Strategy: It’s about Choices AND Commitment

 

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You can’t deny the power of a meme.

A photograph. A pithy quote. Ideally something so succinct it would take you days to get something of equal veracity.

And it never hurts if everyone kinda knows the person you’re quoting.

Drucker. Branson. Churchill. Gandhi. Mandela. Tom Peters. Michael Porter.

Here’s a Hilton B favourite.

quote-Michael-Porter-the-essence-of-strategy

 

 

 

 

 

A favourite because, as Porter so eloquently states, Strategy is really a choice. Of what NOT to do. We all know the harm we put our business in if we try be all things to all people. That’s lunacy. Enough HBR articles and case studies will confirm that.

Why I particularly like the quote though is for a slightly different reason.

It’s the underlying sense that, by making a choice, you’re also committing to a path. That you’re not going to take fork A but you’re sure as heck gonna take Fork B.

Trouble is I don’t see nearly as much committing as I do choosing.

I see plenty of hedging. I see plenty of toe-dipping masquerading as “test markets”. I see plenty of self-imposed internal handcuffs disguised as governance guardrails. I see a lot of cutting corners presented as a trendy attempt at “minimum viable product”

I don’t see as much committing. Fully and completely.

Recently I had an incredibly tortured experience with a local retailer. I’ve bored my friends enough with the story that I wont repeat it here. The PTSD remains too raw. In fairness, their newly-minted Director of Customer Experience is working quite diligently to address the past mistakes.

The issue stems from, what appears to be, a monumental disconnect between the products they sell and the service related to installing those very same products. Aspects of their service chain and installation are outsourced (not unusual), their service center has only a marginal understanding or control over the outsourced part (again not unusual) and the overwhelming sense you get is that once you’ve bought the product, any after-sales stuff is really none of their concern. Its not them, it’s the outsourced 3rd party.

WRONG 

It is ALL your concern.

If you elect to outsource something, and its often a prudent move, you still own that partner. And that part of the customer experience. And if they f**k it up, its your brand that takes the hit, not some ACME dude in a plain white van with an indecipherable accent. He’s just cashing the cheque your company paid him. He’s certainly not worrying about your declining brand equity and reputation.

Commitment is the issue. Or, more importantly, lack of commitment.

If you chose to be in a certain type of business, or offer a certain type of service, then you’ve no choice but to deliver against the minimum threshold of customer expectation in the category. And all that minimum threshold affords you is the opportunity to be the value player in that segment.

<And if you think the minimum level is a Teflon-shield, try escape the teeming hordes on social media dying to skewer you at every turn>

The leaders in a segment are those who over-commit.

Who go further than the minimum threshold of customer expectation. That doesn’t mean they necessarily over-commit on service but they over-commit on one of the classic “4 P’s”. Ryan Air doesn’t overcommit on customer service but I’m damn sure there are no cheaper flights anywhere in Europe. That’s commitment.

At the risk of being nauseatingly pithy, commitment is what makes any relationship strong.

And if you’re not interested in strengthening relationships with your customers, then you shouldn’t be in business.

Strategy is about choice. It’s also about commitment.

<I wonder if there’s a Deepak Chopra meme about that>

Culture, Strategy & The Turmoil of M&A

Heinz_Ketchup_Bottles_AP_Wide

 

Another week. Another deluge of press releases announcing another mega-merger. This time between Heinz and Kraft.

Inevitably the press releases read like a playbook of PR buzzword bingo.

Synergies

Complementary competencies

Economies of scale

And the phrase so beloved of Wall Street analysts….Efficiencies.

Efficiencies. Such a benign word in print.

Not so benign if you’re the 2nd SVP of R&D in the new entity. Or the brand manager of the former “Loss Leader” brand that’s now been characterized just as “Loss”

Or when the “L” and “I” of that wonderful accounting acronym LIFO means you.

There’s no denying the potential economic capital upside of these mergers. But it’s the downside of the human capital that warrants attention too. And I’m not merely talking the lay-offs and plant closings. I’m talking about the impact on the folks who remain too.

Too often these mergers are couched in terms that make it seem like an exercise in Brand Architecture and a way of aligning which brand, sub-brand goes where in the brand structure.

But is less about where something fits than how it fits.

And that how is Culture.

And whether the two merged cultures can fit together as snugly as the Wal-Mart planogram your new organization is salivating over.

In our practice we talk about Culture in simple terms. Culture is really nothing more than “the way we do things around here.”

The things we consider important.

The values that define how we behave – or want to behave.

How we treat each other. And treat our partners, vendors, franchise partners.

How we treat our customers. And how critical that is.

That’s Culture. And it sets the tone for how your organization acts internally. And that directly impacts how your brand executes and acts externally.

Its one thing when you’re merging the manufacturing operations of the famous 57 with the manufacturing operations of powdered cheese and dry macaroni.

Now consider how serious that Culture alignment is when your organization – and brand – stares into the faces of millions of paying customers directly each and everyday. Like the recent merger of Burger King and Tim Hortons.

You don’t think an alignment of Culture is critical in determining what’s important in setting how that company considers, acts and behaves over the top of a store counter hundreds of times a day?

How about a few business examples that ran aground on the rocks of mis-matched Cultures. While all these examples aren’t specifically M&A’s, they do point to the power of Culture.

Publicis & Omnicom. When the immolation of your proposed merger becomes an op-ed piece in The Economist, you’ve officially achieved the business equivalent of a hasty, drunken Britney Spears wedding in Las Vegas. Seemed like a good idea at the time but now all you’ve got left is a massive hangover and a huge messy amount of legal bills to deal with.

Unilever and Ben&Jerry’s. The classic “we’ve agreed to disagree” press releases following a fall-out over GMO and GMF food labeling highlights that even the best business relationships can run afoul over a difference in values and beliefs. And nothing defines Culture more than the values and beliefs that actually drive the behavior of an organization. Remember Rule 1 of strong businesses folks – “Do then Say”.

