Marketing Muse has shifted
Folks - you will now find Marketing Muse at
http://marketingmuse.posterous.com/
http://marketingmuse.posterous.com/
posted by Krishnan at 10:57 PM
0 comments
Tuesday, January 19, 2010
Tuesday, November 17, 2009
Back to the Consumer
Between a number of disparate activities - planning our annual global meet, a positioning articulation for our consumer services vertical and a number of customer conversations, I am beginning to find numerous sparks blending into the light at the end of the tunnel. The thought is complex - but its a marketing muse task to simplify it. So lets have at it.
I have referred in the past to the fact that the recession was brought on us as a consequence of developed world consumption fuelled by unreal feelings of wealth. The bubble burst - taking all that wealth with it, and the tailspin began. An interesting piece of research by the team shows that a year ago, in the S&P 500, 80% of companies were used to positive revenue growth. In mid 2009 this reversed to 80% actually demonstrating negative revenue growth. However, the story does not end here - the best analyst estimates indicate that by mid 2010, 80% will be back on the growth path. Then what's the New Normal ?
The New Normal is simple. In the old normal - 50% of the S&P 500 were used to > 10% growth rates. This will halve to 25% - meaning that the world of business will either have to reconcile to a hindu rate of growth; or truly engage in disruptive business model innovation to buck this. How will they do this ? This is where I want to ramble and talk about a number of disparate stories.
Facebook will soon become the largest country in the world. Coca Cola is today the third largest music retailer in the UK. 95% of music downloaded last year was free. Bottom of the pyramid market facing innovation has driven India to the top of Nokia's global agenda. The US will not recover without the chinese consumer. Blockbuster vs Netflix has demonstrated that real estate is now digital and not physical anymore. The rockstar status of micro-finance has demonstrated the power of business lies in empowerment. Governments want to control salaries in the financial sector. Google buys Gizmo5 and takes position in the telco race. Amazon becomes one of the largest retailers of diapers. Noble intentions win the Nobel prize - more importantly, the prize becomes a blot on the Obama escutcheon. The world's going crazy - but in a nice way.
Thats because its back to the consumer. It's over for the middleman. Bucking the growth trend will mean finding new consumers and developing a new kind of business to entice them with. And all business value will lie in the relationship between the business and the consumer - intermediation (for instance the financial services industry in the old normal) will no more be a source of value. The world is going 1on1 and obfuscation is out. The simple truth is - if complex derivative products had not concealed it, you and I would have known that the house which was bought at $100K could just not be worth a half million. If all housing purchase was done only for the purpose of living in - it is very unlikely that speculative bubbles could be so easily fuelled. In essence, the game is with the consumer - and not the customer. Businesses which smell the coffee will realise that there is no value in inventory (which is where intermediation plays a role) - all value lies in the act of consumption.
Lets call this the 1o1 Business. Its that old mom and pop store - which continues to battle giant retail quite well. With one fundamental difference. Technology has suddenly made the 1o1 business scaleable. And 1o1 is happening first through content. Economic theory has historically focused on transactions between the producer and consumer as individuals - the concept of the firm / organisation was not allowed to complicate further an already complicated subject. Theory has suddenly become reality - when what is produced and consumed is content. People who like books go to Amazon and exchange content. Out of this a phenomenal business was built - and the story is not over.
The 1o1 business is a platform. One that brings together like-minded indivuals globally in a content sharing experience that is compelling. And then proceeds to convert the content sharing experience into a social interaction. And then proceeds to monetise the experience. Facebook has already done the first two - it is best not to dwell too long on what will happen when they crack item three.
Just imagine the power in the 1o1 business. Pun intended. Energy is becoming a passionate subject amongst people. A power company that focused on bringing together a community around the concept of smart energy - could then become a mart for all kinds of green products. Now think photography, music, sports et al. I-tunes is wildly successful - but has yet do all three 1o1 items. The rug can still be pulled out.
Because its back to the consumer. And the producer.
And they are 1o1.
I have referred in the past to the fact that the recession was brought on us as a consequence of developed world consumption fuelled by unreal feelings of wealth. The bubble burst - taking all that wealth with it, and the tailspin began. An interesting piece of research by the team shows that a year ago, in the S&P 500, 80% of companies were used to positive revenue growth. In mid 2009 this reversed to 80% actually demonstrating negative revenue growth. However, the story does not end here - the best analyst estimates indicate that by mid 2010, 80% will be back on the growth path. Then what's the New Normal ?
