How did I do in 2016?

How did I do in 2016?

Jan 5, 2017 | Strategy

 

 

Following is a re-run of the post from January 2016 when I again rubbed my crystal balls and made some predictions for the year.

Let me know if you think  the scores I gave myself are reasonable.

 

7 trends driving business in 2016.

Like everyone else who sees themselves as having a useful view of the train coming at us, I have again tried to articulate the things I see as important to businesses, particularly the smaller ones that make up my client base.

 

  • The density of digital content is becoming overwhelming.

Businesses  have always generated and distributed ‘content’, but it was called ‘advertising’ or ‘collateral material’. Since we all became publishers, and the marginal  costs of access to markets approached zero, there has been a content explosion, and we are now being overwhelmed. It has become pretty clear that video will take over as the primary vehicle of messaging, and I expect that trend to consolidate over the coming year, and see a bunfight for eyeballs between social media and search platforms

Ad blockers will change the way the so called pay walls work, as well as ensuring that the density of content is replaced by less but better stuff. Ad blockers may be come discriminatory, allowing through stuff that the algorithms know you have been searching for.

The focus on content will be on the sales funnel and conversion metrics, much more than just pumping the stuff out, which will be a good thing for those who manage their inboxes.

Commentary Jan 2017

I think I got this fairly right, although video has not surpassed everything else as I expected, and I have not seen ad blockers becoming discriminatory as yet. Still might happen in 2017, but it is a bit like sticking a finger in the dam wall if you think it will stop the flow. 3/5.

 

  • Existing digital platforms will extend themselves competitively to attract new users, increase the usage and ‘stickiness’ of their platforms. Linkedin’s successful extension of their blogging platform and purchase of Slideshare are one, Facebook is aggressively setting out to attract new users by making themselves attractive to developers and others, with the launch of FB techwire in an attempt to attract the really technically oriented including those writing about tech, Twitter appears to be trying to find ways of monetising their users and will probably apply controls to the currently uncontrolled  stream in your feed, but there again, I thought that last year and they did not do it.

Also, platforms will recognise the huge potential of the B2B advertising market, and find ways to exploit it. Many B2B businesses are reluctant to use social advertising as they see the platforms as essentially B2C and therefore  not appropriate for their products and services. This is a huge potential market for business, and the social platforms will be cashing it.

Commentary Jan 2017.

Again, not bad. Microsoft bought LinkedIn during the year for 26 billion, which proves the point of the potential for B2B of social platforms. Microsoft will want a return pretty quickly, so expect the free version of LinkedIn to be stripped back, with features being transferred to the paid versions. Got it wrong, again, about the monetisation of Twitter. 3/5

 

  • Rate of Technology adoption is still increasing. Ray Kurzweil’s 2005 TED talk on the rate of technology adoption is resonating louder now than a decade ago. Some of his observations such as the rate of cost decline of solar technology and battery technology efficiency are coming to pass. However, it is his basic thesis of the logarithmic rate of technology adoption that will engulf us over the coming short term. Think about the confluence of big data and machine learning.  When you wipe away all the tech-talk and hyperbole, it comes down to a simple notion: the “friction” of information that has always existed is being removed at logarithmic rates, progressively revealing more stuff to see, and to do with the stuff we have. As we go online, and use technology throughout  the value and marketing chain, technology is reducing costs, speeding cycle time, and opening opportunities for innovation.

Commentary Jan 2017.

Chances of getting that wrong were pretty slim, so a fair score is warranted, although the specifics of a prediction were not what I would expect of a soothsayer, way too general. 4/5

 

  • Evolution of the “marketing technology stack”. For most small businesses this can be as simple as a good website with a series if resources available to collect email addresses, and an autoresponder series on the back.

For large businesses it can be a hugely complicated stack of software running CRM, customer service and scheduling, marketing messages, and the integration of social channels.

Commentary Jan 2017.