Saturn & GM. To a weary (and wary) auto-buying consumer the Saturn promise of “A Different Kind of Car. A Different Kind of Car Company” was a siren song. And boy did hundreds and thousands respond by snapping up the cars and attending the annual Saturn owner’s picnics in droves. This brilliant article from Wharton highlights how the dichotomy in opinion, worldview and day-to-day practices (I hear Culture in there) inevitably drove this brilliant operation into the ground.

Like me, your LinkedIn feed likely features that delightful meme of Peter Drucker with the famous “Culture Eats Strategy” quote. Perhaps an over-simplification of the sage advice Drucker was giving but it is true.

The most well-intentioned strategy (or M&A) hasn’t a chance if it runs headlong into an immovable and intractable Culture.

How well-aligned do you believe the Cultures are of the recently merged organizations are? Do you believe it’s as important as squeaking out that last ounce of operational effectiveness?

Weigh in folks.

All Hail The Courageous Brand

 

 

 

Race-Together

 

 

 

 

 

 

“Everyone’s a critic” is one of those phrases we all know.

Lessor known, but perhaps more accurate, is the epiphany from Clint Eastwood’s Dirty Harry character “Opinions are like assholes. Everyone has one”

If you want to see this reality, throw content into the feeding frenzy of the 1.3 billion users of Facebook. Or, if you’re particularly resilient and enjoy self-flagellation, venture into the uncharted territory of Reddit and sub-Reddits.

But should that stop brands and businesses from stepping into the fray?

Should the potential for backlash, ridicule and lambasting mean that you should soft-pedal on your company’s Purpose and Vision?

Howard Schultz, Founder and CEO of Starbucks, evidently doesn’t think so.

The organization’s recent #RaceTogether efforts to elevate the conversation around race and race relations in the USA has polarized customers and the press. The intensity of the backlash has forced the organization to stop certain elements – like barista’s writing #RaceTogether on your morning coffee and actively engaging caffeine-starved customers on the subject – to something on a microsite.

Starbucks certainly aren’t the first well-intentioned and Purposeful company to wade into these sensitive and polarizing issues.

Kenneth Cole

My absolute favourite fashion brand, and one that has not shied away from commentating on topical and controversial subjects. Albeit with a very wry sense of humour.

kenneth-cole

However their brand consistent advertising lead to an infamous tweet around the Arab Spring uprisings. That single tweet highlighted how quickly smart can become smartass and how attaching your brand to events as tumultuous and violent as Arab Spring isn’t a particularly great idea.

Bennetton

The original bad boy of marketing. Constantly making provocative and outrageous advertising to communicate their stance of key social issues. If you want to discuss the original attempt to raise the issue of race, look no further than their “Colours of Bennetton” advertising.

Bennetton

But when that topic moved to kissing priests, new-born babies, assassinated mob figures and death-bed photographs of Aids patients, it was clear that Bennetton had moved from Purpose through Provocative and all the way into Shock-value.

 

Shock-value is never an enduring or welcomed communications platform. Certainly not for an organization trying to regain relevance and bolster plummeting sales.

Dove

Another brand throwing themselves headlong into thorny societal issues. Almost a decade ago their advertising agency Ogilvy&Mather launched “Evolution” which became an online viral sensation and laid the foundation for a campaign that AdAge called the most influential of the 21st Century. No small feat.

By unapologetically taking on media stereotypes about what “real beauty” means, Dove artfully raised perceptions of their brand by tackling one of the most pervasive and universal issues facing over 50% of the world’s population. As the father of two daughters I give them kudos.

So what can be learnt from this spotty history?

Execution, Execution, Execution

Sounds pretty obvious but these initiatives all come down to execution. A mis-step or an unrealistic expectation of your staff – “please discuss deep thorny issues with people of another race before they have their morning coffee” – only sets you up for a torrent of social media backlash. Did Starbucks send all their employees for sensitivity training and counseling or did they hope the well-intentioned but awkward and fumbling efforts of their front-line staff would be shrugged off by the customers? (My question is rhetorical)

Scenario Planning

A precursor to the execution point but have you really exhausted your thinking around “What’s the worst thing that could happen and how will we react?” When the Starbucks person leading the communication task for #RaceTogether shuts down their Twitter account because of the volume and vitriol of tweets, it sounds awfully like they were ill-prepared.

Check Your Closet for Skeletons

Woman around the world regularly praise Dove for taking such a visible stance on woman’s rights. In the same breath they ask how parent company Unilever can apparently support teen-boy brand Axe, well known for its testosterone-fuelled, male sexual fetish advertising, with equal investment and passion. And sell skin-whitening beauty products to Asian customers.

There is genuinely nowhere to hide if you go this route. And the louder your proclamation, the more fervent the naysayers.

Expect the Trolls

Personally I was devastated when Coca-Cola’s #MakeItHappy efforts around making the Internet a better and safer place was brought down in less than a week by the (malicious and headline grabbing) efforts of Gawker magazine. Again, what might’ve been prevented by a rigorous scenario planning exercise that anticipated the vocal trolls hiding out in social media land?

Is It A Legitimate Position For Your Brand?

Is this effort a genuine alignment with an organization’s core beliefs, vision and Purpose? Or is this just more marketing fluff? There’s no denying Starbucks credentials behind purpose-driven efforts like Freetrade, employee wellness and profit-sharing programs and a slew of other fine, fine initiatives. But when Quartz magazine points out the lack of diversity in the Starbucks board of directors and their over-saturation in affluent white neighbourhoods, you have to ponder just how far your Purpose can stretch. If people can’t point to genuine, tangible artifacts within your company walls, expect the cry of “bullsh*t” to ring out loud and clear.

Let me be clear I commend Schultz’s efforts to run headlong into these issues. Heaven knows race is a festering issue in the USA today. But well-intentioned must also be well-managed if its to have the impact we all want.

As someone who adores Purpose-driven organizations, I tip my hat to Starbucks.

