marketing Archives - Aide Memoire

January 10, 2011

Innovation – does it make sense for business?

Every business book I pick up nowadays seems to accept as a fundamental premise that innovation is a good thing and that it should be pursued relentlessly. But I’ve been wondering about that particular premise and under what circumstances it might (or might not) be true.

Innovation provides us with a dilemma in business. Don’t do it at all and the business will probably die over time. Or others will innovate and leapfrog the business – this is what has happened to Australian retailers (like Gerry Harvey) who have ignored their online channel. Do it too early, too late or too often and it could also damage the business.

A business is setup to measure, monitor and reward people on the basis of performing well in the existing business model, and few businesses are setup to simultaneously manage a disruptive new business model.

Then there is the challenge of innovating while continuing to run a successful business. After all, if the current business is not broken, why would people bother to change? This is a big problem that I have seen many times. Once the need to change is obvious it is often too late and market disruptors are already in play. In many organisations the pressure on getting the most out of the current business model leaves little spare capacity for innovation.

This dilemma of managing both the existing business and innovation at the same time is the great challenge for business leaders of our day. We can see ample evidence of this with the Australian retail industry. Many of the big retailers rested secure in their ‘knowledge’ that online had failed in the dot-com bust of 2000. They ignored the online channel and competitors from overseas have gradually grabbed market share to the point where Australia’s retailers are now crying out for government assistance.

It is interesting to see that, in contrast to the head-in-the-sand approach of many Australian retailers, shopping mall giant Westfield has pursued a diversification into online shopping as well as focusing on their core bricks-and-mortar business. [Disclosure: I used to work for Westfield as part of the digital team.] Thus they have balanced their successful existing business model with innovation.

In the places where I have worked successfully on new products there has been a happy confluence of things that made it possible. Among them were:

substantial top-down support from C-level team, coupled with time to educate executives about the idea/product and it’s benefits and risks to the business
an active and responsive project owner at executive level who can protect the team and manage upwards effectively
adequate resources to get the job done
appropriate oversight and governance (but not too much)
freedom to get it wrong in the short run, together with focus on getting it right in the long run
clear goals, objectives and milestones
adoption of agile development methods for software
good project management together with adequate reporting to enable stakeholders to gauge progress
a small tight-knit team who have a clear sense of mission and purpose

Whenever these things have come together for an innovation project it has been successful. Where these are missing the success has been much more hit and miss. That is not to say that an innovation cannot be brought to market without these things, but it is much more fraught with angst and is much harder for all concerned.

Business leaders really need to think about what internal barriers to innovation exist in their organisations and how to create safe nests for innovation to incubate.

November 11, 2010

The future of shopping is social

These are some thoughts that I presented at the AMP Social Media Cafe in Sydney on 11 November 2010, the slides and references follow below.

The future of shopping is social. But that is nothing new – shopping has always been social. The difference is that now we are seeing social interaction on a hyperconnected scale and the emergence of new competitors. It is still shopping, but social shopping is on steroids.

Firstly I want to give you a sense of the broader shopping landscape in the digital age.

There is a growing body of empirical research on retail effectiveness and the statistics are quite scary. As Sorenson notes “The shopper comes to the store to buy things. The retailer creates stores to sell things. Manufacturers create products to sell. Yet most of the shopper’s time in the store is spent not buying.” And he notes further that “a single item in a store might attract only 300 seconds [of attention] from all shoppers in an entire week, about five minutes [in total]”.

This means that not only are shopping centres fighting to get and maintain traffic, but also that the traffic is not necessarily being well used by the retailers to sell products effectively. And this leaves each of them vulnerable to competition.

Yet the work we have been doing in the shopping business over the years can summarised quite nicely by this diagram by Robert Kozimets. And the model works equally well for retailers or for shopping malls. We have been building spaces for brands that cluster around either the transactional (think supermarkets) or the iconic (think of one of the new high fashion shopping centres).

