23 Reasons Not to Talk to Strangers? Or...

...Little Red Riding Hood?

My friend and former colleague Eric Pelletier blogs in a wonderful post, Croissants and fairy tales. How storytelling makes strategy happen that

...when people in a similar context, are exposed to the same facts, they tend to arrive at the same conclusions. And so, when they're in the same organization then, they're also likely to arrive at the same conclusion about the right strategy to take the organization forward.

While he focuses on the power of getting people on board via storytelling to implement strategies, I have little doubt he'd agree about the power of creating shared conclusions on formulating a winning strategy in the first place.

In The Biggest Problem in Strategy? Mindset, I noted how the railroads in post war America missed out on growth opportunities because they saw themselves in the railroad business, not the transportation business, and how Blockbuster missed out on digital distribution, ignoring intelligence on the looming threat. While railroad efficiency made enormous strides post deregulation in 1980, it basically kept the surviving companies in the game. Rail's share of freight traffic in the US (measured in ton-miles) declined from about 75% in 1930 (A Short History of US Freight Railroads, pp3) to 28% in 2000 (Freight-Rail Bottom Line Report, pp 14). Worse, its share of freight revenues dropped to a mere 6%. Blockbuster went bankrupt in 2011, shuttering the last of its outlets in 2013. Other examples of failed strategies aren't hard to find: cell phone manufacturers Nokia and Motorola; bookstores Borders and Barnes and Noble; computer manufacturer Sun; the plethora of desktop application software firms - remember VisiCalc, Lotus 1-2-3 and Freelance Graphics and WordPerfect, all of which dominated at one time?

Storytelling works because of the evolution of the prefrontal cortex of the human brain, which helps us recognize and act on patterns. It also works, as Eric notes, because it creates a shared context, or "experience" (even if vicarious) in the tribe. 

But this pattern-recognizing ability is both a help and a hindrance, for individuals and groups. It helps tremendously when the situation is reasonably stable, but often fails us in times of significant environmental change, when we are unable to recognize new patterns. And the worst failures occur when the "tribe," and especially the decision-making leadership, is unable to jettison outdated mindsets.

The most powerful stories are the ones collectively arrived at, through shared experiences. And the most powerful of these are crises. IBM (where I worked for the better part of a decade), was able to reinvent itself in the early 1990s because the tribe members (the employees) knew there was no other choice, enabling Lou Gerstner to drive a change in the collective mindset. But it was painful, to the tune of 200,000 layoffs.

So I return to a theme readers of my blog will recognize: why not create simulated "crises" to enable decision-makers to "experience" the consequences of potential actions. Militaries, governments and airline pilots (see Chance Only Favors Prepared Minds) do this regularly. And some companies regularly incorporate scenario planning or business wargaming (among other experiential planning techniques), designed and facilitated by experts for maximum effectiveness, into strategy development.

Companies that invest in these now, incorporating the latest available intelligence on potential opportunities or threats, reap huge future returns and often avoid debilitating disasters.

Will Your Assumptions Cost You $24 Billion?

As I passed a shuttered Blockbuster store, one of the last to remain open, I wondered what assumptions its executives used to guide their decisions.

Blockbuster filed for bankruptcy in 2011, closing its last stores in 2013, in the face of competition from Netflix, Vudu, Hulu, Amazon.com and the cable / satellite providers. Dish Network bought Blockbuster's streaming service from the bankruptcy court for $321 million. In contrast, Netflix' market cap is worth over $24 billion today - and Blockbuster could have bought it in 2000 for a mere $50 million.

The Blockbuster executives didn't fail from a lack of market intelligence. NetFlix was founded in 1997 and began video streaming in 1999, followed by Vudu in 2004 and Hulu in 2007. And Blockbuster didn't even enter the DVD-by-mail business until 2004, long after Netflix had proven its success. Forbes blogger George Anderson wrote in Blockbuster Beyond the Grave:

“The fascinating issue for me is that Wayne Huizenga and his executive team were well aware of the risks from digital distribution of media and discussed it at times,” wrote loyalty marketing expert Bill Hanifin in a recent RetailWire online discussion.

