Creating Winning Strategies by Changing the Dialogue

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In far too many companies, "strategy" has become a euphemism for planning or budgeting. The underlying - and unstated - assumption is that marketplace conditions are largely static: the future will be largely an extension of the past and, thus, all we need to do is optimize our current operations.

This assumption, unfortunately, has proved fatal in industry after industry. Just a few years ago, Motorola and Nokia were major cell phone players, Sun was a significant server manufacturer, Blockbuster was the source for many of us for at-home movie viewing, and Borders and Barnes and Noble were where we shopped for books...

To drive serious strategic discussions, you first need to accurately assess your source of competitive advantage. Here's a framework we've found useful:

Source of Competitive Advantage (worst to first):

1. Commodity with cost disadvantage

2. Commodity with cost parity

3. Commodity with 10% to 20% cost advantage

4. One-year offering development lead

5. Two-year offering development lead

6. Brand, patent, copyright

7. Owning the customer relationship

8. A string of dominant positions (for example, cost advantage + development lead + patent protection

9. Managing the value net or ecosystem

10. Owning the industry standard

Importance of Marketplace Insight

The first two, of course, confer no competitive advantage; unfortunately, a realistic assessment of their true competitive position would surprise many companies... Hence the importance of helping decision makers develop relevant marketplace insight. Answers to these critical questions will help:

• What are customers really buying? How are their preferences changing?
• What new initiatives are current competitors undertaking: operations, innovation, marketing, sales, customer service?
• What economic or regulatory trends will impact the industry?
• Which emerging competitors have the potential to change the nature of competitive dynamics?

Assessing the Consequences

Once the decision makers have grappled with these issues, they'll need to assess the impact on the organization, including:

• Systems and processes: Do we need to change our offerings development or production processes? Which need to be re-engineered? Which can we outsource? What support do we need from IT?
• People and skills: Do we need to retrain our existing workforce? Change our hiring requirements? Restructure the organization?
• Culture: Do we need to change the behaviors? If so, where? Only in specific functions? Or everywhere in the organization?
• Incentives: Do we have the right incentives in place? And how will we align these across the organization?
• Profits: How will we make money in the future? How can we protect our profit streams?

Creating Winning Strategies

With all of the above in hand, decision makers can proceed to the important work of re-allocating resources to create:

• Differentiated value propositions
• Innovation, operational and go-to market initiatives
• Organizational alignment

Challenging work, all this, since it means the nature of the strategic discussion must change, from planning / budgeting to strategy, from past to future and from business-as-usual to new business models. Importantly, it means changing mental models - how decision makers interpret information about the marketplace. And this, in turn, means creating opportunities for dialogue and debate, v. reading reports.

But it could mean the difference between organizational life and death.

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How Good Are Your Marketplace Insight Capabilities?

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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 

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Growth is Hard

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Columbia Business School professor Rita Gunther McGrath writes that only 8% of the 5,000 companies with over $1 billion in revenues grew sales by 5% annually over a 5 year period, and only 4% grew net income by at least 5% annually.* Compounding the challenge are the prevailing conditions found in many markets:

• The new product failure rate is repugnantly high: estimates range from a minimum of 40% to as high as 95%; 

• Few completely new categories have emerged in recent years;

• Risk aversion results in few real disruptive market strategies;

• Rivalry is intense and along many dimensions;

• The role of channels is becoming ever more pervasive and powerful; and

• Cost pressures continue to escalate, absorbing significant company resources to address.

Companies can beat the odds through a structured approach (chart):

• Marketplace insight – What is the customer need or problem a new growth initiative will resolve? How have recent competitive and supplier initiatives and technological developments impacted customer needs? What is going on in competitors’ minds, what are they planning, and how will they respond to our initiatives?

• Opportunity assessment and selection – How can we extend current capabilities to address new opportunities or change the nature of competition? How do we develop and test new growth opportunities beyond our current strategy? Which customer segments will we choose to serve? Which will we not serve?

• Strategy – How do we resolve a market problem / need in a valuable and differentiated manner? What is the value proposition? How will we capture value, what scope of activities will we perform and how will we protect our profit? 

