‘Organic’ investment should be the saviour of (some) retail.

‘Organic’ investment should be the saviour of (some) retail.

Feb 16, 2018 | Customers, Marketing, retail

I went into a retail store last week with a problem, not really expecting to find anyone or anything that remotely met the immediate need I faced.

My web search had revealed many solutions, none of which gave me much confidence for one reason or another, but it had sparked a few ideas.

Lo and behold, the store I went to, (after a bit of web research) an independent store that clearly understood the niche it was servicing, had made a significant ‘organic’ investment.

They had several people who understood my problem, and were able to offer several sensible alternative solutions, one of which was perfect.

When faced with the same or similar challenge again, guess where I am going!

It may not be for a while, but inevitably it will happen again. Meanwhile, guess which store I am touting to my friends and colleagues.

Ironically, it seems that the most successful retailer on the planet, when measured by the standard retail sales/sq foot, and margin/square foot metric is one of the tech disrupters: Apple. They have redefined bricks and mortar retail by adding ‘organic’ sales staff to the best long term branding job ever seen, except perhaps for a couple of the major religions. At the end of 2017. Apple had 499 stores worldwide, and not content to leave well enough alone, are continuously investing and experimenting with formats, layout, branding, and the important ‘organic’ part of this hugely successful bricks and mortar puzzle.

On Wednesday (Feb 14, how appropriate) the Myer CEO was dumped by the board for failing to turn the ship around. The last time I was in a Myer store, admittedly some time ago, as I have no wish to repeat the experience,  there was no staff anywhere to be seen. My intention had been to buy a suit that had been advertised as part of a sale. Good price, good brand, I was in the store to buy, but no sale for Myer, although I did buy a similar suit elsewhere. Firing the CEO will have little impact on my future purchase intentions, without the long term investment in one of the the foundations of successful retail, good people at the customer coal-face, and a management culture that recognises and nurtures those people.

Digital is great, the convenience, price, and range are seductive, but there is no substitute for a person who has deep domain knowledge, has seen the problem before, and who is happy to help, and clearly gets a kick out of doing so. After all that, price does not matter so much, it just needs to be in the ball-park.

Just ask Apple.

Photo credit: Harry Pappas via Flikr

Three metrics by which to measure the value of marketing content.

Three metrics by which to measure the value of marketing content.

Feb 9, 2018 | Communication, Marketing

All marketing content I have ever seen is driven by one, or a combination of three things:

  • Vanity
  • They have something to sell
  • They have something to say.

There is always some overlap, but when you dig deeper, the motivation is always one of the three, and by a vast majority, one of the first two. To be clear, ‘Content’ is everything you post, from a thoughtful and original marketing blog post you wrote, to a research paper published elsewhere, to a cat photo.

However, the most successful content is when you have something to say, an idea you want to articulate and spread, a perspective that throws light on a question.

It becomes pretty easy with some level of objectivity, to put some numbers against these simple measures, even vary the sizes of the ‘bubbles’ to reflect the relative size visually.

When the purpose of a piece of content is to inform, educate, enlighten, and that purpose is met, financial outcomes may follow, but they should not be the objective, they are the outcome of great content.

What is your purpose for your content?

 

 

 

How does the Amazon innovation formula keep replicating?

How does the Amazon innovation formula keep replicating?

Feb 7, 2018 | Change, Governance, Innovation, Strategy

Amazon is an astonishing company for a whole lot of reasons, but there is one that is not front and centre in most conversations I have seen and in which I have been involved. This is the means by which Amazon just keeps on innovating, genuine, disruptive innovations, time after time, at astonishingly small intervals.

Note: This link is to an expanded version of this infographic from Visualcapitalist.com

 

Amazon must have the internal processes that enable it to punch out new businesses, and business models that way a factory stamping machine pumps out widgets.

The biggest impediment to efficiency on a widget machine is the changeover times between widget sizes and internal specifications.

Quick changeover is a hallmark capability sought by manufacturing companies employing Lean thinking, and is a challenging proposition, even in a small, tightly run factory. So how does Amazon achieve it at scale in businesses as complex as it routinely disrupts.

Amazon started by flogging books, or as CEO Jeff Bezos  (apparently) liked to say in the early days, ‘we do not sell books, we make books easy to buy’

The hallmark of a successful lean implementation in a factory is that there are processes that take a prospective order through the whole ‘sales funnel’ to production, delivery, and ongoing relationship building. Lean practitioners call it the ‘Value Stream,’ the set of activities required to deliver value to the customer. These are all done the same way, every time.

The paradox is that this process stability is the foundation of innovation, you need a stable base in order to trial ideas at speed, then scale the ones that work. This is an idea sometimes hard to communicate but as fundamental as it gets to successful innovation and continuous improvement.

Amazon appears to have achieved this at scale, in a service business, typically harder than a manufacturing business to get traction.

How?

Amazon is organised just like a whole collection of independent business units, all cross fertilising, and cross pollinating each other, using (I suspect) what Ray Dalio would term ‘Radical Transparency‘.

The secret seems twofold:

  • The internal technology that Amazon uses across all its activities, is modular and scaleable.  It is in effect the machine enabling the manufacturing of Amazon widgets. This enables new businesses to be added the way you would add another coloured widget to the sales inventory of a manufacturing business. I suspect the scalability will be the source of the next round of disruptions coming to the fast moving goods retailers.
  • Each part of the business multiplies the customer impact of the ones next door, a ‘flywheel’ effect. Digital technology enables the network or ‘Flywheel’ effect to build momentum. The more eyeballs you have on one side of the network equation, the greater the value to the other side. This effect builds scale very efficiently once you have reached a tipping point, reflecting Metcalf’s law which states that the value of a network increases with the number of nodes in the network.  Amazon has created their own version of Metcalfe’s law amongst their own offerings, one product or service leading to the one next door.