The New Normal is simple. In the old normal - 50% of the S&P 500 were used to > 10% growth rates. This will halve to 25% - meaning that the world of business will either have to reconcile to a hindu rate of growth; or truly engage in disruptive business model innovation to buck this. How will they do this ? This is where I want to ramble and talk about a number of disparate stories.
Facebook will soon become the largest country in the world. Coca Cola is today the third largest music retailer in the UK. 95% of music downloaded last year was free. Bottom of the pyramid market facing innovation has driven India to the top of Nokia's global agenda. The US will not recover without the chinese consumer. Blockbuster vs Netflix has demonstrated that real estate is now digital and not physical anymore. The rockstar status of micro-finance has demonstrated the power of business lies in empowerment. Governments want to control salaries in the financial sector. Google buys Gizmo5 and takes position in the telco race. Amazon becomes one of the largest retailers of diapers. Noble intentions win the Nobel prize - more importantly, the prize becomes a blot on the Obama escutcheon. The world's going crazy - but in a nice way.
Thats because its back to the consumer. It's over for the middleman. Bucking the growth trend will mean finding new consumers and developing a new kind of business to entice them with. And all business value will lie in the relationship between the business and the consumer - intermediation (for instance the financial services industry in the old normal) will no more be a source of value. The world is going 1on1 and obfuscation is out. The simple truth is - if complex derivative products had not concealed it, you and I would have known that the house which was bought at $100K could just not be worth a half million. If all housing purchase was done only for the purpose of living in - it is very unlikely that speculative bubbles could be so easily fuelled. In essence, the game is with the consumer - and not the customer. Businesses which smell the coffee will realise that there is no value in inventory (which is where intermediation plays a role) - all value lies in the act of consumption.
Lets call this the 1o1 Business. Its that old mom and pop store - which continues to battle giant retail quite well. With one fundamental difference. Technology has suddenly made the 1o1 business scaleable. And 1o1 is happening first through content. Economic theory has historically focused on transactions between the producer and consumer as individuals - the concept of the firm / organisation was not allowed to complicate further an already complicated subject. Theory has suddenly become reality - when what is produced and consumed is content. People who like books go to Amazon and exchange content. Out of this a phenomenal business was built - and the story is not over.
The 1o1 business is a platform. One that brings together like-minded indivuals globally in a content sharing experience that is compelling. And then proceeds to convert the content sharing experience into a social interaction. And then proceeds to monetise the experience. Facebook has already done the first two - it is best not to dwell too long on what will happen when they crack item three.
Just imagine the power in the 1o1 business. Pun intended. Energy is becoming a passionate subject amongst people. A power company that focused on bringing together a community around the concept of smart energy - could then become a mart for all kinds of green products. Now think photography, music, sports et al. I-tunes is wildly successful - but has yet do all three 1o1 items. The rug can still be pulled out.
Because its back to the consumer. And the producer.
And they are 1o1.
posted by Krishnan at 10:44 PM
3 comments
Wednesday, September 23, 2009
The business of creation
William Blake wrote " I must create a system or be enslaved by another man's; I will not reason and compare - my business is to create."
Marketing is the business of creation. Sometimes we forget this in the hurly burly of transactions. The world of reason, fact and measurement needs to subsume itself as the operational leg of what is primarily a creative function. This is easy to forget - because operations come easier to us than creation.
The question is - once we realise we are losing the creative edge; how do we snap back on course. I believe Blake has the answer. Creation is not a system response - therefore, the only way for an entire function to tread this path is through individual choice. Each member of a marketing team has to believe their greatest individual value lies in creation - not "being enslaved by another man's system". The following are some of the behaviours I find creative people exhibiting - consciously adopting some of these can help a great deal.
1. Pleasure in work : creation is an act of joy and celebration. Musicians enjoy making music more than making money. You can see this joy in how they interact with their work environment - in Ideo's Palo Alto office, one employee brought a van into the office and redid its interior (with a desk and stuff) so that it became his office. To top it off (literally) the top of the van has a mounted drum kit and the office band does concerts off it.
2. Intense focus on detail : this sounds counterintuitive. However, creators are perfectionists. They are presenting something new to the world with a stamp of their identity. They tend to focus down to the last brush stroke and painstakingly repeat small things again and again till they are satisfied. The creators eye is the most critical of them all. Prabuddha Dasgupta is one of the finest photographers India has produced - I have seen him take the same shot for 5 hours till he was satisfied. To my untrained eye - every shot looked equally good.