Given their lack of action, they clearly operated under two critical - fatal - assumptions: not only would the near-term future be like the present, but also that they would have enough time to respond to a "real" competitive threat, before a crisis hit. But by the time it did, it was too late.

We all have assumptions, of course. They help us interpret the barrage of new information we are bombarded with daily. And they work, so long as underlying conditions remain the same. But all assumptions are susceptible to cognitive bias, particularly anchoring, where humans rely too heavily on the first piece of information they receive, using that as the basis for subsequent decisions.

But assumptions often fail us in times of radical change, when they need to be tested to ensure continued validity. Unfortunately, senior executive decision makers are the most resistant to challenging their assumptions. Because of their long years of experience, they "know" the business, the customers, the competitors, the technology and the industry. In turn, this leads them to lend more credence to facts or information that reinforce their world view (confirmation bias).

Given human nature, changing long- and deeply-held assumptions requires a crisis. As English author Samuel Johnson said, "nothing so focuses the mind as the possibility of being hanged in a fortnight."

But rather than awaiting a real crisis, forward-looking organizations create "crisis" experiences, where decision-makers collectively evaluate intelligence, develop new insight and assess the strategic and operational risks of changing customer needs, new forms of competition, changing technologies, new discoveries and emerging government policies, in structured situations.

They can then decide to weigh anchor - or even break the chains - and navigate to a new destination, before the storm hits.

How Good Are Your Marketplace Insight Capabilities?

Since posting Insight is Where the Game is Won and Lost, many have asked "how can we assess our insights capabilities to identify where to focus?" Building on both internal work I did in the early 2000s, and an article published independently by Herring and Leavitt in 2011,* here is a framework you can use to quickly evaluate your organization's insights capabilities. There are five dimensions to rate your organization on (directions at the bottom):

• Insights culture
• Sources used to generate the information base to help create insights
• Marketplace focus
• Personnel
• Early warning of emerging threats and opportunities

The organization's culture sets the tone for insights creation, which can address markets, customers, technology or competition. Initially reactive (Level 1), executives ask for data and task available personnel to gather information for a presentation or meeting, invariably sourced from easy-to-access published data, such as annual reports, existing market research or industry analyses. The initial focus is on traditional markets, customers, technology and competitors.

Soon, a frustrated executive or ambitious analyst determines that standardized profiles, newsletters and databases will improve organization awareness. Dedicated, often part-time individuals (becoming full-time as demand increases) standardize outputs, create delivery schedules and expand the fact base to include subscriptions to specialized industry publications, and start to focus on partnerships and alliances which impact growth and the ability to compete (Level 2).

Success begets more challenging questions, such as what does this data mean? how will the trends play out? and what emerging customers, technologies and competitors should we be concerned about? Improving capability requires teams of skilled analysts under a functional manager (Level 3). Since the answers are rarely contained in published data, analysts must incorporate validated opinion and observations from individuals who don't have the time to write it all down - customers, channel partners, R&D and sales personnel, their own executives, and industry observers and experts.

The expanding organizational knowledge base generates new requirements: what are the implications of these projections? what options do we have? what should we do about them? how might customers or competitors react? how feasible is a new technology? Mature organizations assign or recruit a senior leader to answer these, using increasingly sophisticated research and analysis techniques and a well-nurtured source network. And the organization expands its focus to better understand the interactions within the industry value chain and how these will play out (Level 4).

Finally, a radical shift occurs, from an emphasis on producing reports to facilitating dialog: the organization structures insights-driven strategic decision-making sessions (Level 5). Key executives interact directly with well-prepared internal and external experts, to determine how to best position the enterprise for future success. Topics might include identifying and evaluating the strategic risks of potential new initiatives, untapped sources of customer value, the next generation of customers, emerging competitive threats (frequently through business wargames) and new growth opportunities.

The importance of early warning. 

The organization's ability to avoid surprises - a major executive concern - increases with the sophistication of its insights capabilities. Fledgling operations frequently start by looking at any of a variety of "megatrends" (example here), "boiling the ocean" to try to find a something the organization can act on. They progress to tracking studies, targeted assessments of specific marketplace issues and systematic monitoring of the periphery (emerging customers, competitors and technologies). But real breakthroughs occur when organizations form heavyweight teams, consisting of both internal and external experts, to address critical emerging issues through innovation and new business models.