If anything I underestimated the speed of Martech adoption, and the rapidly increasing options. Scott Brinker continues to be the thought leader in this space, and I look forward to his 2017 Martech landscape graphic.  4/5

 

  • Big data to little data. The opportunities presented by big data are mindboggling, but even the big companies are having trouble  hooking their data together in meaningful ways let alone introducing the third dimension of big data.

Small companies will have to start to use little data better, or die. Data already available to them is becoming easier to use every day, to turn into insights about their niche, local market,  and competitive claims. Simple things like pivot tables in excel will be used, and tools like Tableau which brings a structure to  data from differing sources including big data, will  become more widely recognised by small business for the value it can deliver.

Big data will have machine learning applied, and the data revolution will get another shove along. From a non technologists perspective, industrial strength  data systems such as IBM’s “Watson” must drive some sort of further revolution, but my crystal ball is too cloudy for me to have much of an idea of the impact beyond making what we currently see as advanced systems look a bit like a pencil and paper look to us today.

Commentary Jan 2017.

Small and medium companies still have a huge and increasing capability gap when it comes to the management of data. While it is powering ahead in large enterprises with the resources and energy to pursue digital, SME’s are floundering. Over the course of the year several clients I started working with did not even use the most basic data analysis capabilities of their own data with  simple excel tools. 3/5

 

  • Technology hardware explosion becomes over-hyped. The volume and type of hardware that has become available is as overwhelming as the access to and availability of information.  Driverless, wearables, AI, 3D, blah,blah. Each of the developments has its place, and may change our lives at some point, but there is just so much of it that we are becoming immune to the hype. Who needs a tweeting washing machine anyway?

So, what is next?

Seems to me that we are on the cusp of an energy disruption driven by the combination of hardware and advanced materials science . The technology surrounding renewables is in the early stages of an explosion that will change the face of everything. Highly regulated and costly energy infrastructure distributing energy will start to be replaced with decentralised renewable power generation, much the same as PC’s replaced mainframe computers 30 years ago. The catalyst to this metamorphous will be the combination of governments that are broke and no longer able to fund the institutionalised energy systems and the development of a reliable “battery” system. Elon Musk has made a huge bet on his “Powerwall” battery system and manufacturing plant currently under construction, and it would be a brave person that bet against him. However, looking well ahead, it seems probable that it is the beginning of the logarithmic adoption curve of renewable power following the path of Ray Kurzweil and Gordon Moore.

Commentary Jan 2017.

The action has replaced the hype in several areas, with the IOT dropping down the list, and VR and Augmented VR rapidly becoming a reality.

I expected to see Musk’s Power Wall  start a huge adoption curve which appears not to have happened, although his Tesla cars have proved to be a smash hit. However, Governments around the world, and certainly in Australia are profoundly gun shy when it comes to actually doing what they say they will do about the digital and power infrastructures we rely on. Their inability to move beyond the simplistic populist bullshit, self- interest, nonsensical press releases, and  immediate electoral cycle is profoundly disturbing. 3/5

 

  • Marketing has always been about stories. However, somehow ‘content’ got in the way of those stories, and marketing became a different beast in the last 10 years. We will go back to marketing, and start to tell stories that resonate with  individual targets. Storytelling will become again the core, and we will be looking for storytellers in all mediums, written, pictorial, video, as we all absorb and recount stories in different ways.

All the good journos displaced by the disruption of traditional publishing can find great places in this new world of marketing storytelling, if they are any good. The competition is strong, and the results immediate and transparent so no longer can you get away with rubbish. Organisations will change to accommodate the fact that everyone is in marketing

We will become more aware of the permanent nature of the internet, and the manner in which our brand properties need to be managed.

In a commoditised world, where the transparency of price makes competition really aggressive, the value of a brand is increasingly important, and fragile.