• Organization alignment – What processes, systems, structures, and incentives need to be changed? What will inhibit successful execution of the growth strategy: culture, mindsets, resources, incentives?

• Execution – What specific actions will deliver the product / offering and profitably capture value? How will we measure success? How will we monitor results?

*McGrath, Rita Gunther, “How the Growth Outliers Did It,” Harvard Business Review, January – February 2012

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Droning On: Strategy Isn't Dead, Not by a Long Shot...

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Last week, blogger Mark Wilson, in a post entitled "The End of Strategy as We Know It," noted that strategy has become "too slow; too inflexible, too cautious; too protectionist." He bemoans "old-school strategy" and asserts that "businesses need to think strategically, on a daily basis...the solution is that "business leaders should focus on their organisation's innovation behaviour and how to build a culture that supports it."*

At least he got it partly right, unlike Saatchi & Saatchi's CEO Kevin Roberts, who said last year that "strategy is dead, the big idea is dead, management is dead and marketing, as we know it, is also dead." Then he really stepped into it: "Who really knows what is going to happen anymore in this super VUCA [volatile, uncertain, complex and ambiguous] world. The more time and money you spend devising strategies the more time you are giving your rivals to start eating your lunch."**

No one, of course, KNOWS what's going to happen in the future. But throwing up your hands is dangerous.

Take Jeff Bezos' revelation on 60 Minutes last night that amazon.com is testing drones for package delivery. If successful, small packages could be delivered within 30 minutes. Attention getting sound bite? Without a doubt.

But listen closely to Bezos: "I would define Amazon by our big ideas, which are customer centricity, putting the customer at the center of everything we do, invention." Looking deeper, Amazon Fresh, which started delivering groceries in Seattle several years, has now expanded to Los Angeles. Grocery customers typically want same-day delivery and, says Bezos, "if we can make this model work, it would be great because it extends the range of products that we can sell."***

Now this is "old school strategy." What Bezos recognizes that Wilson and Roberts miss is that effective strategies start with insight that defines a marketplace opportunity. Only then can you innovate around customer needs and then drive the necessary changes in systems, structure, skills and culture through the entire organization to meet those needs. Focusing on innovation unlinked to a defined opportunity and you become Xerox PARC, whose radical innovations (Ethernet, laser printers, the GUI and even the modern PC among others) were successfully commercialized by others, not Xerox.

No, "old school strategy" is not dead.

But those who dismiss it soon will be. Their rivals will eat their lunch.

*Wilson, Mark, "Is This the End of Strategy as We Know It?", One Last Thing (blog), http://thehumanlayer.com/issues/issue-7/22-one-last-thing/index.html#!

**"Strategy is dead says Saatchi & Saatchi CEO," The Drum, April 25, 2012, http://www.thedrum.com/news/2012/04/25/marketing-dead-says-saatchi-saatchi-ceo

***"Jeff Bezos Looks to the Future," 60 Minutes, December 1, 2013, http://www.cbsnews.com/news/amazons-jeff-bezos-looks-to-the-future/

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Chance Favors Only Prepared Minds

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Creating Crises

On January 15, 2009, US Airways flight 1549, with 150 passengers and five crew, struck a flight of geese two minutes after take-off, losing power in both engines. Four minutes later, Captain Chesley B. "Sully" Sullenberger's crew landed the Airbus A320 in the middle of the Hudson River. Aided by first responders, there was no loss of life, and the five injuries and a number of cases of hypothermia were quickly treated.

How did these teams perform such an incredible feat? Was it a miracle? Perhaps. Most commercial flying is routine and pilots rarely experience a real crisis. The FAA reports the odds of a bird strike are one in 10,000, and experts estimate the odds of losing both engines are one in several million.

Yet the crew and first responders instinctively knew what to do. They had rehearsed responses to low-probability, high-impact events in simulated crisis conditions. It's part of their job.*

The chances of an employer going bankrupt in 2012 were 0.007%**, 70 times higher than a bird strike. How many executives rehearse responses to such a high-impact crisis? OK, maybe that's stretching the point. After all, company bankruptcies don't risk catastrophic loss of life.