How good is your organization's insight capability? Identify where it is in each category, sum the associated levels, and divide by five. If it is:

• below 2.0, it is drowning, with little chance of a lifeline in the next round of budget cuts
• between 2.0 - 3.0, it is treading water, with increasing odds of getting a lifeline
• between 3.0 - 4.0, the shore is in sight, but beware of undercurrents
• above 4.0, the beachhead is secured and the insights function is capable of making a real difference

Now ask what will it take to improve? And, importantly, what will be the impact on the business?

* Herring, Jan and Judith Leavitt, "The Roadmap to a World-Class Intelligence Program," Competitive Intelligence, January - March, 2011 

What Really Matters

Differentiation

Winning value propositions must be both relevant to customers and differentiated from the competition.

To create one, identify and rank the brand or offering attributes your market intelligence team identifies from customer research, and then have your competitive intelligence team assess these against competition. Organize these into four categories.

• Neutrals. Features and functionality that are irrelevant to customers
• Antes. Features and functionality that are important to customers, but provided by key competitors at similar price points and quality.
• Drivers. Benefits and attributes that are important to customers, and which are highly differentiated from competition.
• Fool’s Gold. Benefits and attributes that do not matter to customers.

You may be shocked at the results – the research may show that something everyone thought was a key point of differentiation is at best an Ante or worse, a Neutral. And you may sadly find that you've been wasting precious resources promoting benefits and attributes that don’t matter.

Clearly, you want to emphasize the Drivers. But also ask what you can do with the others. For example, a recent ad by TD Bank emphasized the difficulty of finding pens that worked in other banks (and often on chains so you can’t “steal” them). TD Bank recognized a customer service and branding opportunity and now stocks logoed pens and even encourages you to take them. The question is, of course, whether this is a Driver or Fool’s Gold, but given the lack of real differentiation between retail banks, a small gesture such as this contributes to and reinforces the overall brand experience.

Another example. Road warriors on overnight flights find it difficult to see their computer keyboards once the lights dim, even with the overhead light on. I experienced this for years, until I found a simple solution on my Thinkpad (simultaneously press Fn-PgUp – the bottom left and top right keys of the keyboard – on older models, or Fn-Space on newer models). The interesting thing is how I learned this. In a meeting with a number of IBM executives where, with the lights dimmed for a presentation, one executive’s Thinkpad had a glowing light. He explained how it worked to this seasoned group, many with decades of experience – none of us knew about it! Again, a legitimate question is whether this is Fool’s Gold, but in the commoditized PC business, it is also legitimate to ask whether it could be turned into a Driver.

Try this test. Ask an objective analyst pick out the key messages from the communications (ads, websites, social media, etc.) of you and your key competitors, present these anonymously to decision-makers and ask them to distinguish who is who.

Now get to work on creating real differentiation.

Next: Effective Communications Briefs

You're Not an Island

Cultivating the best talent.

To accomplish your objectives, you’ll need to rely on your team, which requires a combination of recruiting, training and leadership. “Your team is what makes matters most,” says Kristin Hambleton, VP Marketing, Neolane Communications, now part of Adobe. "You’re not an island – you need collaboration and leadership.”

Successful marketing executives recruit the best people they can. 

Kimberly Clark CMO Tony Palmer says, “the smartest thing I did when I started was to go out and hire four or five of the best people I could find in the disciplines. They were people who had a lot of weight in terms of skill set and experience, and that helped enormously. I think that very early on, the organization saw them as a skill set that they didn't recognize, and they tended to therefore be invited in more.”*  Adds Tony Wells, CMO of ADT Security Services, “surround yourself with good people – hire people better than you.”

Then, they build their team’s capabilities. 

Most importantly, says Ted Rubin, Chief Social Marketing Officer of Collective Bias, “teach mid-level marketing execs to speak to the c-suite in a way they understand – learn to speak their language – talk to me about sales / conversion.” Says Wells, “always look to develop people – make it possible for them do the best work of their career.” And Bloomberg CMO Maureen McGuire says “development of people is a daily task…It’s about coaching people through the process, helping them to understand the business and what’s good or bad about the work that they've done at the moment.”**

Finally, leadership is critical. 