Perhaps, as a final acknowledgement, the famous words of Finnish composer Jean Sibelius

Remember a statue has never been set up in honour of a critic

Brand Rejuvenation : The Elusive Search to Reinvent Your Brand

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When I started my marketing career I dreamt of the opportunity to work on storied brands like Coca-Cola, Pepsi, Nike, M&M’s, P&G.

I remember thinking “If only I could get that break…”

So it is with no small degree of sadness that I look at how far some of these storied, global behemoths seem to have fallen.

Coca-Cola

Despite a fairly steady showing on the stock market, scientific news this week that diet sodas are linked to widening, not shrinking, waistlines must be a tremendous blow to Atlanta’s hopes to turn around stagnant growth. Especially considering we all know full-sugar soda sales, like their famous red can, are in free-fall globally.

McDonalds

You can’t open any business press without more depressing news from the world’s largest QSR. Pundits lambast them for selling off the brand – Chipotle – that’s resoundingly stealing share from them and building rampant customer affection. Experts ask how repeated advertising efforts actually address more systemic operational issues in their stores.

These two are not alone.

Kodak. Blockbuster. Nokia. Kelloggs. GM.

All businesses relegated to the history books or suffering an inexorable fall from idol to has-been.

This is certainly not a knock on the legions of smart and passionately committed folk trying to turn around the fortunes of these beleaguered businesses.

 Is There A Way Out?

Historically beleaguered local brands struck out for new shores and new markets with the enthusiasm of Mayflower zealots. Sadly, to paraphrase the classic quotation about Alexander the Great “when Alexander saw the breadth of his domain, he wept for there were no more worlds to conquer” Eastern Europe, China, South America, SEA and even my former continent, Africa are all pretty mature markets today. Sure they’ve not reached the penetration of Wal-Mart, Starbucks and Apple seen in North America and Western Europe but no one in those markets is collapsing in ecstasy over a pair of black market Levis. The potential for 20% annual net growth is not happening by finding untapped markets. There are none Dorothy.

The ever-opinionated Mark Ritson, in a great article for Branding Strategy Insider, suggests that an obsession with “focus” has hobbled these organizations. That by sticking obsessively to their core competencies and core product lines these organizations have created too narrow a lens to ever achieve real growth again.

I would agree.

There is a very fine tipping point at which brand equities become brand handcuffs. Building brand equities is a fine objective but when droves of marketing executives become so busy “protecting” what their brands mean today that they can no longer imagine what their brands could mean tomorrow, that spells trouble.

Could Purpose Be A Lens For Rejuvenation?

If you’ve read previous posts of mine, you know I’m a huge proponent of Purpose as a galvanizing idea to drive internal alignment and external growth. Unlike an organization’s Mission which typically articulates what currently drives a company forward – and can change as the marketplace does – Purpose is more like a north star or beacon that is unwavering.

Purpose is often a loftier goal. And it seldom (if ever) is attainable in the quarterly cycle so beloved of publicly traded firms.

In establishing a Purpose for your organization, you’re giving yourself the latitude to strive for a broader reason to exist than the value proposition you execute on currently.

Delivering on your Purpose, it has been argued, is what allowed Apple to pivot from being a niche player in the desktop computer business to being the most-admired organization on the planet in less than 20 years. From phones, to music, to TV and recently into fashion with Apple Watch, Purpose has given Apple the opportunity to escape the narrow confines of being an also-ran versus the PC to being on track to become the first trillion dollar business in history.

Evolving from a purely functional product differentiator (a quarter cup of moisturizer) to becoming the champion of a woman’s right to feel comfortable and beautiful in her own skin and not be manipulated by media stereotypes of beauty, Dove is another business that has shown the possibility that comes when you create an ideal behind a higher Purpose. Dove campaign for Real Beauty

And it’s not just the Apple’s and Unilever’s who’ve found Purpose as a driver for business success.

Media maven Tyler Brûlé, currently founder/editor-in-chief of wildly successful Monocle, is another example. Unencumbered by traditional notions of what a high-end magazine for the jet setting lifestyle should be,Brûlé has launched a radio station, a number of high-end café’s and is embarking on a print-on-demand concept store in London. By using Purpose as a guide, he’s been able to create a richer set of business opportunities than ever before.

It would be insane to suggest Purpose is a magic wand. One wave and Poof, your problems disappear.

Equally insane to suggest any of the fine folks in these beleaguered organizations are just sitting around rearranging deck chairs on the Titanic.

What is clear is that more polishing around the edges and being shackled by former glories and equities, is not the answer.

Perhaps its time to re-find that north star.

Where would you start to rejuvenate these brands?

How Purpose can Drive Change and Innovation

Axa Asigurari1288

 

 

Change has become a recognized game-changer for enlightened and progressive businesses. In this series we’ve attempted to define why Purpose and Profits should be linked and explained the importance of building a system to measure the impact Purpose has. In this post, we go further into the notion of Purpose as a catalyst for change.

In a business environment where change is trumpeted as the only constant, its not surprising many organizations recognize the imperative to build deeper competency in change management. Sadly though, as John Kotter the veritable “father” of change management has asserted, the reality is that most large change initiatives are blighted with sub-standard results and some are dismal failures.

Why? Why? Why?

Well, according to Gary Hamel, the issue is that organizations are spectacular at managing the implementation of top-down change but really shoddy at embedding the reasons (and rewards) for change at a deeper psychological level. And secondly, in a world fixated on agile and nimble companies, they seldom create a business that can adapt – and innovate – quickly.

Simplistically the failures seem a classic case of “the process” over “the people”

Perhaps a better way forward would be to look at change through an entirely different lens.

Shift the question from “Change – to what end?” to “Change – to what purpose?”

In this alternative world imagined by Hamel lies change platforms that syndicate and democratise change across the organisation, that are based on initiative rather than mandate and that encourage free-form experimentation rather than project-managed milestones. Such an approach, encourages wider and more accountable participation, fosters honest conversation, diversifies solutions rather than seeking to close everything down to a single answer and seeds local experimentation that can then be refined in a less risky environment before becoming part of the way forward.