3. Envelope Pushing : not being enslaved by another man's system literally means creative people use role definitions merely as guides - not as boundaries. The photographer who shoots a movie, the film maker who becomes a singer, the musician who writes a book - how many of these instances have you come across ? Role descriptions become limiting factors to operational minds - the creative mind devotes itself to bringing its own unique x factor to many things. Its just so much fun.
4. Experience vs Transaction : Creation vs Operations = Human vs Machines. This is why increasing levels of automation across businesses can always generate operational redundancies. When a process is seen as a string of transactions - its easy to automate. Conversely, when a process is seen as a series of experiences delivered through multiple touchpoints - the empathy which goes into experience designing each touch point becomes the critical differentiator. The creative mind devotes itself to converting the transaction into an experience - and this ensures that obsolescence is never possible.
5. Easily bored : The Hyde side to the Dr. Jekyll of the creative mind. By nature the creative mind quests for new thought and experiences. The minute the job being done starts smacking of the operational or the comfort zone - the creative mind starts shutting down. This is a truth we have to recognise whether we are creative minds ourselves, or manage such people. As Morrison put it - variety is the spice of life.
6. Inner directed : creative people tend to set their own benchmarks. By definition they deal in things that do not exist at present - and therefore potentially have no acceptable measurement mechanism. Good or bad is defined by the creator - consequently creators do not depend greatly on external recognition to drive their sense of self worth. Van Gogh had to die before the world discovered his value.
The business of creation. Its hard work.
Marketing is the business of creation. Sometimes we forget this in the hurly burly of transactions. The world of reason, fact and measurement needs to subsume itself as the operational leg of what is primarily a creative function. This is easy to forget - because operations come easier to us than creation.
The question is - once we realise we are losing the creative edge; how do we snap back on course. I believe Blake has the answer. Creation is not a system response - therefore, the only way for an entire function to tread this path is through individual choice. Each member of a marketing team has to believe their greatest individual value lies in creation - not "being enslaved by another man's system". The following are some of the behaviours I find creative people exhibiting - consciously adopting some of these can help a great deal.
1. Pleasure in work : creation is an act of joy and celebration. Musicians enjoy making music more than making money. You can see this joy in how they interact with their work environment - in Ideo's Palo Alto office, one employee brought a van into the office and redid its interior (with a desk and stuff) so that it became his office. To top it off (literally) the top of the van has a mounted drum kit and the office band does concerts off it.
2. Intense focus on detail : this sounds counterintuitive. However, creators are perfectionists. They are presenting something new to the world with a stamp of their identity. They tend to focus down to the last brush stroke and painstakingly repeat small things again and again till they are satisfied. The creators eye is the most critical of them all. Prabuddha Dasgupta is one of the finest photographers India has produced - I have seen him take the same shot for 5 hours till he was satisfied. To my untrained eye - every shot looked equally good.
3. Envelope Pushing : not being enslaved by another man's system literally means creative people use role definitions merely as guides - not as boundaries. The photographer who shoots a movie, the film maker who becomes a singer, the musician who writes a book - how many of these instances have you come across ? Role descriptions become limiting factors to operational minds - the creative mind devotes itself to bringing its own unique x factor to many things. Its just so much fun.
4. Experience vs Transaction : Creation vs Operations = Human vs Machines. This is why increasing levels of automation across businesses can always generate operational redundancies. When a process is seen as a string of transactions - its easy to automate. Conversely, when a process is seen as a series of experiences delivered through multiple touchpoints - the empathy which goes into experience designing each touch point becomes the critical differentiator. The creative mind devotes itself to converting the transaction into an experience - and this ensures that obsolescence is never possible.
5. Easily bored : The Hyde side to the Dr. Jekyll of the creative mind. By nature the creative mind quests for new thought and experiences. The minute the job being done starts smacking of the operational or the comfort zone - the creative mind starts shutting down. This is a truth we have to recognise whether we are creative minds ourselves, or manage such people. As Morrison put it - variety is the spice of life.
6. Inner directed : creative people tend to set their own benchmarks. By definition they deal in things that do not exist at present - and therefore potentially have no acceptable measurement mechanism. Good or bad is defined by the creator - consequently creators do not depend greatly on external recognition to drive their sense of self worth. Van Gogh had to die before the world discovered his value.