“Know yourself, your job, your people, their strengths and weaknesses, says Tony Wells, CMO ADT Security Services. There should always be something exciting going on. Create energy.” Unfortunately, says Karen Masullo, EVP Social Media of Firestorm, “many marketers who move into executive positions tell their teams what to do without soliciting their input – allow your team to help you. Avoid being dictatorial.”

The management consulting firm Hay Group suggests using a variety of leadership styles,*** noting that a poor leader uses a single style, effective leaders use at least four and superb leaders can use six, and know when to use them:

Allies, Agnostics and Antagonists

First Things First discussed the first of five key things the CMO must do well*, getting the marketing mandate right. 

The second is building meaningful relationships with functional and business leaders.

After the CEO, the most important constituents for the CMO are his or her peers. Senior leaders look to the CMO to be a thought leader on the businesses’ critical issues. They want the CMO to learn how other functions and businesses work and what their challenges are and be willing to engage them early in the development of marketing plans.

“I want my CMO to be sincere about enabling cross-functional success; he’s in a position to tear down walls. Get out of the office and spend time with customers, at the factory, attend the national sales meeting. Take an interest in other functions,” said the president of US sales for a consumer products company.**

“As much as possible, try to understand where they’re coming from and make them the hero. Come in humbly and say, ‘You make great things. I can help you tell the world about them. Let’s figure out how our skills are complementary,’” said Andy Berndt, Head of Google’s Creative Lab.***

This is going to require all the political and networking skills you've acquired over the years. You’ll find allies, agnostics and antagonists:

Congrats! You're a Marketing Exec - Now What???

Throughout your career, you've focused on becoming better and better at your job. You've deepened your technical skills, you've learned how to keep your boss happy and you've learned how to manage. But the game has now changed completely.

First, you’re going to get LOTS of advice and counsel about what marketing is and needs to do. You’ll get it from the CFO who fancies him- or herself a creative copywriter, the top sales person who is convinced that one more event will generate enough leads to meet his or her quota, the head of product development who just knows that if you can write that brochure describing every single one of the features of the new product customers will be beating down the door. And, of course, from the CEO and board.

Some of this will be well meaning, some will be self-serving, and some of it will be uninformed bordering on ignorant.

Unfortunately, you can't ignore it. You've got to listen and find ways to incorporate these suggestions into your programs, or risk alienating your constituents.

You've also got to establish your independence.

How do you walk this fine line?

Let’s look at some research. SpencerStuart, the executive search firm,

What Do CMOs Actually Do?

The stereotypical view of the CMO has been the Chief Advertising Officer, reinforced by the popular AMC series Mad Men (I admit to being addicted to the show…).

But the CMO’s remit from the CEO and management team is much broader than creating winning advertising campaigns, argues Joe Tripodi, chief marketing and commercial officer of The Coca-Cola Company. “They want the CMO to be the chief growth officer of the company. They want the CMO to drive cultural change, and they want the CMO to build capability with people.”*

Nigel Dessau, currently CMO of Stratus Technology and ex-CMO of both AMD and StorageTek, says “I spent 40% of my time marketing, 30% on corporate issues and 30% on the road, mostly with customers. It is surprising how little you get to do your nominal job as head of marketing.”

“There is a very unique strength that most leading CMOs have: helping to lead a group of professionals from marketing as sales support to strategic marketing,” says Suzanne Lowe, author of The Integration Imperative, a book written for professional services marketers. “Professional services marketing is a very young profession; construction management, for example, is RFP driven. All professional services marketers need to shift from being order-takers / responders to move to focusing on identifying the critical factors of competitive success for their firms. And they need to help their firms make this shift.”
_____

Next: Congrats! You're a Marketing Executive - Now What???

*"What do you want from me? How high-performing CMOs exceed expectations," Spencer Stuart, November 2010,

Surviving in the Marketing Jungle

Marketing is about survival in a jungle that has no mercy, particularly for members of one of the least understood clans in the corporate world.

If you play the game well, you’ll get additional opportunities. Many companies now have Chief Revenue Officers, which formally combine sales and marketing. You could eventually get IT: Gartner research VP Laura McLellan* predicts that by 2017 CMOs will spend more on IT than CIOs. And you might even have a shot at the top position, as did James White who become the CEO Jamba Juice.

