Aug 10, 2012 | Management
An old mate of mine has only one rule of negotiation “he who mentions price first, loses”
Whilst there are other things that contribute to a successful outcome, he is right about the price. Once an expectation of price has been mentioned, it becomes the point from which other conversation evolves.
Typically: “I want $1,000 for it” “well, I would be willing to pay you $500”
This will evolve to a final price of $750, but had the initial price been $1,200, the end price may have been around $900.
Perhaps the most public example of this anchoring phenomenon I have seen is Alan Greenspan, former head of the US Federal Reserve, the acknowledged expert on the economy, who completely missed the GFC, simply did not see it coming despite many warnings. The preconceptions he had of the way the economy worked simply blinded him to alternatives. Later, after it became obvious that he was wrong, to the detriment of the US and ultimately world economy, he felt obliged to acknowledge his error before a congressional committee.
When negotiating anything, do not forget my mates rule 1, but recognise that it works across a wider field than just price. Any firm preconception will blind you to alternatives in a negotiation, particularly when there is an emotional investment in the result.
Aug 8, 2012 | Management, Marketing, Social Media, Strategy
Whilst I hesitate to add to the plethora of words dedicated to the saga of Fairfax, from the stupidity of “Young Warwick” onwards, it seems to me that there are a couple of points that nobody has made.
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- Consumers of media have not changed. They still want to see the news, sports, political analysis, and the latest fashions and foibles of the rich and stupid, and they still want it delivered, and are prepared to pay for it, but they now have options about the delivery not available 15 years ago. Your $60 a month broadband costs are just a different means of delivery of content, the stuff newspapers used to deliver exclusively, for about the same price.
- Newspapers revenue comes from advertising, the literal “Rivers of Gold” that flowed from the classifieds, not from consumers. The price paid at the newsagent (another anachronism of an older world) would not cover the costs of printing and delivering the paper, then disposing of the excess. Newspapers disengaged from the primary source of their revenue and profits, advertisers, whilst their consumers still want, and obtain their news fix, it is just that they can get it elsewhere.
The disruption in the newspaper industry is from the new competition for advertising dollars coming from new channels of content distribution, not from consumers of content turning away.
In all the fluff written about the Fairfax share price, the stalking by Gina, the so called “code of journalistic conduct” and the failure of the Chairman to come to terms with the competing views around the board table, I have seen nothing that points out the basic failure to recognise who is your customer, and who pays the bills and why, outlined above.
The real reason Fairfax is stuffed is that it deserves to be.
P.S. (after 5 years)
It is now April 2017, and Fairfax is saving another 30 million by chopping costs, which means journalists. There is still no recognition of the simple fact that the distribution channels may have changed, but the consumers ares still out there, still consuming media, the challenge is articulating a value proposition that makes it worth their while to part with some money.
Aug 7, 2012 | Management, Marketing
I was recently the recipient of one of the slickest presentations I have seen for some time, as the Marketing Manager of a business on whose board I sit employed the full range of his presentation skills on us. It was a truly impressive performance, at least at a superficial level.
The business is successful, and its marketing programs are seen as a key component of that success, but the reality is that we really do not know in quantitative terms the value delivered by the marketing investment.
Marketers, and the boards to which they report need to be recognise that the days of hype are over, and what is needed now is a solid, quantitative foundation linked to the outcomes so that intelligent, informed assessments of the marketing investments can be made.
Boards are used to numbers, and generally have to date tolerated the marketing hype delivered to us because:
- They do not understand the marketing jargon
- They had no idea how to measure it, so as it appeared to work, why change.
Those gravy-days of marketing are now ended, and no marketing function or person should be able to avoid the scrutiny and opportunity for productivity gains in marketing investments that have been delivered by intelligent metrics available in the digital world.
Aug 6, 2012 | Management, Marketing, Social Media, Strategy
The term exponential is routinely used in engineering, maths, and the sciences, meaning, in lay terms, that the rate of increase in the derivative of a factor increases faster than the increase in the factor itself. “Gobbldy Gook” to most marketers.
Moore’s law is perhaps the most widely known use of this equation, but is only one of many.
Futurist Ray Kurzweil cited many others in a fascinating TED talk a few years ago, in which he points out that exponential growth is a common feature of technological growth, we just have to recognise it when we see it.
Mitch Joels great blog got me thinking.