For those caught up in the “innovate or die” zeitgeist, the scenario above sounds like nirvana.

But what if we could further elevate the potential that these changes would be embraced more readily, and more deeply?

What would happen if those change platforms were purpose-focused– if they focused on changes that could change the world as well as the bottom line?

What if the changes being sought on an altruistic level (intentional purpose), were linked to the pursuit of commercial benefits that were tangible and sustainable (functional purpose) would that inspire managers and people in the businesses themselves to participate in the ways that Hamel describes?

Could that help deliver the bottom line benefits that growth-focused change management cannot?

This isn’t a new thought.

In 2009, two McKinsey principals, Carolyn Aiken and Scott Keller, wrote an article about the irrational side of change management in which they identified a range of pre-conditions for successful change:

  • A story that focuses on the impact of change on society, customers, investors, teams and that is compelling to individuals not just the organisation; that people feel they “own” because they helped author it; and that uses a combination of urgency and dreaming to spur momentum and incite change.
  • Clear behaviours that are expected from all involved, that are publicly reported on and that are embraced by all, rather than led by a select few.
  • Aligned and reinforcing mechanisms, such as systems, processes and incentives, that are seen as intrinsically fair and that are long on meaning because they are offered as a surprise rather than a right or an entitlement.
  • Skills enhancement that focuses on what people feel and believe in as well as what they think, and that build capabilities through a programme of forums and fieldwork.

 

What sounded like an irrational premise to them then, sounds incredibly like a Purpose-driven and Purpose-founded set of conditions to us now.

126Yet there remain many who are Purpose-skeptics. Who believe that Purpose is merely a business Polyanna. These include renowned Australian marketing scientist Professor Byron Sharp has taken Jim Stengel, one of the key advocates of purpose-driven brands, to task over whether such brands are as effective as Stengel states. Sharp questions whether the methodology used to arrive at Stengel’s list of successful purpose-driven brands is sound.

That skepticism may be well-founded. After all, as we noted in our last article in this series, the current lack of an accepted measurement system to effectively monitor the competitive difference that purpose injects is worrying. But, there was a time that measuring Brand Value didn’t exist either.

Here’s what we’d contend is unassailable.

Change requires people – not processes – to do something different tomorrow than they do today. It’s messy, complicated, frustrating and the attraction to slip backwards toward the current status quo remains high.

Making the change, and sticking to it, therefore requires an appeal to both the head and the heart of your people. In organizations who have a clear, distinct and embedded Purpose, that appeal becomes infinitely easier and infinitely more motivating.

After all, as our PROSCI Change Management instructor was fond of saying, “Change is all about the people, Stupid”

We think Gary Hamel would agree.

Mark Di SommaThis post was co-authored with friend, brand zealot and cranium tickler Mark Di Somma. New-Zealand-based he’s a creative strategist, keynote speaker and writer for Branding Strategy Insider. For more than 20 years Mark has helped decision makers, brand owners and brand agencies define, articulate and elevate the value of their brands. He brings a refreshingly New World perspective to issues around compelling brands, competitive value, purposeful cultures, market leadership and responsible ideas. Follow him at @markdisomma

We’re committed to a series of posts on this subject. Look for them over the next few weeks. Your feedback, comments and input is appreciated.

Measuring Purpose. The next key business imperative

Nike-FuelBand-MakeItCount

In the first article in this series on purpose, we looked at the nature of purpose and espoused the view that purpose has two facets: functional (where it describes what the company must get done); and intentional (where it articulates what the company would like to see change in the wider world.) In this article, we look at how purpose and its impacts might be quantified and the benefits that a measurement system might bring.

We’re a species of builders. Building has ensured our survival since the beginning of time. And whether you’re building a home or a business, measurement is a critical accompanist to activity. Measurement is so important to us that one of the most profound upheavals in European history was driven by a desire for common units of measurement. Measuring and building are, therefore, inextricably linked in our DNA.

“Measure what matters because it matters what you measure”

For years we’ve had common measures and yardsticks for ascertaining the relative health of organizations. Some objective measures– like EBIDTA – and some more subjective but no less important – like stock prices. More recently, the Internet has become a measurement bonanza for business leaders and meta-trends like “big data”, highlighting just how much opportunity and potential lies in the ability to track every click, measure every interaction and derive sentiment and “truth” from every social engagement.

With such a bewildering array of data points to measure, how does a business leader choose the right set? No business would ever just measure CAPEX and leave OPEX uncalculated. So, how can a business leader ensure they’re measuring a balanced set of data points rather than just one’s that might give them an erroneous and biased view of their organization?

In particular, how do we find consistent and verifiable ways to measure intangibles like Purpose?

And why would we spend time tracking that measurement?

Firstly, there’s plenty of evidence to show that fuelling purpose fuels performance. According to Deloitte’s Culture of Purpose 2013 Report, a strong sense of purpose has been shown to contribute to long term success. Cultures with purpose report that their employees are more likely to perform well and the businesses concerned experience strong financial performance. They also have a distinct brand, a clearly defined values and belief system, greater customer satisfaction and better employee satisfaction. As far back as 2011, the father of organizational effectiveness John Kotter correlated “high performing cultures” and financial performance in his book Corporate Culture and Performance

The data is there and the recommendations pretty unambiguous.

So with all the lot of discussion about why it makes sense, who it affects and what it can be used for, why is it that putting metrics and measurement to purpose seems so elusive?

And what metrics might we use?

There are some suggestions in a recent article in MIT Sloan Management Review. Companies focused on customer focus might look to their Net Promoter Score for proof of whether their purpose is effective. But that strikes us as a blunt tool when used alone. For those that seek to put their employees first, the authors reference employee engagement scores. Again, a rather ambiguously defined metric and certainly not one operating to a universally consistent standard of measurement.