These 5 extraordinarily stupid examples of how not to do it  should be a wake-up to the CEO’s who leave marketing to the junior marketers, often a transient bunch who have no investment in the business or brand, they are just there for a good time, and usually a short time.

One day I will do a study that compares the realisable value of the tangible assets of businesses compared to their value as calculated by the market. My instinct tells me that in many stock market categories  the biggest item as calculated  by the difference between those two numbers represented as  goodwill and inflated realisable values, will be the biggest item on  the asset side. In short, the value of their brands and customer relationships. Managers and boards need to deeply consider the nature of the people they have managing their brands, or risk losing them, often before breakfast, as the speed of disruption and change continues to increase.

Commentary Jan 2017.

Marketing is still about stories, always will be, the challenge increasingly is getting the stories seen. There will continue to be money wasted on stupid, irrelevant and sometimes offensive marketing, nothing to be done about that, the gene pool is still pretty shallow when it comes to marketing decision making.

 

As we go into 2016, the 3 questions every board and management should be asking themselves are:

“If  I was starting in this business today, what would I be doing to deliver value?”, and

“If a leveraged buyout happened, what would the new management be doing to unlock the value in the business?” and

“What do I need to do to implement the answers to the two above?”

 

Have a great 2016, and thanks for engaging with me.

 

Addendum Jan 2017.

These three are still great questions, and I suspect will be in another 50 years irrespective of technology and all the other distractions. People will still be people, and we will still behave in ways dictated by hundreds of thousands of years of behavioural evolution, not the tech of the last 20.

Have a great 2017, and thanks for engaging over the course of the year.

 

Allen Roberts

 

Where are your OSZ boundaries?

Where are your OSZ boundaries?

Nov 25, 2016 | Change, Management, Strategy

We are all familiar with the term ‘Comfort zone’ as in ‘that is outside my comfort zone’.

When most people speak publicly to a large audience for the first time, it is way outside their comfort zone. That discomfort manifests as fear, they sweat, the knees are rubbery, voice goes up a few octaves, and sometimes nausea takes over, but for most, they become increasingly comfortable with being on stage with practice.

In effect the limits of their comfort zone have been expanded. What was previously in their discomfort zone has become comfortable.  The ‘fear’ of being on stage has lessened, you learn to work with it, manage it, and often turn it to your advantage.  For some it becomes an exciting and stimulating experience.

I would propose then that we go one  step further.

To our own comfort and discomfort zones, which are well populated in our minds, we add a third option.

Our ‘Oh Shit’ zone, or OSZ.

This is not just an increased level of discomfort, the jelly-knee, voice cracking experience of that first gig on a big stage, where you are able to add rational thought and know that whatever happens, you will go home that night at about the same time.

The Oh Shit Zone implies a level beyond  psychological discomfort to one of physical or psychological danger. Manageable but nevertheless, danger, with the attendant fear that has to be managed if you are to get through to the ‘other side’ of the event.

For me, it would be jumping out of a perfectly good aeroplane with a little sack on my back that promised to float me to earth safely.

However, once done, having conquered the fear the first time, the second time would be easier, and the third, easier again.

The uncomfortable things we all need to do, but often do not are the things that hold us back. I am as guilty as anybody, that fear of failure, of public censure or even pity is strong. Those that push through, conquer their fear and get the job done despite the obstacles, are the ones who will be successful.

Considering you OSZ puts a different perspective on  bit of discomfort.

 

How to easily solve the strategy jigsaw

How to easily solve the strategy jigsaw

Nov 23, 2016 | Leadership, Strategy

Imagine, your task is to complete a 1000 piece jigsaw puzzle with one of your kids, but the puzzle is an old one, in a bag, so you do not have a picture of the end result to work to.

It is further complicated, as some of the pieces in the body of the picture  are also missing, some are faded beyond recognition, and others have been bent to be ‘force-fitted’ to other pieces that they were not designed to fit.

Not easy.

Building a strategy is not dissimilar.

