. Marketers key responsibility is to tell the future, then shape the resource allocation decisions their enterprises make to best leverage what they think will happen. No future comes in a linear fashion, but AI can only reflect in a linear way, in response to the algorithms on which it was trained.
Strategise.
Strategy is a game of choice, where what you will not do is at least as important and often more so than what you will do. Again, these choices are based on what you think might happen, and as noted, these are never linear choices. Strategy in a world being homogenised by access to data will be more fundamentally important than ever.
Manage Communication structures.
Yesterday’s world was dominated by silos. The simple fact is that customers do not care about your silos, only how you deliver value to them. Enterprises have evolved hierarchical silo structures as the most efficient way to allocate and manage resources. That remained true until the mid-nineties, and most enterprises still have not got the memo. Today, even any hint of silos and barriers to communication internally, and more importantly with customers, will lead to a rapid and fiery death at the hands of data and its scribe, AI.
Remove marketing complexity.
The last 20 years have seen a multiplication and fragmentation of communication channels to customers and consumers, along with the inevitable silent middlemen and rent seekers who just siphon off dollars with little or no value add. The complexity of the choices and channels has created a situation where the analysis of the value of marketing expenditure is little short of a children’s guessing game. This is despite and partly because of because of the plethora of options and tools. The only way to address this complexity is to cut the gordian know and simplify, simplify, and then simplify some more. In other words, marketing focus driven by strategy. Easy to say, hard to do.
Generate attention.
The main game of being relevant in a huge homogeneous crowd is to first generate attention. You do that by being different, and being different with a big dose of energy being injected into the differences that are relevant to customers and consumers because they solve real problems, delivering them real value.
If you do all that, while leveraging the capabilities of AI, and digital systems generally, it will be your competitors that struggle, while you are ahead of the game.
Header cartoon credit: Tom Gauld
May 24, 2023 | Change, Innovation, Strategy
Dr. Geoffrey Hinton, often labelled ‘the Godfather of AI’ left his ‘home’ at Google so he could ‘freely share his concern that AI could cause the world serious harm’.
The idea of AI is not new. Philosophers and mathematicians through the ages have been speculating and writing about things we would now count as part of the foundations of AI.
Jonathan Swift gave the Lilliputians ‘the Engine’, Thomas Bayes built his probability framework that is still used every day, and Nicola Tesla built a radio-controlled boat for the 1898 New York exhibition controlled by what he called, ‘a borrowed mind’, and the first paper that recognised the potential neural symmetry with our own brains was publsiesh in 1943.
Alan Turing proposed what became known as ‘The Turing Test’ in 1950. This generated a surge of activity, culminating in three academics hosting a workshop at Dartmouth College in 1956. This workshop is now seen as the ‘kick-off’ of AI research, much as the Solvay conference in 1927 was the catalyst to the nuclear research that led to ‘the bomb’ in 1945.
From that workshop, great minds have been busily stuffing the AI equivalent of Pandora’s Box until Pandora, in the form of Open Ai’s ChatGPT opened it in November 2022, and let the whirlwind rip.
As in the fable of Pandora, one of the most enduring of the ancient Greek allegories, once the box was opened, despite all efforts, there was no stuffing the evils back in the box. Luckily, Pandora had also been created with beauty, intelligence, and tellingly, curiosity, which led to her opening the box.
This is as it is with AI.
There is the evil we all see, centred on the rapid destruction of the status quo in all corners of our commercial, private, and public lives. The beauty may be harder to see in the short term, but will become obvious in the longer term, after all, the last thing to escape Pandora’s box was ‘hope’.
If nothing else, it will be exciting, and for some, the source of significant new leverage that can lead anywhere.
Header credit: Dall-E with the instruction: ‘Create a painting of Pandora opening the box allowing the evils to escape, in the style of the ancient Greeks’
Apr 29, 2023 | Change, Innovation
30 years ago tomorrow, April 30, 1993, the public internet was born with the announcement by the European Organisation for Nuclear Research that they would publicly release the HTTP protocols that would change the world. These protocols had been created by Tim (now Sir Tim) Berners-Lee for use by academic and defence facilities and had been very tightly held. On April 30, 1993 they were posted on what would become the world’s first website and were to be freely available to all.
10 years ago, I posted a happy 20th message.
Leading up to that momentous release of the HTTP protocols, providing the initial foundation for today’s internet, the US department of defence had created the ARPANET (Advanced Research projects Agency Network) in 1969. The first email message being sent by Ray Tomlinson who first used the @ symbol to separate the recipient’s name from the network address to himself in 1971. By 1983 there was general agreement on the standards for communication on the internet, the TCP/IP (Transmission Control Protocol/Internet protocol), and in 1985 the first domain, Symbolics.com was registered, which remains live today.
Once publicly released, the standardised protocols saw a mobilisation of innovative resources from around the world, resulting in rapid development of uses and tools.