So, if we agree that “Purpose” is an aspirational goal for any organization, something tantalizingly just beyond reach, shouldn’t the measures of success relate directly to the progress being made towards that purpose?

Case in point, if you’re IBM and you’re committed to a smarter planet, then the number of new patents, the levels of publishing and the dollars being invested in R&D are all good purpose-performance indicators. Perhaps peg those numbers as a percentage of EBITDA or even as part of the P/E ratio calculations. Look to at the correlations between outputs and profits. After all, if the Deloitte findings are correct, purposeful organizations should be capable of higher than average future earnings. If you’re Zappos, and your purpose is to deliver happiness through service, then those indicators would be things like staff churn, average tenure of customers, Net Promoter Scores and the numbers of repeat customers. Again, they show how the pursuit of happiness is benefitting the business.

So can we align pursuing purpose with metrics that provide clear proof of the impact on the business? 

And if we can, why hasn’t it happened yet?

One of the key issues with purpose is that it has traditionally been expressed as an aspiration, and that aspiration has been isolated from the rest of the business. What’s been lacking is further drilldown that details what will be achieved, when and how. In other words, the financial impacts of the projections have been isolated from the purposeful impacts.

For example, Nike sees its purpose as being “To bring inspiration and innovation to every athlete in the world.” In order to quantify how the pursuit of that purpose boosts the bottom line (and therefore why purpose is good for the business), Nike would need to quantify the impact of inspiration, innovation and the number of athletes in the world on their bottom line. Remember, in Nike parlance, we are ALL athletes.

So … 10 questions that might go some way towards doing that:

  1. What do we define as inspiration and what part do we play in that inspiration?
  2. How many inspiring products do we sell (and therefore who do we inspire and to do what)?
  3. What did those products cost to develop?
  4. What do we make from them?
  5. To what extent are we making money from products that continue to inspire vs those that are re-inspiring vs those that will inspire into the future?
  6. What is the “inspiration” contribution of our product versus that of the sponsored athlete, high school jock, weekend warrior wearing it?
  7. What innovations have we introduced in the last year for athletes?
  8. How many of them have we sold?
  9. What’s still in development and what are the projections for those products in the business case?
  10. How quickly is our innovation cycle and being realized in terms of saleable goods and what effect are those innovations having on our bottom-line?

But is all this introspection about measurement worth it?

We believe so.

While some may see quantifying the impact of aspiration as problematic, there is good precedent to pursue this.

There was a time when considering a “brand” as a legitimate asset on a balance sheet was considered heresy. Business today largely accepts the notion of “a brand as a genuine asset” as mainstream. Ergo, if purpose can galvanize employees to be more effective, entice partners and vendors to greater heights and drive disproportionate customer preference, loyalty and sales, doesn’t it behove us all to make more of an effort to try quantify its contribution?

Ultimately if purpose is to be embraced as a competitive force, those organizations that are genuinely putting it at the core of their strategy, must be able to demonstrate the rewards. To themselves. To their investors. And, let’s be honest, to a legion of business people who still remain skeptical about the power of purpose.

How are YOU measuring Purpose in your organization? Do you believe it warrants measurement?

Mark Di SommaThis post was co-authored with friend, brand zealot and cranium tickler Mark Di Somma. New-Zealand-based he’s a creative strategist, keynote speaker and writer for Branding Strategy Insider. For more than 20 years Mark has helped decision makers, brand owners and brand agencies define, articulate and elevate the value of their brands. He brings a refreshingly New World perspective to issues around compelling brands, competitive value, purposeful cultures, market leadership and responsible ideas. Follow him at @markdisomma

We’re committed to a series of posts on this subject. Look for them over the next few weeks. Your feedback, comments and input is appreciated.

Are You Ready for the Next Era of Competitiveness?


blockbuster-store-closing

 

 

Kodak vs camera phones. Blockbuster vs NetFlix. Barnes & Noble vs Amazon. Any newly-minted MBA graduate can reel off a list of organizations felled by a competitor that came out of nowhere and brought the organization crashing to their knees.

The reasons – and the excuses and post-rationalizations – are equally legendary.

Organizational rigidity. Poor situational awareness. Cultural arrogance. Bricks in a world increasingly driven by clicks.

While all those reasons are incredibly valid, one increasing reality to me is that categories have become increasingly porous.

WTH are Porous Categories?

For much of business history companies could easily point out their competitors and where their next competitive threat might come from. Theodore Levitt’s classic missive “What business are you in?” established the most basic way for business leaders to evaluate their operations and determine sources of competition.

Steadfast and much-researched principles like core competencies, barriers to entry, market access made that evaluation easier. After all, it takes effort to build a factory, create a supply chain, negotiate with union employees and large retailers to make – and stock – your products, and it takes as much experience to wring every last drop of efficiency outta those operations.

However, I’d also argue that the supposed “security” of those principles made many organizations complacent.

Today the security of those principles is in real jeopardy.

Obviously the internet has been the single largest contributor to that transformation. Beyond just the ability to enter and upset categories, it’s also created a new aptitude and attitude for business leaders to enter new categories.

It’s that combination of ability, aptitude and attitude that gives rise to porous categories.

Case in point…

Last month the world has shuddered under the massive marketing and PR tsunami that is an Apple product release. It did not disappoint. If there’s one thing the folks at Apple know its how to do pageantry like no others. There were celebrities, there were ohhhhs and aahhhhs, there were bright shiny, lickable new gadgets, there was even free music from U2. Ok, so that last point wasn’t quite as well-received as the other stuff.

The one item getting traction is the release of Apple Pay. Apple Pay, the much-anticipated foray into NFC and the release that could (will?) make the digital wallet a genuine reality.

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What’s profound about Apple Pay – and so many of Apple’s innovations over the past few years – is that its poised to disintermediate the historically unassailable credit card industry by acting as the payment “gate-keeper” to the entire iOS ecosystem. By sitting “in front” of the consumers credit card details on the phone, it has the potential to set which products, which cards and which brands can sell to its legion of Apple users. And if there’s one thing we all know about Apple users, they’re slavishly loyal and typically well-off financially.