The growth of complexity in the practice of marketing; new channels, social media, blogs enabling anyone to be a published writer, 100 TV channels at the end of a remote, new industries, the emerging models of collaboration, and all the rest are not linear growth, they are growing by leveraging the principals of exponential maths. The first one is hard, and takes years, the next is much easier and doesn’t take much time, then there is an explosion.
The way we generally think about marketing, and certainly the way the senior management of most large corporations think about it, is still in the linear mode, when the explosion in the opportunities presented by marketing to communicate and connect is an exponential change.
Competitive advantage will accrue to those enterprises that are capable of recognising that marketing into the future will operate in a different dimension if you like, to the C20 notion of accountability dominated by financial measures. Measuring performance by a P&L and Balance sheet mentality that counts what has happened, rather than assessing what will happen, and recognising the opportunities presented by exponential marketing will be leaving huge opportunities on the table.
Jul 5, 2012 | Lean, Management, Marketing, Social Media
It has always been so.
The father of the modern manufacturing revolution, W. Edwards Deeming probably said it first in a management setting, that led to lean, the TPS, 6 sigma, and a host of management articles, cliches, and learned papers, but it has been said before, in many ways. It is also a core component of the Balanced Scorecard.
Measuring advertising has always presented a challenge, throw an ad schedule on the box, and hope it works, has been the dominant method for many years.
Now we have the net , and a whole new set of measurement possibilities across websites and social media platforms. Like anything, simplicity is the gold standard, finding a few measures that get to the heart of the performance is a real challenge for management, as differing measures for differing platforms, differing markets, and platform/market/interest dynamics are always required, there is no pro forma to be used here.
Avinash Kaushik‘s great blog Occum’s Razor concentrates on measurement of digital performance, this entry on the measurement of social media, which should engage the minds of all marketers.
Jul 1, 2012 | Management, Personal Rant
If Australia was a company, it would be a case study for the need for a coherent strategy as the basis for commercial sustainability. As it is, the place is a shambles, the Directors are held in contempt, clearly they are not listening to management, and have no ideas themselves beyond short term self preservation, and are simply wasting the proceeds of our collective good fortune.
Lets consider some of the characteristics of an enterprise that is successfully meeting the needs of its stakeholders, while building the foundations of long term prosperity.
- The board has articulated a clear, simple purpose for the business to exist, and a strategy that is well understood throughout the business, and by outside stakeholders. Where individuals, or groups have a divergent view, they see that there has been a transparent “due process” undertaken, so they do not feel, as if their voice is irrelevant, or unheard. Contrast that to Australia’s current “board” in Canberra. There is no coherent articulation of the values we hold dear, but when it suits, hypocrisy and expediency with the truth are paraded out as virtues.
- In a corporation, available resources are allocated across a portfolio of needs, from overheads necessary to keep the place running to projects that will build the foundations for continuing prosperity, and those that are needed to address more short term challenges. Contrast that to the poll driven expediency of our current board, and total lack of any management skill, project or otherwise.
- In a corporation, once priorities have been agreed, resultant activities are driven by the desire for simplicity and consistency in the manner in which the contributions to the outcomes are measured and equated. Consider the inconsistency of the introduction today of the carbon tax. The objective is to, supposedly, make a start to a carbon neutral future, give a fillip to carbon reduction technology, and so on, but at the same time subsidies are being given to the Aluminum smelter in Geelong to keep 600 jobs, while the smelter continues to take 15% of the electricity consumed in Victoria, generated from brown coal. Inconsistent??? If the logic holds, Fairfax and News Corp should be in line for massive assistance. After all, they are semi redundant industries laying off 2,000 workers, so they must warrant assistance, right? Hell might freeze over.
- In a corporation we would get the best people we could to head the functional responsibilities, and they would faced the discipline of the bottom line, and delivery of objectives. Here we get, with a few notable exceptions on both sides, political hacks, deal-doers, and “operators” who have served their time in parties whose membership is small enough to fit in a phone box, and who will do and say anything with impunity, if their skin is thick enough. As a result, Australians have lost faith in their integrity, and ability to deliver anything of value.
- Oh, and by the way, we can put directors who lie to shareholders in gaol, although they usually just get a whopping fine, and are banned from being a director again. This is not just a shot at the current prime Ministers whopper about carbon imposition of a tax, but at the whole body politic who seem to be impervious to the truth, use data in highly selective and misleading ways, and squirm at any notion of transparency and accountability. The same lot however, will legislate to outlaw their behavior when others copy them. Is it any wonder that we have lost all respect for them