But all of this is happening in a broader context. The economy is changing around us. We are moving into what I have come to call the engagement economy. But there are so many competitors how for a share of that attention ( as well as for a share of wallet) that it is important to be able to grab attention and then to drive ongoing engagement.

We’ve had social shopping for a long time – since commerce began. But the nature of competitors is changing. Before it was the other mall or the retailer down the road that we had to worry about. Now competitors include farmers’ markets in grocery and fresh food; virtual goods like digital video and music from iTunes; large online aggregators like Amazon (who perform many of the functions of a department store and are often cheaper); and new entrants such as online shopping clubs (of which more later).

This competitive landscape has evolved very fast – just look at this timeline from Sean Carton to see how fast. Two and a half thousand years ago we were writing on clay tablets and in the last decade the digital revolution has changed our lives. Many of us cannot imagine a world without the internet anymore.

Also media has been changed by this digital revolution too. Marketing and advertising are being reborn in this new digital world; while many newspapers around the globe cling tenuously to existence. This diagram by David Armano illustrates this phenomenon very well. He nicely illustrates the fact that we are moving from lower engagement traditional media to higher engagement online social media. After all not many people check their newspaper first thing in the morning, but some recent research indicated that many people check Facebook (or Twitter) before they go to the loo or brush their teeth in the morning.

And the tools of the digital revolution – web 2.0, social media, social networking and mobile devices – have changed the way people interact with each other and with brands.

Facebook is probably the best example of this change (although there are other similar services such as Twitter that are gaining ground). Facebook is important because it is changing what real people are doing with real time and attention every day all around the world.

But now hold that thought for a little while as we consider some other trends.

Let’s have a brief look at the evolution of shopping in the digital age.

There are a number of trends here:

Rise of mobile devices
Word of mouth via social networks
Social shopping
Collaborative shopping
Geo-social services (location based)
Putting geo-social into perspective

Social and collaborative shopping is reshaping the power relations between consumers and sellers. New intermediaries are arising, ones who aggregate consumer demand via shopping clubs. The fight for better value by consumers is shifting onto new territory. And this shift will begin to manifest as changes in share of wallet for traditional retail channels.

The growing role of mobile devices also means that the shopping dynamic is changing. Consumers can share realtime information and collaborate while they are on the move. In the past we had to connect online via fixed PCs,but now the devices are always on and in our pockets and handbags.

Sites like Facebook are picking up on this trend with their adoption of Places – a geo-social application that enables users to share their physical location with friends (there are other contenders in the geo-social space too). And now the interesting thing is that we are seeing the merging of online and offline social activities with shopping and the integration of micropayments. For example Facebook’s relatively recent addition of Buxter to enable peer to peer payments between friends.

It is very early days yet. We do not know where these trends are heading in particular. However, it is clear that geo-social applications have the potential to close the loop between online social networks and real world activity, especially when these are connected by online micropayment capabilities.

What we do know is that consumers are:

Going mobile
Sharing information via social networks
Collaborating via social networks
Shopping for virtual goods
Starting to use augmented reality

Future of shopping is social

View more presentations from Kate Carruthers.

References
Sorensen, Herb, Inside the mind of the shopper: the science of retailing, Safari Tech Books (ISBN: 0131366130), 2009
Lowrey, Tina, Brick & Mortar Shopping in the 21st Century (ISBN: 9781410618252), Psychology Press, 2007
Report: Consumer Shopping Experiences, Preferences, and Behaviors, Oct 2010, Art Technology Group, Inc. , http://www.atg.com/resource-library/white-papers/atg-online-shopping-study.pdf

November 5, 2010

Big Banks: brands, emotion and reality

It has been fascinating to watch the consumer and media response to the recent increase of interest rates above the Reserve Bank rate by the Commonwealth Bank.

Many have expressed their opinion that the Commonwealth Bank is destroying its brand by such a callous action. But this view ignores the market reality in Australia that organisations that have extreme market power – such as the ‘big four banks‘ – are not subject to the normal realities of branding and business.