The jigsaw is a good metaphor, because the steps to solve the jigsaw puzzle are the same as solving the strategy development puzzle.

Have an objective. Start by knowing what the end result should look like, or in the vernacular ‘start with the end in mind’. As they say, ‘without a clear destination, any road will get you there’. Without the picture of the completed jig saw, you are working in the dark.

 Find the foundation pieces. In a jigsaw they are the 4 corner pieces, in a commercial strategy they are your Customer Value Proposition, cash flow management, profit and loss account, and break even point.

Define the limits of activity. These are the sides of your jigsaw, obvious because one side is straight, and defines the edge beyond which there is nothing, but you still have to define the manner  in which they fit together. For your strategy development exercise, the side pieces are determining who your ideal customers are, how will you engage and service them, the manner in which you will be paid, what offer you will deliver them. In other words, your business model.

Functional grouping. The next step in assembling a jigsaw is to group like pieces together, Even without the picture, you can put together all those that seem similar, for example the blue of the sky, green of a field. It will take some experimentation and shuffling to get it right, but slowly, a few pieces will  start to be fitted together. Developing and executing on a strategy is again similar, but the pieces are generally functional. The manufacturing pieces all go together, as do the financial, sales, marketing, and other functional pieces, they fit together, but they also progressively fit as groups into the larger picture.

Build the whole. As the jigsaw picture emerges in front of you, it becomes possible to fit groups of similar pieces together, and you see the ranges of possibilities opening. Those 3 that you found that were blue, and fitted together, are not sky, they are the blue of the house that is emerging on the other side. Again the strategy development process is the same. You will progressively find points where groups of pieces fit together, where sales and marketing merge, the financial reporting systems  are adapted to offer performance metrics on the factory, and you measure customer retention and share of wallet.

Make it scalable. Throughout the construction of the puzzle, once you have found two pieces that fit together, that are a part of the bigger picture, you never take them apart, you move them around until you find others that similarly fit and together make the picture easier to see. In a business this process is more like the development of procedures that are repeatable and scalable. Once you know something works, don’t take the risk of breaking them up and losing a piece, make sure they stay together. Creating standard operating processes for everything that gets done regularly, so it is done the same way every time, is the commercial equivalent. Standard procedures remove variation, creating stability and predictability.

Of course, when you have the picture of the completed jigsaw in front of you, the task is 10 times, perhaps 100 times easier.

Strategy development is exactly the same. Start with the picture, define and progressively build on the foundations, then fill in the holes as you go.

Be prepared to iterate and experiment as you go, just like testing the fit of the jigsaw pieces until you find 2 that are just built for each other, then another 1, then group of several.

Where now for the two big supermarket retailers?

Where now for the two big supermarket retailers?

Oct 10, 2016 | Marketing, retail, Strategy

What a fascinating time to be an observer of FMCG.

The speed of strategic evolution is ramping up, and the risks to the investors in the two retail gorillas must be increasing as a result.

15 years ago FMCG retailing in Australia  was a two horse race. Coles or Woolies, there seemed to be no other options. While there were other options, independent retailers of varying types, particularly in SA and WA, their profile and strategic relevance was generally lower than a dwarf in a game of basketball. They could be annoying, and occasionally useful, but would never change the outcome of a game.

The net result is that Coles and Woolies concentrated on their short term game, with Woolies winning hands down in the shareholder returns stakes until recently. However, in the process, they lost sight of those who made a difference to their strategic numbers as distinct from their immediate financial ones: Customers.

They used their power to belt suppliers, and ignore customers beyond the land grab to put stores in every place where more than a footy team could congregate.

They ignored the opportunity to innovate beyond optimising what was already there, in other words they ensured innovation could not happen, or at least, ensure they carried absolutely no risk in the process.

The world has evolved since then, and panic has set in.