Mosaic, the first popular web browser was launched in late 1993, and later was renamed Netscape navigator, and Yahoo launched in 1994. Microsoft launched their competitive search tool Explorer in 1995, later incorporating it free into Windows, leading to the move by the Clinton government to take action under the antitrust laws in 1998, resulting in an order to break up Microsoft. This order was later lost on appeal, significantly due to the evolving dominance of Google as the preferred search engine. Amazon launched in 1995, Google in 1998 and amongst the wave of tech IPO’s in 1999 was Napster, the first peer to peer file sharing service.
From the launch of Wikipedia in 2001, we again had a wave of launches, most of which failed, but a few became the unicorns that changed our lives, Facebook 2004, YouTube 2005, iPhone 2007, Instagram 2010, and so it continues.
The most recent inflection is obviously the explosion of AI tools since the release of ChatGPT in November 2022.
If you extrapolated from this birthday out to the next milestone, the 40th, the only thing we can say for sure is that you would be wildly, massively wrong. That happens every time such an inflection point is reached. Extrapolation is useless, instead we need to experiment and innovate, a continuous process that will take us in completely unpredictable directions.
I hope I am around to see it.
Apr 17, 2023 | Change, Innovation, Strategy
Over the years I have helped a number of start-ups. Almost all have been single or a few people who have a drive to start something they own, where they can call the shots, and be away from the dead hand of corporate bureaucracy. Sometimes this has been a formal assignment, more often, the result of a series of casual conversation in cafes, networking meetings, and at BBQ’s.
Across these conversations, there have been some consistent themes,
They focus too much on the little things that do not matter much in the long run.
Logo, company name, design of the proposed website, details that do not make or break a new business. At the early stages, these things can be easily changed, modified, and often are dumped.
What this does is take the attention away from what really does matter. Clearly defining the product and/or service to be provided, who is the most likely ‘ideal’ customer, why they should buy from you rather than elsewhere, and how they communicate with them about the value they can deliver without wasting resources. These are the things that matter. Their common characteristic is that they are qualitative, hard to measure, and they evolve.
Evolution happens on auto pilot, make it positive.
Things change, often they change while you are not looking, and only become evident with the benefit of hindsight, by which time it is sometimes too late to do much. The other side of the coin is that evolution also applies to the good things. The task of a new company is to set the guiderails so that the good stuff outweighs the bad. Alignment of all personnel and outside stakeholders is vital in this process, as the pressures will be coming from all sides. And like a child learning to walk, you need to have some of those guiderails in place, or you will wander off in random directions. I call it having a robust, deeply considered strategy.
Imposter syndrome always plays a role.
Unless you are a sociopath, imposter syndrome will grab you from time to time, you will feel out of your depth, wondering why everyone is looking to you for direction and confirmation. It will feel like that first time on a big public stage, dread about what is to come. When you look back, assuming you have done the preparation, you will recognise it for what it really is, a test, and a great learning opportunity.
Spreadsheets are liars.
Most businesses start with some sort of plan, most often articulated via a business plan template and a few spreadsheets. If you are looking for outside finance, these will be mandatory. However, I have never seen a spreadsheet or written plan that accurately reflects what actually happens. Most are nice, comfortable extrapolations of continuous growth along a predictable path. The growth of every successful business looks like a game of snakes and ladders. 3 steps forward, and whoopsie, 2 backwards. The trick is to ensure the steps upward and forward outweigh the falls. Sometimes this simply does not happen, and the snake hole swallows those who fall into it. Spreadsheets never allow for the ‘snake-holes’
Internal Vs External.
Most start-up failure comes from two sources. Firstly, from the lack of cash management. To my mind, there is no greater sins that not being proactive with cash, a simple set of disciplines often ignored. The second is because they have neglected the management of their customers by looking inwards, managing the inevitable personal and process friction that occurs, rather than looking at how they can add value to their customers. Customers do not care about your internal challenges, they are paying you to release them from theirs.
People are your greatest asset, and liability.
A business without people is just a scrawl on a piece of paper. A ‘micro-business’ which is what almost every business is at birth, can be strangled by one poor choice. Equally, that one choice can be the making of you. In the early days, when everyone is acting in all sorts of roles, you need people who are self-reliant, resilient, and happy to ‘muck in’. They are very hard to find, and even harder to keep when you do find them. Equally, when you think you have found the one, only to realise they are not as advertised, which is what they were doing during the interview, remove them quickly. A wrong employee at an early stage can become toxic very quickly. Sometimes that person is great at what they do, are seen by others to be vital, but they are a pain in the arse for some reason. Experience tells me that the benefits of what they are good at are usually outweighed by the hidden costs of them not being aligned with the rest of the team, and its objectives.
Being seduced by opportunity.
That old cliché of working in the business instead of on the business is almost always true in the early days. You will be swamped from all sides by problems as well as opportunities, both of which will radically dilute, if you allow it to, that characteristic of successful start-ups: focus. Plan for what comes next, focus your very limited resources on the key drivers of that outcome, and eliminate everything else. This is never easy, but is absolutely necessary.
None of this is easy, if it was, everybody would be doing it.
The failure rate of start-ups from the corner coffee shop to high-tech gizmos is very high.
Finding the right sort of outside ‘reality check’ advice and input that delivers true value is perhaps the eighth challenge, which so many get wrong, but which can change the outcome dramatically.
Header credit: Arrived via my new AI mate Dall-E
