Avoiding "Surprises"

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Early Warning

Early Warning

Had these experienced commanders and executives (see the prior post, "Surprise") known what was coming, they could have redeployed assets and avoided catastrophic “surprises.” Today, of course, we can see that the available information provided sufficient early warning of clear threats - hindsight is 20/20.

But why is it these leaders couldn't see the signs at the time?

In retailing, it is not as if amazon.com and its offshoots were unknowns by the late 1990s. However, the prevailing view of traditional retailers was that marketplace success required opening as many stores as possible to both gain share and blunt competition. These built vast organization structures around site location, logistics, inventory, HR and downstream (promotional) marketing. And the most successful developed sophisticated information systems that reported operational performance variation in increasingly exacting detail. Have a hot selling item in one location? Easy - find excess inventory and load it on the next shipment. Poor performance in another? Schedule a performance review with store management to isolate and fix the root cause.

What they didn't have was an information system to warn of emerging strategic threats. No doubt these executives received information about the impact of Internet business models. But, unlike the internal information, it was unstructured, arriving initially in dribs and drabs. By the time clear trends emerged, the successful early Internet movers had learned from their mistakes and established defensible niches.

Caught in the daily exigencies of running an enterprise, these leaders simply weren't programmed to evaluate the nature of the available early warning intelligence within the context of their brick-and-mortar operational mindset and information expectations. And, eventually, when they did assess the threat, they were constrained by the amount of investments required to overcome the first-mover advantage, which would have required diverting significant resources from successful operations.

Waiting until information is absolutely certain (right hand side of the chart) results in a crisis, forcing leaders to rapidly rethink critical assumptions: maintaining outdated mindsets when bombs are falling or bankruptcy looms is suicidal. But it may be too late: they have very little flexibility in how to respond – you can’t re-position a fleet immediately or turn a brick and mortar operation into an e-commerce one overnight.

On the other hand, way back in relative time (the left hand side), leadership has more leeway in deciding where to deploy assets. However, the uncertain and often conflicting information makes it difficult, if not impossible, to challenge the existing organization mindset.

Avoiding “surprise” requires speeding up the processing of relevant information, moving the information certainty line upward and the intersection of the two lines to the left, when there is more decision-making flexibility.

Creating the intelligence necessary to challenge assumptions earlier requires choice and focus – every startup or new technology is a potential threat. And, perhaps perversely to some, the solution is not simply amassing and sorting through vast amounts of data. 

It requires asking the right questions.

Next: You Can't Find What You're Not Looking For

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"Surprise"

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December 7, 1941

Nothing frustrates executives I speak with more than a crisis caused by surprise: a new competitor product or unexpected price cut, unexpected loss of a key bid or long-held account, or new technologies or shifts in buyer behavior that obsolete current offerings. And heads roll when these cause a miss in quarterly earnings or, worse, bankruptcy.

The question that always arises is how could we have avoided surprise?

Lack of knowledge is not the problem. “We now live in a world where knowledge transfer and information exchange are tremendously efficient, and where there are numerous organizations in the business of collecting and transferring best practices. So, there are fewer and smaller differences in what firms know than in their ability to act on that knowledge.”*

Said another way, surprise rarely occurs due to a lack of signals. Information on the Toyota Production System was available to the US auto industry for decades, and traditional retailers certainly had time to absorb intelligence on amazon.com’s business model well in advance of having to declare bankruptcy. In the military sphere, “an analysis of surprise attacks suggests that the intelligence community seldom fails to anticipate them owing to a lack of relevant information.” And a US Congressional Subcommittee that examined several critical US political crises pointed out that “in no case had lack of data been a major factor in the failure to anticipate the crisis.”**

Take Pearl Harbor – why did the US navy fail to detect anytime in advance the movement the most powerful fleet in history? It was not as if Japan’s blue water fleet was a surprise – in 1905 it destroyed the Russian Pacific fleet. Nor were Japan’s expansionist intentions a secret – it invaded Manchuria in 1931. And it’s not as if the US Pacific Fleet wasn't concerned about the Imperial Japanese Navy: it knew it was the only real threat to those intentions. Finally, beginning in early in 1941, there was a slew of signals that the Japanese navy was targeting Pearl Harbor.

Given this, “intelligence officers could perhaps have foreseen the attack if the US, years before, had…flown regular aerial reconnaissance of the Japanese navy, put intercept units aboard ships sailing close to Japan…or recruited a network of marine observers to report on ship movements.”***

Did the US Navy create its own surprise?