But what if the odds of business failure were greater than one in two? Writes Harvard Marketing Professor John Gourville, "most studies estimate new product failure rates at 50% or more," ranging "from 40% to 90% across product categories."***

Alternatively, consider the difficulty of sustaining profitable growth. Columbia Business School professor Rita Gunther McGrath writes that only 8% of the 5,000 companies with over $1 billion in revenues grew sales by 5% annually over a 5 year period, and only 4% grew net income by at least 5% annually - that's less than one in 20.****

Why not increase the odds of success by taking a page from pilot training and have teams "rehearse" in launch or growth simulations?

Master motivator Lou Gerstner, who took over an IBM in its death throes in 1993, determined that the organization had the capability to perform incredible feats, if only he could refocus its efforts. Early on, he challenged his senior executives to attack their businesses as if they were their primary competitors, in effect "rehearsing" competitive responses.

Later, in the early 2000s, IBM embedded "crisis" simulation into the strategy process. Executive business unit teams went offsite to confront their biggest challenges, such as reversing a loss or identifying how to grow revenues by an order of magnitude, in response to likely market, competition and technology evolution. To make the "rehearsal" as consequential as possible, the teams had to present their solutions to the senior-most executives in the organization - the stakes were high. As English writer Samuel Johnson said, “nothing so focuses the mind as the possibility of being hanged in a fortnight.” At IBM, the teams had three days.

Organizations can similarly improve results by running simulations focusing on assessing and responding to growth opportunities, marketplace risks, untapped sources of customer value, the next generation of customers or emerging competitive threats.

While each simulation requires a different approach, the key to success is creating a realistic environment - a "crisis" - that challenges existing mental models and addresses the organization changes required to deliver a new initiative (structure, systems, people and culture).

It's hard work, but the results can be significant: IBM's EPS increased eight-fold over the decade following the launch of the strategy simulations, tripling the share price.

As Louis Pasteur said in a lecture at Lille University in 1854, "...chance favors only prepared minds."

*Newman, Rick, "How Sullenberger Really Saved US Airways Flight 1549," USNews & World Report, February 23, 2009
**42,008 bankruptcies in the US in 2012: "Bankruptcy Filings Down in Fiscal Year 2012," US Courts; 6,049,655 employers: "Statistics about Business Size," US Census Bureau
***Gourville, John, "The Curse of Innovation: Why Innovative New Products Fail," MSI Reports, Issue Four, 2005.
****McGrath, Rita Gunther, “How the Growth Outliers Did It,” Harvard Business Review, January – February 2012

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

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Ask the right questions

Smoke detectors are programmed for early warning. But they don't detect CO2, equally as dangerous.

With a specific threat - or opportunity - identified, designing a system or capability to capture and process the relevant signals and issue an alert is pretty straightforward.

The challenge for companies is to articulate the potential business threat or opportunity. But in a dynamic marketplace, these are everywhere. Organizations simply can’t monitor every Bill and Dave or Steve and Steve in their garages or Jeff in his warehouse.

It is exacerbated when organizations obsess on collecting reams of customer data or developing in-depth competitor profiles, especially when these focus is on what the customers wanted or what the competitor did. The often-unstated assumption – the mindset – is that the future will be largely like the past and, circuitously, the historical facts support the prevailing view.

But there are no “facts” about the future.

Creating the necessary insight requires asking the right questions:

• How will new technologies and business value propositions impact our customers, products, services, and business growth?
• Which industries, customer segments and offerings categories offer the best likelihood of future business growth?
• Who are the most threatening traditional, emerging and potential competitors? Why?
• Where are the greatest long-term profit streams according to the capital markets?
• What is required for future competitive success?

How many organizations have good answers to these questions? How many have the leadership that asks them?

You can’t find what you’re not looking for.

Next: Creating Crises

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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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Know Your Enemies

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Creating differentiation: how much do you know about your competition? 

“You don’t have to be the best, you just have to be better than your competitor.”*

Successful marketing executives know a lot. That's how they create differentiated value propositions.