Whether Apple Pay will do for (or to) the credit card and mobile payment category what iTunes did to the music industry is for others way more technologically savvy and clairvoyant than me.

What’s been interesting to watch is the reaction from “competitors” terrified by the sea-change that Apple Pay portends.

Sensing the momentum quickly moving away from them, large US Retailers, who’ve been slow to explore this sector, are quickly adopting Apple Pay or accelerating their own foray into the space. After years of postulating the intersection of Retail & Mobile, we may finally be there.

It’s one thing to accept that porous categories are a reality. That, as a business leader, you genuinely have to consider a world where competition can and will come from literally anywhere.

But, what to do about it?

Some advice is pretty obvious and, if you’re not already doing this, you bluntly don’t deserve to be in business.

  • Read, re-read, print and sleep with this classic Michael Porter article under your pillow.
  • Raise your situational awareness – and make it someone’s total job to evaluate your direct, near and in-direct competitors more frequently than your annual business planning meetings.
  • Raise your comfort level with testing and failing – Innovation is such a topical buzzword but many companies still seem reticent to try something new unless they can guarantee 100% success every time. That’s both unrealistic and blinkered. Failing, particularly failing where you learn something profound about your organization’s shortcomings, can be the most enlightening action you can take.

 

And here are a few other options that might reduce your exposure to competition.

  • Build a deep and broad competency in Change Management. As a recently minted PROSCI graduate its not surprising I’ve drunk the Change Management Kool-Aid. The point being is that, in a market buffeted by change, so few organizations have any internal competency in this critical area or it is often the responsibility of a single department. Change Management acuity should sit in all areas of your business because that raises the likelihood you can achieve point #2.
  • (Comfort with) Change should be a Cultural phenomenon internally. The cases cited earlier typically point to an inability of those organizations to culturally adapt. In hindsight that’s likely very true. Just like you currently obsess about being customer-centric and building a culture to deliver it, you should equally obsess about creating systems that motivate and celebrate change. If you’re not sending signals to your employees that change is inevitable and welcomed, you’re not building the internal agility to meet that inevitable change.
  • Obsess on your Vulnerabilities. In an earlier post I talked at length about the predilection of organizations to fixate on strengths and core competencies. Why not, we all like talking about those. Truth being, competition comes from your Achilles Heel. From exploiting the areas where you’re weak. Do you feel exposed by the answers to these questions…Can we democratize our customers more? Can we give them more, not less, choice? What will cloud-based services do to our business? Should you be concerned about the Uber-fication of your category – here’s a bunch of categories already changing because of Uber. Strengths are great to talk about to analysts and at the Xmas party but its your vulnerabilities that will fell you.
  • Re-examine your Purpose. Yes, Dear Reader, I’m dropping the “P” word on you too. Purpose has become the clarion call for many enlightened organizations. Sadly for many less-enlightened ones, its still just words on a wall or in an annual report. Simplistically if you believe your Purpose is merely short-hand for the one-dimensional functional delivery of your products, you’re missing a trick. Purpose, as companies such as Patagonia, Jet Blue, Chipotle have shown, can be a competitive advantage. While it may not save those companies from having new entrants enter their respective categories, it does make them less vulnerable to customer defections. And that’s certainly critical.

 

Dear Reader, I can guarantee you one thing – categories are going to become more porous. The internet’s ubiquity – and the realization of “The Internet of Things” – makes that inevitable. You can metaphorically play the game of the Dutch boy and the dyke, or you can take a more aggressive posture by focusing on the areas of Change, Vulnerability and Purpose outlined above.

Bon chance.

Tackle Your Brand Vulnerability – or Be Prepared to Lose

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When former US-President Bill Clinton proclaims that the three largest global soda manufacturers have declared their intent to reduce sugary calories by 1/5 within a decade, you can be assured of two things. One, it’s a pretty damn important message. Two, every media outlet imaginable is going to carry your message in their next news cycle.

Skeptics might argue that, for these oft maligned and outed soda manufacturers, the second reason might actually pip the first.

After a decade of fighting public relation battles that stretched from Mayor Michael Bloomberg’s attack on serving sizes in New York to numerous references in medical journals about the contribution of high-calorie sodas to teen obesity, there’s definitely a chorus of folks remarking “about friggin time guys”

To give credit though, reducing sugary calories by 20% is a great step forward – Jim Collin’s might even label it a Big Hairy Audacious Goal (BHAG) – but this spectre has haunted the category for a while. Worse, their historic responses – typically splashy marketing and advertising efforts - have been so saccharine and self-serving as to make no impression whatsoever. In fact, many of those earlier efforts were so poorly received that they were quickly quashed.

Two things strike me about this news.

1 – Why, after decades of declining sales in their principal markets and in their principal product lines, did this initiative take them so long to launch?

2 – Why is it that so many mature categories seem so unwilling to tackle well-documented, broadly understood vulnerabilities in their value proposition?

I’m not so ignorant as to presume that a single memo or a strongly-worded email from the CEO would turn around the behemoths that are Pepsi-Cola, Coca-Cola and Doctor Pepper. When Interbrand values you at $17.8billion (Pepsi) or $79.2 billion (Coca-Cola) these are deeply integrated organizations that have spent decades chasing Michael Porter’s “core competencies” in manufacturing, distribution, new product development, sales and marketing. You don’t unravel that Gordian knot overnight.

But when you’ve invested countless dollars creating – and supporting with marketing dollars - a product portfolio of over 400 product flankers, bought new verticals to capture juice, water or energy variants and folks are still leaving in droves, it must beg the question “perhaps there’s something else we need to be addressing?”

frustrated-by-automated-phone-system1But they’re not the only culprits.

Cable companies that advertise a slew of new content blockbusters yet seem unable to send a technician to my house at the time they scheduled.

Telco companies that offer a bewildering array of snazzy new phones and data plans yet take 45 minutes and several rounds of escalation to answer a simple question about my monthly bill.