Next: Avoiding "Surprises"

*Pfeffer, Jeffrey and Robert Sutton, The Knowing-Doing Gap, Harvard Business School Press, 2000
**Kam, Ephraim, Surprise Attack, Harvard University Press, 1988
***Kahn, David, "The Intelligence Failure of Pearl Harbor, Foreign Affairs, 70, no. 5 (Winter 1991/1992)

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Get Out of the Office

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Sales Readiness

“Everyone lives by selling something,” wrote Scottish author Robert Louis Stevenson.
And perhaps the ONLY thing I disagree with Peter Drucker on is his observation that “the aim of marketing is to make selling unnecessary.” Selling is necessary. While marketing is about understanding and preparing customers to buy, selling is about turning marketing programs into transactions.

That said, the lines between marketing and selling in the digital commerce age have become increasingly blurred. In many cases, when you buy online, it is without human intervention. Gerhard Gschwandtner projects in SellingPower that the number of outside sales personnel will decline from about 18 million today to about 4 million in 2020. He writes, “as the number of software applications is exploding and computing power is accelerating, we will see more sales tasks move online, requiring fewer salespeople. ”

The sales process (human or digital) requires the right collateral, sales tools, presentations and demos and comparative value propositions, albeit it in different formats. Take reference selling, for example. Spokespeople and endorsements are important in both B2C and B2B sales (either through advertising or through a list of references the buyer can call). In the digital world, online ratings and comments by buyers are now supplementing and may eventually become the standard for reference selling.

As this shift occurs, marketers, with their understanding of buyer motivation, will have an important role to play. But to take on this role, many will need to expand their worldview to include revenue generation. Says Sergio Zyman, ex-CMO of Coca Cola, the definition of marketing success is to "sell more stuff, to more people, more often, for more money, more efficiently." To do this, marketers will need to develop a deeper understanding of the sales process.

And the best way to do this is get out of the office and accompany sales people on sales calls.

*Gschwandtner, Gerhard “How Many Sales People Will Be Left in 2020,” SellingPower

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Make Haste Slowly

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Effective Communications Briefs

Once you've developed a differentiated value proposition, you've got to communicate it to the target audience, using powerful language and visuals. You've got to find out where that audience “hangs out” – what television programs they watch, what magazines they read, what radio stations they listen to, what social media they follow and where they spend their time online.

Creating a winning (and by winning, I mean winning in the marketplace, not winning awards) marketing communications program requires a team of specialists: communications strategists, copy writers, graphics and layout artists, media buyers and, increasingly, social media specialists, often found in marketing or communications agencies.

How well your awareness-building initiatives succeed depends on your ability to harness the full power of these talented individuals. A good agency won’t start work without a good brief, which ensures that their team stays focused on your objectives. But developing a good brief takes time and hard work, and if you leave most of the effort to the agency, not only will you receive a hefty bill, but you and your internal non-marketing clients may become frustrated with the process. Plus, leaving it to the agency risks that they will only work with the marketing department, losing you an opportunity to engage with key business stakeholders.

The solution: create your own brief, which gives you the opportunity to harness the best thinking of your organization’s talent, and not just the marketing team. Here are some guidelines:

1. Start with your market insights. What's the big picture? What's going on in the market? What are the opportunities or problems in the market?
2. Who is the campaign talking to? The more precise and detailed the better. Describe demographics, firmographics and psychographics. Explain how the audience currently thinks, feels and behaves in relation to the product category, your brand, and your specific product or service.
3. What is the objective, the purpose of the campaign? A concise statement of the effect the communication should have on customers. Typically expressed as an action, focused on what the communications should make them think, feel, or do.
4. What's the most important thing to say? What's the single most compelling statement we can make to achieve the objective? This should be a simple sentence and certainly no more than a few sentences if absolutely necessary. Avoid generalities.
5. What are the supporting rational and emotional reasons to believe and buy? Explain why the customer should believe what we say, and why they should buy. Include all the major copy points, in order of relative importance to the customer. It is also helpful to include other information the agency might need, such as a description of the brand personality, positioning tag lines, creative thought starters, terms of direct response offers, result expectations, and mandatory elements such as the logo and Web address. 
6. What do we need from the agency team? And when do we need it?

Finally, make haste slowly. While it takes an effort to collaborate across internal functions who don’t speak marketing, engaging them in the process as trusted advisors (with marketing doing the heavy lifting) will increase both understanding and buy-in.

