Mar 4, 2014 | Customers, Innovation, Marketing, Strategy
Innovation is a process, mostly it is managed for better or worse with some sort of stage-gate process.
Sensitive project management of innovation is vital, the context of the project, the culture, management engagement, business model, the source of resources used, funding, and all the rest are critically important, and blend into a system.
However, one vital consideration often under-considered, or missed, in development projects is the evolution of the Customer Value Proposition.
Concentrating on the product, its specifications, the technology, operational considerations, design and engineering, and all the rest are vital, but ultimately, it is the customer who puts their hand in their pocket, and allocates, or otherwise, their scarce resources to your products. They will only make that choice in your favour when it is in their interests to do so.
Why is it then that the foundations of the value proposition, the identification, characteristics, interaction, and measurement of the drivers that will deliver customer value and therefore sales are often ignored, or glossed over? In my experience, it is usually because the developers fall in love with their products and designs, not really considering them from the customer perspective.
The value proposition usually evolves during the design and pilot process, but only if it is allowed to.
Sensibly, there is a second stage gate process, one that is parallel to the product development, the value development process which critically translates the product features into customer value as they evolve.
A test of the success of the value development process is the depth of the debate about price. A successful VDP will preclude almost any debate, and certainly the most often used determinants of prices, being cost and competitor activity, will be relegated to the bottom of the pile of considerations.
Feb 27, 2014 | Leadership, Management, Strategy
Some things we can predict with great accuracy, simply because we can quantify almost all the variables that come into play. The path a bullet will follow when fired, how long it will take a brick to hit the ground when dropped, and how much fuel it will take to do 10 laps of Mount Panorama racetrack flat out.
It is when you start to introduce unquantified variables, as distinct from unquantifiable variables, that things get exciting. A strong gust of wind will change the trajectory of a bullet, and a prang on Skyline and subsequent braking and weaving will alter fuel consumption, but the impact of both can be reasonably accurately forecast if they are included in the variables considered.
It is the random events that really cause trouble, the kangaroo that jumps out half way down Conrod, the quick-handed apprentice that reacts to the brick heading for your toes and does a diving catch, these things cannot be reasonably forecast, are random events, but have a profound impact on the outcome.
The point of the story is to again confirm the old adage that strategy rarely survives the first contact with the enemy, so the more agile you can make your reaction to the unpredicted and just plain random, the more likely you are to come out on top.
Feb 24, 2014 | Branding, Governance, Marketing, Strategy
There is a lot to learn from the SPC imbroglio, the feds must be delighted to have got away with their IR/”no more handouts” agenda intact as the Victorian government bailed out not only SPC, but their federal colleagues, albeit not a good look for the state version and federal version of the same party to take a different position on a matter that both are saying is fundamental to their philosophy.
But what can we marketers take away?
- Every conversation has many sides. Jan Carlzons great “Moments of Truth” idea from the 80’s hold true in the C21, but the moments have been multiplied by the proliferation of connected devices. Not only do we need to have to have those we used to call “front line” troops on the hymn-sheet, but we have to have everyone on the sheet, as the conversation is now much wider, and almost totally uncontrollable, unlike the past. Best you can do now is have a credible seat at the table. I wonder would Sharman Stone have had the same impact 25 years ago as she has had over the last few weeks? I suspect not. Her message would have been the same, but her ability to access consumers, interest and advocate groups, and the public would not. She may have got a sound bite on the evening news, perhaps a radio interview, and the local paper would have run it indefinitely, but would the rest of us have been aware of the Gaffs the PM made about the workers entitlement, the connections made with the car industry, the Cadburys decision and Tassal decisions? No.
- We do care about local industry. SPC sales soared after the publicity, Australians do care that local industry is being decimated, but not enough to buy more cars. Is the cause of agriculture is closer to our national psyche than cars? Perhaps the cost of a car Vs the cost of a can of peaches had something to do with it. It will be interesting to observe how a renowned marketer like Coke extends the effect. I doubt they will be able to, as they will just revert to the tried and true, the plan, and what has gone before, when the context has changed completely. Having the cultural agility to completely change the message is usually beyond hierarchical organisations. I would radically alter and expand SPC consumer communications to keep the mood alive, and the retailers on side.
- Marketing needs to be agile, and connected. Following the above point, the production of annual marketing plans that feed into strategic plans, with budgets, accountabilities, media plans, and all the rest remains a vital task, with the huge caveat that things move so fast these days, that marketers need to be prepared to respond instantly to stuff that emerges. That single twitter post highlighting a product failure cannot be left alone, you may choose to do nothing, but ignoring it is not an option, you risk the classic “United breaks guitars” response.
- Marketing is the driver of everything. Marketing used to be just another functional responsibility, usually seen as a poor cousin to operations and finance. No more. Those enterprises that continue to see Marketing as the producer of the ads and promotional material, diviner of new products, and artistes of the long lunch rather than an idea that is the responsibility of everyone to be a part of, the driver of perceptions, and the voice of the market inside the enterprise will not be long in the business.
How does your place rate?
Feb 7, 2014 | Change, Leadership, Management, Operations, Strategy
Scaleable.
My world is SME’s, helping them to be more profitable, more commercially sustainable, more accountable, by being focused on customers and their own processes and priorities. The outcome is that most successfully remain SME’s, avoiding the many death traps that lurk, and a few make the leap and become SLE’s, or sustainable larger enterprises.