Hotel companies with incredible mobile tools and services allowing me to rate, review and check-in to my $450-a-day room from anywhere yet also seem to think that charging me an additional $30 a day for wifi is somehow appropriate.

Software companies launching fantastic new features with every release though, sadly, those same releases seem to be bloated and buggy until release 3.0

There was certainly a time that building a business and brand by launching new products or adding new features was the fastest way to market success but, particularly in mature categories, that traditional approach seems closer to the law of diminishing returns than the greenfield opportunity of old.

What’s a marketing leader in a mature category to do?

Well one answer might lie in an unusual and unlikely source for mature categories – the fantastic work by Adam Morgan, the father of “Challenger” brand 51uK-n3zEkLthinking.

Amongst his 8 Credos of a Challenger brand, Adam sets out the notion of “Symbols of Re-Appraisal” which essentially asks brands to think deeply about what actions they can take to make consumers profoundly think differently about them. What would it take to make consumers stop and think “Wow, I’d never have believed category X or brand Y was capable of that” In Challenger brand folklore, when ING Direct decided to offer customers a banking experience without bricks&mortar branches, that was a profound “Symbol of Re-Evaluation” which lead to a redefinition of what consumers expected of the category.

It means taking on the sacred cows – or obscenely overgrown pink elephants – of the category. Or within your organization.

And, most importantly, its now the category champions, not just the historical Challengers that are doing this.

McDonalds stepped up admirably with their “Our Food, Your Questions”. Heaven knows, the QSR category – of which McDees is the de-facto big dog – has a very tattered and blemished record, particularly in the mature markets of the US, Canada, the UK and Australia. But by tackling their toughest critics head-on, versus dodging them, McDonalds was able to claw back some credibility – and create a Symbol of Re-Evaluation.

The brutal reality for all marketers is that building brands entirely on what we perceive as strengths is no longer enough. Our brand weaknesses, or vulnerabilities, are just as likely to sink our sales aspirations as our brand strengths are to drive them.

Well-informed consumers are just too socially-connected, too societally-aware, too financially-empowered and too able to find and purchase alternatives for us to think that not addressing our vulnerabilities is sustainable.

To paraphrase that terrible dream of King Nebuchadnezzar, perhaps its time for all brand leaders to consider if they’ve built a giant with feet of clay. Because, it may just be those clay feet – or Achilles Heels – that will topple your business.

How Winning Brands balance Purpose and Profit

BELGIUM jan14013

 

There are those who continue to frame the role of business in purely commercial terms. Business is hard enough, and the demands of shareholders and the markets so insistent, these people say, that companies need to avoid the ‘distractions’ of infusing a moral platform into what they do. They should just get on with making profits. That’s their purpose. After all that’s what shareholders demand and that’s typically what they’re compensated on.

And in that one word, purpose, and its ambiguities, lie the seeds of an increasingly vigorous debate that, to our minds, stems from a confusion of ideas (and priorities).

When you adopt a functional definition of purpose, this is pretty much where most of us land: The purpose of business is to make money. True. Single-minded. And responsible – in the sense that without money, there are no resources to keep people in jobs and to contribute to the economy and the markets.

If however you take an intentional definition of purpose this idea extends one stage further: the purpose of a business is to make money and to do good in the world; or even the purpose of a business is to make money by doing good in the world. Also true, for those of us who believe that there is more to business, and life, than just money. Less single-minded, because there is a linked agenda. Also responsible – but to different things, in the sense that money is a means as well as a resource.

Purpose when it is defined as a function revolves around the immediate and commercial reason for being.

The focus tends to skew towards results. In the right hands, this concentration on outcomes energises and drives the business priorities and strategies inside an organisation. Coke became the biggest beverage company in the world because it set its sights on putting a glass of Coke within arm’s reach of every thirsty person on the planet. The pursuit of that result is reflected in its supply chain policies, in its product development, in its distribution and pricing strategies. When it goes too far though, the pure-play pursuit of results (and their attendant incentives) drives an organisation to pursue agendas that are so outcome-focused they can lack humanity and even responsibility. The actions of Enron and GM are cases in point. Both organisations pursued results at the expense of other considerations.

Purpose when it is defined as an intention reflects a more global bias.

It frames what the people inside an organisation, and the customers who buy from them, would like to see change (for the better) in the world. In this context, the focus is on shared beliefs and on a shared view of the world that is much more long term. In the right hands, this focus on what’s desirable and altruistically aspirational holds an organization on a steady morally-focused course. It puts some ideas in-purpose and renders others unacceptable because they do not contribute to the intentional purpose (even if they do contribute to the functional purpose). As I pointed out in a recent post , a strong and clear purpose drives collective comprehension, cohesion and forms the basis for fundamental business choices. It focuses on an agreed worldview that provides people inside an organisation with powerful incentives to come to work and gives consumers reasons to stay loyal to a brand. When it goes too far though, the pursuit of an ideal leads to inefficiencies, lack of operational strategies and the adoption of an aggressive and self-righteous moral high ground that subsumes everything in its path and brooks no dissent or even debate.

Ergo, pursued to extreme either reading of purpose, functional or intentional, is detrimental.

Interestingly the ‘grandfather of consultancy’ Peter Drucker held a perspective more in line with the latter view.peterdrucker3

He once famously said, “Business has one task – to create a customer”. In Drucker’s world profit was a consequence, not an objective. If an organization successfully “created a customer” – through superb products built on sound insight, artful distribution and an alignment of the views of the organization with the views of the customer – then profits and success were inevitable.

This needn’t be an “either/or” decision though..

Pursued in a balanced manner, the two agendas hold each other in check. They provide the business with a mandate to chase its commercial goals at the same time as they lay down clear guidelines within which that pursuit must take place.

So what might that mean in a real, practical example?

The challenge for Coca-Cola today is not whether it should make money or tackle obesity but how it can continue to keep everyone happy by making responsible returns, persuading people to consume less calories through its products and using natural resources like water in sustainable ways.