Based on interviews and research, those who just focus on "marketing" are less likely to succeed. The successful CMO needs to think act like the CEO of a business – your business is the business of "understanding, attracting, and keeping valuable customers."** You need to become the CEO of Marketing™.

Forget Everything that Got You Here

You've just landed that CMO or executive marketing job you've wanted for years.

Congratulations! Bask in the glory.

For about a minute.

Now focus on this: 45 months* - or if you're in healthcare, automotive, restaurant or communications / media, 28 to 32 months.

That’s the average life of a CMO (and if you're not the CMO, you need to start thinking about his or her replacement...)

And that’s the good news – the lifespan is up from 23 months in 2006! But less than four years is hardly a career, and what you do during three critical time periods will determine your success, and your tenure:

Get out of the building

I've read about Lean Startup Marketing, so when the local entrepreneurs Meetup group offered a chance to learn from those who had undergone the three day process, I took it.

The concept is straightforward:

Do you have a dog's resilience?

Yesterday, our dog ate something he shouldn't have, and had, um, shall we say, serious indigestion. We spent a good part of the day nursing him back to health. He was one sad puppy - loss of bodily fluids does that to you.

Today? Yesterday doesn't exist. He's back to doing his job, which is mainly to be cute, friendly and affectionate.

Dogs live in the present. Jane McGrath in a piece for Animal Planet writes it is because they "they don't have the power of episodic memory, or the ability to remember particular events in the past."

What are you paying for?

I can't stand most Chinese restaurant food.

Yes, I'm spoiled. I spent two years in China and had really, really good Chinese food. Here, despite the sometimes attractive decor, all the sauces taste the same (and they're all bought in gallon jugs from the same distributors...), the food is too sweet, and the dishes have names that don't exist in China.

So, how do we pick? Easy.

Dogs are loyal

Dogs are loyal.

Until someone else gives them a treat.

Dreaming of sushi

Jiro Dreams of Sushi is a must-see documentary about the world's greatest sushi chef, 86-year-old Jiro Ono, the only sushi chef to receive 3 stars from the Guide Michelin. The restaurant, located in a subway station in the Ginza, has 10 seats. A 20-minute meal STARTS at $370, and diners often reserve a year in advance.

Jiro has been perfecting his craft for over 75 YEARS (his alcoholic father abandoned the family when Jiro was 7 and when he left home at 9, he was told he had no home to come back to), yet says "even at my age, in my work, I haven't reached perfection."

Robotic brand behaviors

By now most marketers (effective ones, anyway) have moved beyond a Mad Men "brand = logo (or advertising - read From Mad Man to Superwomen) view of the world, and are focused on behaviors.

And with good reason. Viewing marketing as communications (only) is like viewing sales as cold calling or finance as accounting - necessary, but no where near sufficient. A logo or ad may catch your attention, but the customer experience results in the sale, and repeat business. Great companies define and build the experiential aspects of the brand into everything they do, creating a competitive advantage that can't be replicated.

But there is a fine line between definition and prescription.

Picked especially for you...

Increasingly, I get eblasts that start "Picked especially for you..."

Amazon made this popular, and I still enjoy its missives, because it actually has made picks for me, based on sophisticated algorithms. I don't always buy, but I am always interested in learning about new books that may be an enjoyable read.

Listening

We'd heard about a nice local deli, and stopped in to see the offerings.

Greeted with a smile, we asked about their prepared dishes, particularly vegetarian ones which, unfortunately, were on the sparse side. Because the store came with high recommendations, we persisted in our questioning.

Until the clerk offered us a sampling of the store's meatballs, something they were well known for.

Huh?

Movie theaters

Movie theaters should be dead.

Yet, the latest statistics from the MPAA show international box office receipts are up 35% over five years ago and even US receipts are up 6% over the same period. This despite the fact that a ticket costs more than a monthly subscription to NetFlix, which many can watch on home systems exceeding the sound and video quality of the theater.

And yet the movie theaters are packed. Why?

What's a smile worth? Redux

In the local supermarket today, two young women offered wine tasting samples. Good location, right at the front of the store.

I walked right by.

Not because of the wine.