Due to their market power and the difficulty of switching to other providers the ‘big four’ Australian banks are in a unique ‘quadropoly‘ position. They are seen as big organisations who are safe for consumers. And, most importantly, the cost of switching from one to another is very high.

Sometimes the switching cost is an upfront fee to move a loan from one bank to another, but often the switching cost is the sheer effort of transferring all of the automatic payments to another bank.

The other issue is the incumbency effect. For many of us, we still bank with the organisation that gave us our first money box as a small child. The Commonwealth Bank benefits strongly from this effect (many of its customers started with a ‘Dollarmite‘ account in primary school).

All of this means that the big banks are different from other companies. Most companies exist in an open market, without large numbers of long-term incumbent customers, and the switching costs are not very high in most cases. Bank brands are almost irrelevant for the big banks. I suspect that for the Commonwealth Bank – and any of the others that follow suit – this is a mere blip on their brand and that their brand will suffer little (if any) long term damage.

I think that this video sums up the position of the Australian banks (HT: @TRON_Lord):

October 11, 2010

Presenting with power means PowerPoint must not be a crutch

We are currently planning the next Social Innovation BarCamp for 6 Nov 2010 in Sydney and I’ve just written a post about it called 4 Principles and 2 Laws of Social Innovation BarCamp.

Thinking about the state of conferences over the past few years I have become enamoured of unconferences. In the case of Social Innovation BarCamp, the sessions are facilitated conversations. That is, there is no speaker at the front of a room in a traditional sense, nor is there an audience per se.

Instead there is a facilitator or session leader who frames and encourages a conversation about the topic that they have proposed. Participants come along ready to get involved and not just sit back as an audience.

This is similar to the process Dave Winer outlines as used at the well-known BloggerCon and updates it here:

“…there is no audience, there are no speakers. There is a discussion leader, a person responsible for the flow of the discussion.”

I have concluded that the old conference model with experts out front and a passive audience is no longer sufficient to grapple with the big ideas that we must confront in business and society today. The old conference model harnesses only a small fraction of the brainpower, passion and intelligence in the room.

Further, I have come to realise that many of us are not focused on communication any longer . Instead we tend to focus on the presentation itself. This is because the presentation tools we use – things like PowerPoint, Keynote or Prezi – tend to conform our communications to their own patterns.

I realised how much of a communications crutch that PowerPoint had become for me while delivering a talk at Parliament House earlier in the year. At the last minute I discovered that it was not possible to use my carefully prepared PowerPoint slides. It was a cathartic experience in many ways. It also led me to define the following law for the next Social Innovation BarCamp:

“The Law of No PowerPoint, which states simply, we know you’re used to the crutch of PowerPoint (or Keynote or Prezi, etc) but you need to leave it behind for the day. Instead use other forms of communication (perhaps draw a poster or write on a whiteboard?) to help get your message across.”
Source: Kate Carruthers

It’s going to be interesting to see what happens without the comfort of a data projector and slideshow. Now is as good a time as any to re-discover the joys of communication without relying on technology to mediate our ideas.

September 28, 2010

Does your company have a “message gap” problem?

Burson-Marsteller has just realased a study on Message Gap Analysis where they investigate the cut through of corporate messaging to mainstream media.

Their research indicates some scary results:

“… a 48% gap between the messages a company communicates and the message conveyed by the media. The study also found that the gap is even bigger between a company’s message and bloggers’ messages (69%). ”
Source: Burson-Marsteller

Some other key insights from the study include:

1. “Aspirational” branding language needs to be supported by concrete facts and messages or it will be ignored. Messages that tied back to the company’s core values and identity were more successful.
2. Tell the whole story or the media will tell it for you. While this is age-old advice, companies that focused only on their own message paid the price by having their message become relatively more diluted in the broader story.
3. Avoid using jargon, as the mainstream media and bloggers either ignore it or must create their own explanation of the potentially confusing company message. Make communications as accessible as possible.
4. Press releases are being reprinted extensively, which affects the strategy for the communications professional. Communicators should realise that the audience for press releases is no longer just the media, and their language should be adapted for consumers, financial analysts, and other stakeholders, as well as media.
5. Bloggers are more likely to make comparisons to competitors and to speculate about an organisations intentions and strategy. Because bloggers are more likely to incorporate their opinions and include messages from multiple sources, companies should consider developing messaging that is more targeted for a blogger’s needs.
via News – Public Relations Institute of Australia.