But first, please don’t tell me you think competitive intelligence (CI) is espionage. I’m not naive – there have been far too many cases to pretend industrial espionage doesn't exist and some major countries are well known to engage in spying for their companies.

Ethical competitive intelligence has a long history, going back centuries. The first published mention dates from 1876, in an Institute of Civil Engineers discussion of carriage design. It gained popularity in the 1980s following the publication of Michael Porter’s Competitive Strategy,** now in its 60th printing. Today, most major corporations have a CI function and there is even a professional organization of Strategic and Competitive Intelligence Professionals (SCIP).

I actually got my start at 18, as a mobile ice cream salesman. Ice cream sales is a winner-take-all business – if you get to a swimming pool full of kids on a hot summer day 10 minutes after your competitor, you sell nothing. A long-standing competitor straddled the routes of a friend who was selling for the same company I did. At the end of each day, we plotted his route until we knew exactly where he was when (this was before cell phones...). Once we had the intelligence, our sales skyrocketed, while his dropped to near zero. He abandoned the route within weeks and we had free rein for the rest of the summer. I didn't know I was doing CI. It was purely a matter of financial survival.

In my first corporate job, marketing aircraft tires, I could predict within 1% the price our competitors would offer, through a thorough analysis of bid performance. My technical team was able to assess the performance characteristics of each tire in our competitor’s line, which enabled us to arm the sales force with the information they needed to increase sales. We gained share every year.

Perhaps surprisingly, the first thing you need to do is learn as much as you possibly can about your own business, before you try to understand the competitor’s. You’re only as good as your ability to impact your business – you can be the greatest analyst in the world, but if you don’t understand your own business well enough to know what intelligence is needed to impact a decision, you’ll fail. And, as you deepen your knowledge of your business, you’ll gain incredible insights into the competition. Faye Brill, who was CI chief of Ryder Systems, Inc., ‘believes that 80% of what you need to know about your competitors is right inside your company.’***

You’ll find this easier than you might think. Consumers and “clients are often happy to provide feedback to soften the blow of losing a contract”**** or selecting another product.

As Chinese philosopher Sun Tzu wrote: “If you know your enemies and know yourself, you will not be imperiled in a hundred battles.”

Next: What do You Need to Know About Competition?


*Elix, Doug, SVP, IBM, conversation with the author
**Porter, Michael, Competitive Strategy, The Free Press, 1980
***DeWitt, Michelle, Competitive Intelligence, Competitive Advantage. Grand Rapids, MI, Abacus, 1997
****“Get something from losing,” One Minute Articles (link no longer active).

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Don't Talk About Marketing

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Marketing Strategy and Planning

Many marketing plans look somewhat alike: executive summary, situation analysis, SWOT, objectives, marketing strategy, action plan and financials, with assorted appendices.

And most are equally ineffective.

The biggest deficiency is the lack of a business case: what business results will occur, and for what cost. This is not easy (see the post Meaningful Metrics), often because of the difficulty of proving, for example, the impact an awareness-building initiative had on sales. But building the business case is an absolute must.

It starts with the company objectives. Are you pursuing organic growth? If so, how? By expanding the customer base for current products, increasing sales to existing customers, or entering new markets? Then (yes, this is simplistic, my apologies), how will each marketing initiative support the objective?

Take increasing sales to existing customers. One organization, with two distinct offerings, wanted to increase cross-sales into accounts where one offering dominated. The challenge was that not only did the account executives not know enough about the other offering to create selling opportunities, they didn't know who in the organization to talk to. Marketing got sufficient funding by working with sales to agree on account penetration objectives and identify what programs and investments were needed to "open new doors" (offerings education, easy-to-use collateral and reference-selling coaching).

In another case, the "objective" was to increase sales, based on the assumption that was the only way to increase profits. The research marketing then unearthed a critical insight: consumers saw multiple benefits to the product that were not being communicated. This led to a new communications strategy that both increased unit profits as well as unit sales.