Bezos has achieved something that I think will be studied for decades, and it is clear he is not stopping any time soon. The only thing that appears likely to slow the momentum is regulatory intervention. Amazon has 44% of  on line retail sales in the US, 35% of global cloud services, a market growing at 40% a year,  where AWS is bigger than the next 5 biggest combined. The list goes on. The point is, Amazon is chewing up competition everywhere, yet pays very little tax, $1.4 billion since 2008, while Wal-Mart has paid $64 billion over the same period, so in effect, Wal-mart is subsidising its greatest threat to eat its lunch. Outcomes and numbers like that will have to prod regulators into some sort of action, before Amazon (and to be fair, Facebook and Google are very similar, even more dominating in their markets)  is in a position of power so dominant that regulators cannot stop them.

Amazon, a product of the 21st century is simply outrunning the capacity of the institutions and public mind set of the 20th century by reshaping our world around us, and with our consent by unthinking compliance. They are being joined in this exercise by Google, Facebook,  Alibaba Tencent, and a few other aspirants like Netfliks, to dominate the way we think, behave and work.

Header photo Jeff Bezos circa 1998

 

Update June 2018.

Amazon bought on line pharmacist ‘Pillpack’  last week for almost a billion dollars, saw its own share price jump double what they paid at the same time industry incumbents collectively lost 10% market valuation. Jeff Bezos has signalled his interest in pharmacy in various ways for years, so this should not come as a surprise, but it seems to have done so, as the threat of Amazon had clearly not been priced into the market valuations of the incumbents.

The Pharmacy guild in Australia, one of the most powerful lobby groups in the country, should be asking themselves if they are next for the chopper.

Update August 2022.Amazon last month paid $A5.6 billion for subscription health service One-Health, which gives them a network of doctors surgeries around the US. If ever there was a huge industry mired in its own importance, removed from the needs of those it is supposed to service, and ripe for disruption, it is the US health care industry. It will be a tough nut to crack, others have tried and failed, but Amazon has the street-cred to make it happen. The ‘flywheel’ at work again.

Your ‘enemy’ makes you stronger.

Your ‘enemy’ makes you stronger.

Feb 2, 2018 | Marketing, Strategy

Strategy is as much about what you will not do as it is about what you will do, perhaps even more so, as it forces difficult choices.

Equally, the old marketing buzz-word ‘positioning’ which was defined in my university days 45 years ago as ‘how your customers see you’ benefits hugely from the addition of a clear statement of what you are not, what you will  not do, and even calling out the ‘enemy’.

When you define who is your enemy, those who feel the same way as you will find it very hard to do anything but support you, it rallies support to your cause.

This means that you can never create a product for everyone, the more defined you are the better, as you will then have more potential for rallying groups of those who are against what it is you are against.

Where would Mohamed Ali be without Joe Frazier?

Where would Apple be without Microsoft?

Would Neil Armstrong have taken a moon walk in 1969 without the Russians?

Mr. Churchill would have remained a backbencher without Herr  Hitler

Would Coles and Woolworths be the most successful FMCG retailers (as measured by domestic market share) in the world without each other?

In the back streets of Ashfield in Sydney there are two small grocery stores, almost opposite each other, fighting to the death for the last 20 years, and in the process keeping Woolies and Coles at bay, at least in the very local area they service.

Respect your enemy, and learn from them, they make you stronger.

Photo credit MrT HK via Flikr

A brand is a red highlighter in your brain.

A brand is a red highlighter in your brain.

Jan 19, 2018 | Branding, Marketing

Brands have a number of useful commercial purposes. They can build margins, gain distribution, provide a base for expansion, and a whole lot more, but that is all from the perspective of the brand owner.

From the opposite perspective, that of the customer, and potential customer, a brand also has a whole lot of purposes, none of which have anything at all to do directly with your prosperity.

A brand is the end result of all the impressions and emotions individuals have experienced while coming into contact with the thing to which the ‘brand’ is attached.

Our individual responses will be marginally different, but as a group, we label those collective experiences  a ‘brand’

Our brains are just massively complex parallel computers, something the boffins in Silicon Valley are trying valiantly to replicate.  In effect, we absorb and process all sorts of things at the one time, mashing them all up to something that gets ‘remembered’ and which our brains can retrieve automatically when presented with the ‘trigger’

This is a combination of rational and emotional inputs that has its roots in evolutionary biology.  It enables all the things going on around us to be sorted quickly and efficiently without resorting to consciously making a series of choices. This applies as much to the choice of yogurt on the supermarket shelf as it does to the rustle in the bushes that last time resulted in your sidekick caveman being a tigers breakfast. You do not forget that, but at the critical point, when you hear the rustle again, your brain registers the rustle, and auto responses kicks in, and you get the hell out of Dodge.

There is a lot of bullshit and hyperbole around the notion of ‘brand’. However, like many things in life, we complicate it past the point of common sense. The challenge then is to dig sufficiently deeply to understand and articulate the trigger/response mechanism in the minds of those we most want to influence.

It sounds a bit creepy, but is just the way we respond to our environment.