The business of creation. Its hard work.
posted by Krishnan at 1:09 AM
2 comments
Monday, July 13, 2009
The treasure within...
I frequently look at data to gauge source of business - and every time the answer is the same. The biggest source in our industry happens to be references - we get new customers if the existing guys are happy. Clearly, the corollary to this is - if proactively done, there is potential to create demand from existing engagements and relationships. If this hypothesis is true - and I will come back to it, lets look at some math.
In Indian IT, the typical sales : delivery ratio is in the region of 1:100. The typical sales productivity ranges from $5 mn - $ 10 mn. Assuming that proactive steps taken by the delivery organisation can have an impact even fractionally correlated with sales productivity - the implications are fairly mind boggling.
I recently had the privilege of conducting a workshop on demand creation with a talented bunch of delivery leadership. We actually used an interactive case study methodology to generate the learnings from within the group. Interestingly - as many as 15 ways of thinking came out of this workshop. If we club these 15 items into a Demand Creation "Hat" - this will be a richly rewarding hat for delivery teams in our industry to wear. Impact is only achievable when the engagement team in totality kicks in. My definition of the engagement team includes the sum total of account management and delivery for the client.
1. Reposition : Indian IT today is roughly comparable to japanese auto in the 80's. The japanese crept up on American Auto with 100 cc bikes. American auto laughed them off and got blind sided while Japanese auto repositioned into high end cars. Indian IT comes from a commodity labor background - and needs to do a similar switch. I have previously written about the three components of positioning - target segment, frame of reference and point of difference. There is little option in the first two - we have to target the business audience (there is play available here in terms of which function / level of business to target) and the frame of reference has already shifted to global mnc's (the global majors are increasingly becoming rate competitive). The engagement team needs to focus on finding the right point of difference in one of the three axes. It could be a unique relationship, unique commercials or unique solutioning. What's your point of difference ? I need one answer.
2. Relevance : Having made a positioning choice - the engagement team should leave no stone unturned to use this to demonstrate relevance to the client. This can only be done if significant effort goes into understanding and living the client's business. Frequently, the client can be a very good participant in this process - you just need to ask. Every proposal should be able to enumerate relevance, every employee should know his or her own relevance, every workspace should visibly manifest relevance etc. Those who soak in relevance build great relationships with clients - the rest grimly hang on to the engagement till they mercifully get consolidated out.
3. Applied Frameworks : In the services business, IP typically manifests itself in frameworks. For instance - we now have a Business Aligned IT framework in HCL which is exceptionally powerful in aligning IT to business process with the express intention of minimising process cycle time. I am sure most firms in the industry have invested in such wonderful frameworks. Unfortunately, I find when the time comes to expose IP / frameworks to clients; most engagement teams call upon the central team responsible for the framework and showcase it in an as is / where is state. Those engagement teams who choose to internalise such frameworks - and present it in the context of the clients specific situation and problems create tremendous impact. The rest just send their clients to sleep.
4. Situation Analysis / Problem Definition : Do look up Bill Bradley in Wikipedia. At one time America's best (white) basket ball player - who more interestingly went on to became a Senator. One of his really neat tricks was the ability to throw the ball over his shoulder straight into the basket while facing away. Whenever asked he used to say it had to do with a sense of where you are. Bill's sense came from complete knowledge of the basket ball court - while maneuvring in a client's business a "sense of where you are" is critical. It makes a lot of sense to put together all data and information we have about the client (including the use of secondary research) to come up with an incisive analysis leading to a very clear definition of the problem/s we seek to solve for the client. If you dont understand the problem clearly - there is no way you can offer a solution. And as they say - if your not part of the solution, then your part of the ........
5. Sizing the addressable market : I think - therefore I am; sounds pretty close to - I have solution, therefore I will sell. Given that I am primarily looking at delivery organisations addressing the task of demand creation - since teams are mostly in the back-end, its quite easy to get lost in the outside in trap. Imagine, a team handling a manufacturing client offering everything but a supply chain solution, a team handling a financial client offering everything but a regulatory / compliance solution, a team handling a retail client offering everything but a POS / CRM solution.... It's only by accurately sizing markets that demand can be created in the most amenable territory. Else you may be selling ice to eskimos.