Don't squander this opportunity.

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Hammering a Nail with a Screwdriver

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Awareness Building

Marketing, in many respects, is about building awareness. After all, if customers aren't aware of your offering, they won’t buy it.

Unfortunately, awareness building is perhaps one of the most misunderstood aspects of marketing, by both non-marketers and inexperienced marketers alike.

In your marketing career, you've probably received an ad-hoc request to run an ad, post a press release or write a brochure. Each of these has a place in the marketer’s toolkit, but far too often someone reaches for the tool before adequately assessing the situation. It’s like trying to hammer a nail with a screwdriver because that’s what you have – it might work, but the odds are against it.

Successful marketing communications requires discipline. While there are occasions when you need to run, say, a spot ad as part of an existing initiative, you’ll be better off if you've done the heavy lifting of developing your marketing strategy and plan. Every single communication should be thought through and evaluated against the selected target markets and customer sets and the value proposition, whether it is an individual Tweet or a comprehensive thought leadership campaign. As a marketing executive you can’t, of course, micro-manage every detail, but that’s where the awareness-building plan, with associated tasks and responsibilities comes into play. Everyone should know his or her role, expectations, accountabilities and how he or she will be evaluated.

Start with the value proposition

A value proposition is a clear statement of the promise of value (expressed as a benefit or business result) you will deliver in answer to a customer need or problem. It answers the question “why should a customer buy from us?” Writing a great value proposition is neither easy nor quick, but here are some steps that will help.

1. Clearly and precisely identify the target segment you wish to communicate to. You may have multiple segments which, of course, means you’ll need multiple value propositions.
2. Prioritize the customer’s needs or problems identified in your insights work. 
3. Then list the primary benefit your offering provides for the expressed problem. For businesses, these often focus revenue generation or cost reduction; consumers might see more benefits in terms of status, ease-of-use or service and support. A useful exercise, once you've developed the initial benefits list is to look at businesses as consumers and vice versa. 
4. Compare this to competitive offerings and list the key points of differentiation.

With this information, write out the value proposition. Here is a “starter” I've found helpful:

For [buyers in priority segments] who need [statement of customer's problem], we provide [statement of the solution / key customer benefits].

Unlike [primary competitors], our offering has / does [statement of major points of differentiation]. 

Then test the heck out of it, both internally (especially with product developers and sales personnel) and with a sampling of target buyers.

With a differentiated value proposition, your marcomms team has a tool to create a powerful awareness-building strategy through the available communications channels: traditional advertising, digital advertising, website, direct, social media, events, word-of-mouth and point-of-sale. Assuming they know their stuff, they'll do an outstanding job.

Next: Creating Meaningful Differentiation: How Much Do You Know About Your Competition?

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Meaningful Metrics

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First Things First discussed the first of five key things the CMO must do well*, getting the marketing mandate right. Allies, Agnostics and Antagonists focused on the second, building meaningful relationships with functional and business leaders. 

The third is agreeing on how to measure success.

Once you've agreed on the marketing mandate and started the process of building meaningful relationships, it is absolutely imperative that you agree on how success will be measured.

Joe Tripodi,  Executive Vice President and Chief Marketing & Commercial Officer of The Coca-Cola Company, advises CMOs to make the CFO a partner in their leadership teams as they develop marketing budgets and metrics. “Unless you have full transparency on everything going in your budget, you’re going to continue to have this marketing-as-a-black-box philosophy. Once you bring people into the tent and then say, ‘Listen, we have nothing to hide here,’ and jointly determine the metrics for measuring marketing effectiveness, you take marketing out of the little black box”

Says Maureen McGuire, CMO of Bloomberg, “every marketer has had this kind of experience: You want to run an advertising campaign to raise awareness and then everybody’s looking for leads and revenue and you say, well, the metric to measure this is whether or not we actually raised awareness. But people are saying, ‘How many leads did it drive and how come my phone wasn't ringing off the hook?’ One of the most difficult things to convince people of is that you should measure your marketing effort according to the objective you’re setting.”*

John Dragoon, CMO of Houghton Mifflin, says “we've rotated (maybe over-rotated) to marketing metrics – I’m fond of the term ‘the ROI of a handshake.’ No one’s written about the softer things – just because you can’t measure it doesn't mean it shouldn't be done.”

So, how do you set meaningful metrics?

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