If Coke’s purpose is ‘Moments of happiness’, then a balanced pursuit of that means finding ways to achieve moments of happiness for all and not at the expense of some. And to do that, Coke’s leadership probably need to be asking themselves at least eight ongoing questions:

  1. How do we define a moment? (is it solitary or social?)
  2. How much is a moment? (is it a gulp, a can or a 2-litre bottle?)
  3. What’s a moment worth? (if there were less moments, for example, could they be worth more? How?)
  4. How is happiness changing across the world? (specific, regional and global trends)
  5. Who must be happy in order for us to achieve our purpose? (how do we judge success and is that how our consumers judge success?)
  6. What makes people happy now and what will make them happy in the future? (How might we evolve what/when/where to ensure we’re appropriate for them?)
  7. Where do the pursuits of happiness fight with each other and how do we resolve them?
  8. Must a moment always include consumption of our products or could/should we enable other moments?

They’re not easy questions – particularly when you’re as global as Coca-Cola and your organization is a patchwork of owners, distributors, bottlers, franchises and partners like McDonald’s. Aligning those entities is another key component because consumers don’t delineate Coke from a vending machine and a Coke poured at the Golden Arches. We’ll deal with that conundrum in a future post.

But they are the questions that leaders need to be asking in our view in order to truly deliver the two sides of purpose.

For purpose to work to its full potential in organisations, the commercial leadership must be balanced by a clear and shared moral leadership.

Today’s leaders need to be comfortable embracing both sides, not merely the commercial one.

Mark Di SommaThis post was co-authored with friend, brand zealot and cranium tickler Mark Di Somma. New-Zealand-based he’s a creative strategist, keynote speaker and writer for Branding Strategy Insider. For more than 20 years Mark has helped decision makers, brand owners and brand agencies define, articulate and elevate the value of their brands. He brings a refreshingly New World perspective to issues around compelling brands, competitive value, purposeful cultures, market leadership and responsible ideas. Follow him at @markdisomma

We’re committed to a series of posts on this subject. Look for them over the next few weeks. Your feedback, comments and input is appreciated.

Business Leaders, How Self-Aware Are You?

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In hindsight I should’ve anticipated there’d be a backlash.

You can’t put “Provocateur” into your LinkedIn title without expecting some provocation to come back at ya. Some debate. Some discussion. Some disagreement. That’s just karma.

Titling a recent post “Without Purpose Your Organization is Rudderless” wasn’t just an attempt to score highly in nautical search results. Its something I feel deeply.

But what makes it particularly personal is that I’ve experienced first-hand the difference between organizations who have a clearly-defined, well-articulated and well-understood Purpose – and those that don’t.

So what’s there to debate?

Well actually, it would seem there’s a fair bit.

Two friends that I admire deeply took me to task on my interpretation of Purpose.

Must Purpose always be Good?

It’s easy to point to Zappos, Patagonia, IBM and Red Bull and all the storied examples and wax lyrically about Purpose. But does that mean that other successful companies lack Purpose – or is it that we’d rather not discuss what their Purpose is?

Monsanto

Enron – which I had personal experience working with.

GoldmanSachs

BP – the actions that preceded Deep Horizon” might suggest their real Purpose isn’t driven by an abiding love of the environment.

GM – the ongoing US litigation scandal and how whistle-blowers were considered internally might suggest another, darker Purpose at play.

And what about the much-loved, admired and emulated Coca-Cola Company.

For several years they battled an embittered backlash in India over depleting the water tables. More interesting was this recent article in BusinessWeek detailing how the organization is attempting to regain #1 share for their signature red can.

Buried within the article “Coke Confronts Its Big Fat Problem”  is a candid account of how a zeal to push sales volume in the US lead to the much-maligned phrase “Super Size”, gave rise to ridiculously outsized portions and, likely contributed, to the associations of soda with childhood obesity and so on.

You might argue those actions were representative of an earlier “Purpose” but you can’t deny they fly in the face of an organization that purports to exist to create moments of happiness.

Begs the question…Happiness for whom?

Purpose must benefit customers and society

Ironically in the same BusinessWeek as the Coke article above, was another that highlighted the lengths that Purpose-driven organizations are supposed to go in defense of their Values and Ideals.

Ben & Jerry’s is in the midst of a disagreement with parent company Unilever over moves to mandate GMO labeling of foodstuffs. Ben & Jerry’s position is that customers deserve to know exactly what’s in the food they eat. Unilever is concerned that the provisions are ambiguous, impossible to enforce and will add substantial cost and inefficiency to their supply chain and production.  Unilever, to their credit, are giving Ben & Jerry’s autonomy in this decision.

Both are acting within their Purpose but which organization is getting kudos and which is being lambasted?

As more and more evidence accumulates that consumers want – nay, expect – organizations to be transparent, societally-aware, environmentally-neutral, positive contributors to the world, what is any ambitious CEO to do?

JanusLet’s Start Here - Leaders Must Be Self-Aware

For the record, neither friend was advocating a Purpose of pillaging and scorched earth. Far from it. In fact both violently agreed that any Purpose has to be built from an organization that is ruthlessly self-aware.

If your sole purpose is to create an organization for acquisition, don’t talk about longevity and legacy.  Your actions are going to belie that Purpose.

If you’re not prepared to stamp out bureaucratic processes that impede customer satisfaction, then you can’t state your Purpose is customer-centricity. Your behaviours run counter to that Purpose.

Ultimately, your Purpose is just that. Yours. You have the responsibility to fashion it in a way that echoes your views and your ideals. Just accept that they may not be one’s that we share.

But if Purpose is intended to drive all decisions you make, just be self-aware enough to be honest about what that Purpose really is.

Because, if you aren’t, then I can almost guarantee Joe Public and Joe Employee will quickly discern the difference between your espoused and your real purpose

And, as the examples above highlight, your reputation and performance will inevitably suffer.