Woolworths botched Hardware in spades, demonstrating an astonishing lack of strategic insight, closed down Thomas Dux after strategically emasculating it just as it was gaining traction, is closing the Metro stores, and now it has been reported over the weekend, that they are considering selling the petrol retailing business. All that and declaring a $1.2 Billion loss for the 2015-6 year.

Meanwhile Coles has renewed itself, and announced a $1.86 billion profit for the year amongst some large write-downs in other parts of the Westfarmers group, particularly worryingly, Target.

Relative newcomer Aldi has upset the comfortable duopoly by grabbing market share and shopper penetration at a rapid and continuing rate. On top of all that you have alternative and web enabled retailers taking an increasing share of mind and attention that will over time convert to sales share. 15 years ago you could not find a Farmers Market, now they seem to be everywhere, and doing great business, and the net retailers seem to be able to actually deliver, sometimes.

For Woolies and Coles to fight each other, and invader Aldi on price makes no sense at all. The logical outcome of a battle on price is that Aldi will win simply because their business model is aligned to accommodate low margins and the gorillas are not, but if they do win that race to the bottom, the real risk is that they will go broke in the process.

No joy there.

So Woolies and Coles are left with where supermarkets started back in the thirties, delivering value to customers.

What an interesting notion for the gorillas, to be competing on the basis of the total value they deliver to customers, not just on price.  They might even have to collaborate in a meaningful way with suppliers, invoking  Joy’s Law, named after  Sun Microsystems co-founder Bill Joy who noted ‘No matter who you are, most of the smartest people work for someone else’.

Clearly, very few of the smartest people work for the gorillas, although there are some more left in their supplier base. However, those suppliers of any real scale who remain locally owned could together just about fill a phone box.

There is plenty of room in the demand chain left for innovation. The first step is to recognise the necessary change from a retail optimised supply chain that implies screwing suppliers for margin in any way you can dream up, while maximising margins at the checkout, to one that puts the consumer front and centre.

A demand chain.

This change requires recognition that the consumer has a reasonably certain amount of money to spend on groceries and household supplies, and will allocate those dollars in the ways  that best suits them and their circumstances.  Economists will call this phenomenon ‘Customer demand”. The name of the game then is to share out those consumer dollars in the best way that serves the whole supply chain based on that actual and latent demand.

Plenty of room for collaboration through the chain, enabling innovation and sustainable profitability. You just have to see the competitive game completely differently. I wonder if the gorillas are capable of that sort of strategic renewal or if I should sell my (very few) shares ASAP.

 

 

Things I do not do to make money from blogging

Things I do not do to make money from blogging

Sep 26, 2016 | Customers, Strategy

StrategyAudit has been going now for quite a long time, almost 1,500 posts to date, averaging between 2 & 3 a week. Every month there are  around 1,000 unique visitors, who consume on average 1.8 posts each visit.

By some standards these are pretty modest numbers, but at least I am reasonably consistent and persistent.

I am asked from time to time how much money I make from the effort, and most are surprised at the answer:

Nada. Zilch. Nothing.

There are so many blogs out there that have no purpose other than to squeeze a bob, I am reluctant to add another. Besides, my purpose is to capture, organise and record my mostly random musings on various  matters of interest, and to make my living providing insight and advice to my clients, not flog stuff to random visitors led to the posts by PPC ads.

It makes me a better confidant and consultant to my clients, as well as sharing a bit of the love around.

I have however, thought about it, and been very tempted from time to time. I thought about it again over the past weekend, and decided against it, again, but in the process, assembled a list of ways I thought I could ‘monetise’ the effort, should I decide to do so, at some point.

Affiliate marketing.

This requires that you either put an ad on your page for the affiliate product, or put in a link that sends a visitor to the sales page directly, such as to the Amazon site. There are many variations on the theme, and there are many products available to sell as an affiliate. Most responsible bloggers restrict their affiliate efforts to products that their specific niche may be interested in. Were I to do it, the sorts of products might be business books and courses, website hosting, and various tools such as autoresponders, and CRM software that automate parts of the digital marketing  ecosystem.