It is interesting to ask how we can apply these insights into our corporate messaging on an everyday basis. How much of our corporate messaging is actually getting through? How much of it is jargon ridden waste?

Time to start looking seriously at our language and the way we present our organisations to the world. It’s time to fight corporate gobbledegook and jargon and to start putting a human face on our organisations.

September 27, 2010

Making digital marketing work

Much of the digital marketing I see is a bit tragic. Tragic for the businesses who are investing hard won income into campaigns that might not deliver a return on investment.

Some of it seems like self-indulgent twaddle done by creative types for their own amusement. Other times it seems that the marketing manager has signed off on a campaign that they like and suits their needs rather than think for two minutes about the consumer.

Often it is difficult to work out who it is aimed at or what the message actually is. Then I start to question how valid it is for some businesses to create their own social networks or even their own Facebook pages for various brands or products.

It seems that we sometimes forget the basics when we fall in love with new technology. Also the new technology associated with digital marketing means that there is a lot of data available.

Yet many organisations are still grappling with how to filter, interpret and manage the firehose of data gushing their way from these digital marketing activities.

Just because we can do certain things with technology is not necessarily a reason to do them. The fundamentals of marketing still apply!

Who is the target consumer? Think about marketing to a single person or series of people, rather than assuming a huge old-fashioned style audience as a blob.
Where can I find these kinds of people?
Why is my product relevant to them?
How can I explain it to them effectively?
How can we translate knowledge into action by consumers?
How we can we measure effectiveness of our digital marketing activities?

The four foundations for success in digital marketing activities are:

Start with understanding the customer – effective research is the cornerstone.
Set an overall strategy and allow it to be the guide.
Chunk the strategy up into campaign elements for tactical execution.
Define the metrics at the start and then track them relentlessly – use them to work through the four steps to recalibrate activity (the day of set and forget marketing is over).

The other critical element is to realise is that consumers are changing. There ways and places of consuming media are shifting. It is no longer safe to assume that traditional media solutions will continue to work as they always have in the past. For instance we are seeing a continued decline in newspaper circulation.

Digital marketing is not just about buying banner ads and setting up a Facebook page. It is about creating real value for customers, shareholders and other stakeholders.

September 15, 2010

A new dimension to analysis: Time to include a spiritual angle?

In business school we all learned to use the same analytical tools – S.W.O.T., P.E.S.T., P.E.S.T.E.L., BCG Growth Share Analysis, Competitor Analysis, Porter’s 5 Forces, etc.

But at dinner the other night, while chatting to some “kidults” (as they were introduced by their parents), we discussed the P.E.S.T.E.L. analysis.

This stands for an analysis of an issue in terms of the following factors:

Political
Economic
Social
Technological
Environmental
Legal

It was a joking suggestion from one of the my dinner partners that this analysis was missing an element that got me thinking. This traditional business school analytical tool is typical of US influenced management thinking. It is entirely rational. It does not incoroporate any other perspectives.

I started to wonder, what happens if we add another element to this kind of analysis? What happens if the last lens becomes:

Spiritual?

Not sure about the answer on this. But I am very curious as to how the answers change if we move from a P.E.S.T.E.L. analysis to a P.E.S.T.E.L.S. analysis approach?