These plans succeeded - that is marketing got the budget it needed - because they focused on business results. The material that makes up many typical marketing plans was available during the strategy discussions, but not "presented" - when the rest of the business leadership team asked specific questions, the marketing team knew the answers.

As Andy Berndt, Head of Google's Creative Lab says, “my advice to marketers is don’t talk about marketing. Bring the CEO ideas that can make the business better or solve a problem.”*

*"What Do You Want From Me: How High-Performing CMOs Exceed Expectations," Spencer Stuart, November 2010

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What Have You Done for Me Lately?

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The third year.

By now, you've gone through two annual performance reviews (good ones, if you've done everything right), and you’re really in the groove. You know the markets, the competition, the product, the organization and you've learned what levers to pull to get things done.

This is your most dangerous time. But within the danger, there is also opportunity, if you recognize and seize it.

Now’s the time to “get out there, try something and learn from it – you’ll make mistakes, but you must learn from each one. The metrics available today allow learning in a real-time manner that was never possible before,” says Sandra Zoratti, Global VP Marketing, Ricoh. “Avoid paralysis and fear about trying a new way.”

The risk is complacency on your part and boredom on the part of the rest of the organization: your team, your peers, and your boss. Let’s take them one at a time.

1. Your team. You've done everything right, weeding out the chaff, selecting new talent and providing everyone with challenging opportunities. But they've now been doing the same thing for two years, and are starting to get restless. The stars (like you) are thinking about their next move and the good performers are falling into a routine. If you’re not careful, you’ll find a team that is quietly becoming dysfunctional.

2. Your peers.  What was once unique is now mundane. The good news is that they've now learned what marketing really is, are asking better questions and starting to develop a marketing mindset to everything they do. But they’re also starting to ask “what have you done for me lately?”

3. Your boss. Your most difficult – or easiest – challenge. His or her world has changed in the last two years – the success you've helped create has both positives and negatives. Of course, your boss is delighted with the results, because that helps with the board. But the board is starting to ask what next? and wondering if s/he can take the company to the next level. S/he is, in turn, wondering the same about you.

Never forget, says Eric Fletcher, CMO, McGlinchey Stafford, that “relationships trump everything – science, metric frameworks – it about connecting relationships and leveraging them. Make sure you have regular, frequent in-depth dialog with the CEO, COO, CFO, the rest of the c-suite and the governing board. Most marketers get into trouble because they are operating out of an island.”

Next: Setting the Agenda

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Day 91

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The next nine months.

Phew.

Day 90 has arrived, and you've successfully managed the transition. Take a break, have a nice relaxing dinner and don’t think about what’s next.

Until day 91.

Now is the time to consolidate and build on the successes you've created in the whirlwind. You've got your team in place, you've begun building coalitions and know what has to be done. What you do next will ensure your success through the next two years.

Says Karen Masullo, EVP Social Media, Firestorm, now’s the time to “work really, really hard. There’s no room for laziness in marketing. If I don’t drive actionable items to the sales team, I’m not doing my job. Never get too complacent. You have to take a stand. Stick to your guns – you’re working with senior leadership, and you must give them your best insights and recommendations. Finally, your responsibility is to unify senior teams, especially technical teams. You need to know everything about the company.”

Visa Global Chief Marketing, Strategy and Corporate Development Officer Antonio Lucio, who has beat the average, says the secret to longer CMO tenure is simple: “You have to be effective and deliver strong business impact.” He’s been able to stay in his role by delivering against three parameters: business results, brand results and broader organizational impact. CMOs who last, he says, have an impact as leaders that has “probably been felt more broadly than in just the marketing agenda."*

Pete Krainik, Founder and CEO, The CMO Club, who’s held a variety of CMO and senior marketing positions at M&M/Mars, Avaya and DoubleClick says “Focus all your energies in things that help build relationships with customers – everything else is just noise. It is easy to get caught up in all the other stuff.” And never forget that “execution determines success. Great ideas without execution don’t matter.”

“Listen,” says Gary Slack, Chairman, Slack and Company. “Go see customers, after you've spent time with the rest of the company. Get to know your staff. Work hard on relationships with peers. Talk to prospects and to defectors. Develop a deep understanding of customer awareness, attitudes and perceptions.”