Affiliate marketing is the most common and biggest money spinner for most bloggers. The two biggest affiliate sites are Clickbank and Amazon Associates, but there are many others.  Before you venture into it, consider the sorts of things that you might sell that are consistent with your niche, and that your audience might welcome being able to get from you. Generally it also comes with some level of implied endorsement, so caution is warranted.

Google AdSense. 

Google makes it very easy for you. All you have to do is sign up, they will stick ads on your site, and give you a fee for every click from your site. For a small blogger like me, the amount is pretty small, and Google controls which ads get placed on your site. When you work hard to service a niche, risking them being alienated by ads for the flimsy promise of a few dollars does not make much sense to me.

Sponsored posts and reviews.

Some bloggers get paid to write a post, or review of a sponsors product, presumably favourable, which is the point. There are many books and writers that I am happy to endorse, but I have never taken a buck to do so, as that would compromise my right to absolute independence.  Similarly, paid guest posts are a great way to build a ‘list’ trading on the readership of others. This certainly does work, and I have guest posted a few times on sites relevant to ‘my patch’ but never been paid. (it is also true that nobody has offered to pay me, but don’t tell anyone)

Paid directories.

The double sided nature of the web means that assembling links and content that others might like to use is a service that can be sold. It is easy enough to use a WordPress plugin to enable such a service, but then to my mind if you are to make any useful money from it, marketing the service has to become the focus of the blog. Not interested.

Create a product and flog it.

This is an extremely useful strategy, but contrary to all the hype from those seeking to profit from your efforts by teaching you how, is it very difficult. The 1400 plus StrategyAudit posts give me a significant well to dig into, and clearly I have done a lot of writing work to get there, but it is still not easy, as my several efforts to collate my musings into still unpublished books will attest.

There are many options, give away e-books as lead magnets,  e-books for sale on Amazon and others, hard cover books and guides, courses, membership ‘clubs’, the list goes on, all designed to generate so called ‘passive income’ a really attractive prospect.  All however take effort to create, curate, and market the content on an ongoing basis. One day perhaps.

 

Be an expert.

This is the one thing I do set out to do. By writing and publishing those sometimes random thoughts, I hope to demonstrate rather than just talk about the expertise and experience I have gathered over 40 years of commercial life, and just life itself. The ‘urgers’ around tell me I am just trading time for money, without the option of scaling, and that is true, but it is also comfortable. Perhaps that is the problem, I am genuinely setting out to help others, not just myself into their pockets.

 

Let me know what you think, am I mad??

Classic marketing strategy: Before & After

Classic marketing strategy: Before & After

Sep 16, 2016 | Management, Strategy

The classic ad for weight loss products is to show a before and after. It also works for make-up, home decoration and renovation, and a myriad of other products,

What about yourself, your personal branding?

Works there too, and it is a pretty important product.

Digital media suddenly requires that we become ‘public’ in a way that was unthinkable just a generation ago. We have become our own products, and yet so many of us are reluctant to spend a few bucks to get the best out of what we have.

I have been no different.

For the past decade or so I have been active on various digital platforms and have used the same photo, taken with a good camera, but nevertheless an amateur photo. While it conveyed (at least I thought it did) the sort of ‘gravitas’ that my long career and deep domain knowledge has developed, it was less than optimum.

So, I took my own advice to my clients, and lashed out and had Sam Affridi  take some shots. Sam spent a considerable time with me in conversation, so that when he broke out his gear, he had a clear idea in his mind what would deliver the best result. Of the many shots he took, he selected a small number, all different, that all convey a subtly different message underpinned with the foundation conveying the wisdom that comes from long experience.

You judge for yourself if it was worth a couple of hours and a few dollars.

hero_shot_sydney_strategy_audit-5

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