September 12, 2010

Rethinking organisations: the digital revolution, social and convergence

An interesting question came up last Friday in a discussion with a group of Marketing and Communications folks from McDonald’s. It was about how social media might be situated and used differently depending upon whether you approached it from either a Marketing or a Communications team perspective. Also the question of who should “own” social media within the organisation was raised.

These are good questions and they got me thinking.

One of the things I often speak about is how technology is converging. How computers, televisions, mobile phones and broadband are converging together to give us new kinds of devices that call into being new kinds of content. As a result we are seeing the mashing up of media from diverse sources and its remixing. The much loved Hitler Downfall Parodies are a great example of this.

The convergence of technology is also being influenced by new kinds of software. Social software that is so easy to use that non-technical people can create and use it without needing to track down geek assistance. Software like Facebook and Flickr are great examples of this trend.

However, another trend associated with this change in technology is the skills and capabilities that businesses need to thrive in this new environment.

In the past, under bureaucratic systems that arose during the last two hundred years in the industrial revolution, specialised silos were created to enable businesses to scale effectively.

Bureaucracy has become a value laden term these days and it is generally used in a negative sense. However, bureaucracy was an essential way to organise people on a grand scale in an age before realtime digital communications. But now that there is almost ubiquitous realtime digital communications we are undergoing a digital revolution.

Our business structures, skills and organisation have not yet adapted to this new world. I can see the need for convergence of skills and activities to enable businesses to take advantage of the digital revolution. Thus I’m starting to see the need for a convergence of many roles and functions. We need to start thinking about how to totally remap the organisation to integrate digital functions effectively.

For example, in the areas of marketing and communications the boundaries start to blur already. The real task of these areas is to communicate with people, either inside our outside of the organisation. And, increasingly, their role is to converse and collaborate with their stakeholders. These functions are merging towards creation of collaborative communities as the audience morphs into participants rather than passive recipients.

The kinds of ideas that need to inform our thinking about how to reshape our organisations for the digital revolution include:

Networks: both human and technology networks are key, working out how to enable each of these inside and outside of the organisation is critical.
Amplification: understanding how these new human and technology networks amplify messages is imperative; defining cultural practices that embrace this idea is important.
Connected: determining how to manage people and business in an age where everything is connected – both people and things – as is how to use this power for business and social good.
Personal: the blurring of the boundaries between business and personal or between private and public is already occurring. We need to develop cultural and organisational practices that understand and enable us to manage this blurring of boundaries.
Social: human beings are social animals. The Taylorist world view that has coloured much management thinking in the twentieth century needs to change and reflect this truth. Humans are not interchangeable widgets and we are not machines. It is time business leaders and structures change to reflect the social nature of human and business interactions.

We need to find ways to move away from hierarchy and silos. We need to find ways to move towards meshes and webs of relationships. These are more like the way human beings relate in nature anyway. The entire bureaucratic venture has been an unnatural way of being for humans. Humans need to find a way to make business more human and less machine like.

It seems that social computing and hardware convergence could be the catalyst for us to change our ways of running businesses so that they better meet human needs and map to human social needs, while continuing to make profits.

March 3, 2010

Engagement marketing is about people

The best place to see engagement marketing in action is in a small town that is not far from a large shopping centre.

Here the shopkeepers know that if they do not engage with you then you will simply jump in the car and head off to the choices offered by the big shopping mall just down the road.

At my local store the shopkeeper always greets me by name and keeps special things aside for me. It makes the choice of dropping by to her local store simple. Because she is (a) friendly and helpful; and (b) goes the extra mile for me and I feel the desire to keep coming back.

There’s nothing like the personal connection. And that is all that engagement marketing really is – connecting with customers so they will choose you above alternatives.

I go back to my local shop because I really enjoy the personalised experience (it’s probably a bit more expensive than the mall) – but my local shopkeeper knows me and my family, she holds items for us and get things in specially.

Marketing does not get much better than this. My whole neighbourhood talks about how good we feel going into that local shop. Just popping in the pick up a newspaper can put a smile on my face for a whole day.