Next: What Have You Done for Me Lately?

*Rooney, Jennifer, “Average CMO Tenure Hits 43 Months,” Forbes, CMO Network, June 14, 2012.

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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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Allies, Agnostics and Antagonists

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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:

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Surviving in the Marketing Jungle

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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™.

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Generating meaningful insights

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with Liam Fahey

Intelligence that makes a difference – that creates insights – is almost always the result of collaboration between intelligence professionals and decision executives. Neither one alone can create and leverage intelligence. 

Executives influence the direction of intelligence work. They shape the context for the work: they identify the current and emerging issues and decisions, questions they want addressed, areas and topics they would like explored, and, the nature of the dialogue they desire with the intelligence professionals. 

Intelligence professionals create understanding and meaning out of disparate and always incomplete data, disconnected viewpoints and perspectives, and an ever-changing competitive environment. 

When they work in tandem, they co-create an understanding of change and its business implications. This understanding influences what the organization thinks about (e.g. which emerging opportunities or risks need attention), how it thinks (e.g. identifying, challenging and refining core assumptions), the decisions it makes (e.g. what strategic moves to make, what business unites to support) and the actions it takes (e.g. where to allocate resources).

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The critical role of the executive in intelligence

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with Liam Fahey

Insight is where the game is won and lost notes that "Intelligence as an influence on decision making has not yet fully bloomed in many companies," listing a number of reasons why.

What an intelligence organization looks like notes that "...today’s most successful intelligence teams have adopted a post-industrial, networked model, co-creating insights with decision makers..."

These lead to a series of observations gained over several decades working with some of the world's leading organizations:

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What an intelligence-driven organization looks like

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with Liam Fahey

What an Intelligence-Driven Solution Looks Like

Insight is where the game is won and lost notes that "Intelligence as an influence on decision making has not yet fully bloomed in many companies," listing a number of reasons why.

To address these challenges, today’s most successful intelligence teams have adopted a post-industrial, networked model, co-creating insights with decision makers, not just producing documents, powerpoints and spreadsheets. They build and sustain an intelligence capability that delivers real business results by:

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Insight is where the game is won and lost

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with Liam Fahey

Intelligence enables superior decision making when it generates insight

Every organization faces a critical need: to understand the emerging and future world better and faster than rivals.

All rivals are looking at the same world, so the real battle is to determine who “sees” the underlying change more incisively than the competition. Capturing “change insight” before rivals creates the potential for competitive advantage: knowing where the marketplace opportunities may be, where the risks or vulnerabilities may be and, importantly, knowing what to do. In short, without superior insight, winning over time is simply not possible.

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Amazon's "Surprise" Attack on the Grocery Business

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The news that Amazon is readying a major roll out of its online grocery business will catch many grocers unprepared.

This despite the fact that Peapod has been perfecting its model since 1989, reaching sales $500 million last year, there are an estimated 1600 online competitors, and Wal Mart decided the category was large enough to enter in 2011. And Amazon's initiative has been five years in the making.

Many will justify their lack of action because, at $6 billion, the category is just over 1% of the $550 billion food market in the US. It's just not big enough, yet, they'll say.

And one morning, they'll wake up, "surprised" at how big the category has become and try to mount an effective response.

It will be too late.

What did they do wrong?

Surprise rarely occurs because of lack of signals; it's due to either misreading indicators or when an organization's view of the environment, conditioned by past perceptions, prevents it from correctly seeking or interpreting indicators or emerging trends.

Take Pearl Harbor - why did the US navy fail to detect anytime in advance the movement of 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. Given this, "intelligence officers could perhaps have foreseen the attack if the US, years before, had...flown regular aerial reconnaissance of the the Japanese navy, put intercept units aboard ships sailing close to Japan...or recruited a network of marine observers to report on ship movements." [Kahn, "The Intelligence Failure of Pearl Harbor," Foreign affairs, 70, no. 5 (Winter 1991/1992)]

In other words, you can't find what you're not looking for. Said another way, we create our own surprises.

What "surprises" await your organization?

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