Watching this evolution occur over many years, different in the detail every time, but following a few core principals, there is one principal, “StrategyAudit’s second law” (the first is “Look after the cash, and the cash will look after you”) that keeps coming up, time and time again.
The second law is “Solutions to problems are specific, and generally do not scale, but principals by which decisions are made can be successfully scaled”
Building scalability into the solutions of problems is about as fundamental lesson in growing a small business into a larger one that I have seen.
Principals scale, single solutions usually do not.
Feb 5, 2014 | Branding, Leadership, Marketing, Strategy
SPC factory circa 1925
If ever you needed convincing that investing for the long haul in a brand was worth the time, energy, risk, and money, there is evidence aplenty in the remnants of the Australian food industry.
It has been reported that the Peters Ice Cream brand is on the market, again, and being scrutinised by the losers in the WCB takeover by Canadian Saputo, Bega Cheese and Murray Goulbourn.
This makes absolute sense as ice cream is a great product in which to store the value of that highly perishable raw material, Milk, almost irrespective of its consumer profit margins. Way, way better than cheese and milk powder, those other value stores currently favoured by Bega and MG
Peters was clearly going to be for sale at some point, having been bought and sold many times over the last 25 years. It is currently owned by a Private equity group, who bought it from Nestle, who bought it from National Foods, (themselves later flogged off to Japanese brewer Kirin) who bought it from Pacific Dunlop, who bought it from Adsteam, and so on. A venerable Australian company started in 1907 by Fred Peters, but passed around like a like a turd in a game of corporate pass-the-parcel.
Through all that ownership turmoil, restructures, factory rationalisation, re-engineering, asset stripping, and a whole bunch of other cliches, the brand still holds a very significant place in the billion dollar Australian ice cream/ice confection market.
Similarly, while SPC the company goes to the undertaker, SPC the brand now owned by Coke in Europe has a significant place in European food markets based on the heritage of canned fruit from the Shepparton region. From almost the formation of the company in 1917 to 1973 when Britains entry into the EU locked out agricultural imports, SPC built a brand that 35 years later is still worth a marketer the calibre of Coke resurrecting. Now of course, SPC branded product in Europe is grown and packed in Spain and North Africa.
If Australia is to be a serious player in the provision of sustainable long term food supplies for ourselves and export, we desperately need to recognise the role of branded value adding. We need the vision and commitment, emotional, technical, managerial and financial to stop just flogging the tradeable commodity, as we will never be the least cost producer, the only ones who survive in a commodity race to the bottom of the price scale.
Jan 31, 2014 | Change, Governance, Leadership, Strategy
Once the dust has settled, political mud-slinging completed, recriminations done, and blame been allocated over yesterdays decision by the Government not to support SPC Ardmona to the tune of $25 million, which would have triggered another $25 mill from the Victorian government, perhaps we can learn something.
Little of this will be of much value to those workers who will have their lives badly disrupted, but the rest of us had better learn, or it will just be repeated, again and again. SPC has little to do with car making, oil refining, mineral or wool processing, but the seeds of destruction of all these industries stem from similar beginnings.
That seed is the productivity of the capital employed in these activities. Australia over a long period has ensured that returns on capital employed in manufacturing in this country are insufficient to be competitive with alternative locations for that investment. This has been starkly highlighted over the last 20 years as supply chains for just about everything have globalised, and investment in everything except mining where we had (note the past tense) genuine competitive advantages has dried up.
It is not the level of wages, power of unions, concentration of retail, high $A, or any other of the myriad of contributing factors on their own. It is the combination of all these factors over the long haul, and our collective failure to see the long term writing on the wall, and respond to it sensibly, in a measured manner that survives political and economic cycles that is to blame.
Were I given that mystical magic wand, able to shape things to come, unfortunately unable to change the past, here is the list I would have, in no particular order:
- Remove the duplication, ambiguity, and situational insensitivity from our public decision making processes. Big ask here, as it involves substantial reform to our the three levels of government, and all their supplicants and rent seekers.
- Inculcate in both management and managed in the private sector a recognition that the short term lasts, well, only a short time, but poor decisions taken to ease the short term discomfort factor will haunt you for the long term. The longer poor, short term accommodations exist, the harder and more painful they are to unwind, as eventually they will need to be. Lets all grow some backbone!
- Have our political leaders recognise that despite many differences in detail, in the end, we are all in the same boat, and we sink or swim together. It seems that the job of oppositions is to oppose, as articulated by the current PM when opposition leader, and to hell with recognising that not all the best ideas come from your own side of the house. By contrast to the opposition, it seems the job of government is to stay in government, by any means, for its own sake, not for what can be achieved for all of us.
- Add some intellectual depth to the public debate. Currently economic and political debate in this country is conducted on the basis of 2 minute, scripted sound bites, superficial and confected “interviews” that skirt difficult questions, which are in any event, unanswered should the interviewer stray, and with a focus on trivial and emotional, albeit attention grabbing events.
- Develop a sense of what the country stands for, just what that means in terms of the allocation of available resources, and how success is measured. If Australia was a company, it just may resemble a strategic plan supported by the programs, priorities, performance measurement and learning feedback loops that manage the implementation.
A short list with some pretty big “asks” but I remain an optimist, although resigned to being both poor, and a voice in the wilderness.
PS. This article by Robert Gottliebsen subsequent to this post is a very worthwhile addition. If SPC can be saved, and it should be by means other than subsidising the continuance of bad practices if possible, then this is a very useful roadmap and precedent for the necessary changes.