6. Dimension : This is one of the biggest problems I find most delivery teams struggle with in communications - the inability to appropriately dimension. Statements like -"we saved operating expense by 20%" - can create enormous confusion with clients. Without any qualification - most business people interpret operating expense in P&L terms (not IT operations cost - or as was meant in this statement, IT Operations for a specific business unit in the client's organisation). If this case study refers to a $ 10 BN enterprise - a client who understands this statement to mean an over $ 1 Bn saving is not interpreting the statement incorrectly. When he finally figures out that it actually translates to some measly $ 10 mn the fallout can be awe inspiring.
7. Best Practice : Most of us forget that one of the strongest value propositions in outsourcing is the service provider MUST be working with other firms in the same industry, and with leading firms across industry. Both translate to best practice. When I look back at the last 4 HCL global meets - the biggest value realised by attendees was networking and experience sharing. If this is the case - and engagement team that continuously strives to find best practices (could be within the same client organisation, industry or across industry) will over a period both build confidence, as well as engage really well in cross sell.
8. High impact customer touchpoints : Any marketing person will understand the investment and sweat that goes behind creating a new customer touchpoint. With existing customers these are freely offered - in visits, negotiations, new projects etc. Every such touchpoint offered should be treated with the value it deserves - there needs to be demonstrated thought leadership (leveraging all the previous 7 points) in converting that touchpoint into a delightful experience. Remember, your customer will only hang with you if your company is valuable and refreshing. Else you can hang alone.
9. Hypothesise : Do you remember the Hitch Hikers guide to the galaxy ? The answer to the Life, the Universe and Everything was 42. To get to this answer the worlds best brains spent about a billion years aided by unbelievable computing power. Perhaps a lot could have been saved with a little hypothesis ? Assuming that a good situation analysis is done and problems are clearly identified - remember one thing. Usually nobody has the answer. And if the client does not have the answer it is always best to work off a solution hypothesis - and let the client accept, bounce or improve with this as a starting point. It's incredibly important to have a point of view.
10. Reason to Believe : Unfortunate as it sounds - skepticism is today deep rooted in humanity. And I must confess - IT service providers have not really been the poster boys of governance and integrity. Actually - let me not be unfair. This is the case for most big business. Consequently, gone are the days of the deal sealing handshake - especially in the B2B environment. Communication needs to be couched with reason to believe. This will require the discipline within the engagement team to avoid statements which they cannot prove. The unfortunate reality is - truth is perception.
11. Solution NOT Capability : beyond a point an engagement needs to mature to see itself as a set of solutions. As the engagement team aligns itself to solution-speak ; it doesnt matter if the engagement is largely T&M / Labour oriented - the engagement language will start changing to cover techno / functional domains and increasingly the relationship will genuinely head towards solutioning. Each individual in the engagement needs to recognise the technical or business solution they are part of - if they can do this, and if the problem identification stage has been well done the engagement will start climbing the value chain like Tarzan of the Apes.
12. Length of Answer : A-ha. How scared are you of a scorpion bite ? Small things can have big impact. This is one of them. This is especially true when westerners deal with Indian teams (its a culture thing - please dont bash me up on any other count). During interactions a client asks a simple question. He expects a simple answer. I have seen interactions where the answer goes round the world like Phileas Fogg and reaches a zone which bears no resemblance to the answer asked for or (in some cases) to the original question. When engaged in a discussion - answer a question in less than a minute (even that may be too long).
13. Measurement of Value : Too much is never enough. Every engagement needs to measure the value it delivers the client. Assuming it does deliver such value - this needs to be communicated every opportunity in an ingestible form to the client. Again. And again. And again. Measurement is crippled without appropriate and adequate broadcast. So equal emphasis - measure and communicate. For a quick lesson on how to communicate refer point 12.
14. Thought Leadership : Trusted Advisor. Two words that are achieved the other way around. First comes the thought leadership necessary to be seen as an advisor - only then can the relationship be worked into a level of maturity for the service provider to reach this status. While who plays the trusted advisor role as an individual can be up for debate - the overall engagement team has to be actively involved in thought leadership relevant for the client. There are many routes to this - the problem definition and best practices pieces lend themselves well to it.
15. Thematise : When the time comes to integrate all of the above into one holistic and consistent experience for the client - it is important to thematise the engagement. This serves as a vision and guide for the engagement as it progresses on relationship and value parameters. Themes should be very relevant for the client. For instance - a theme I quite like is one we had built for a major luxury hotel chain - "Mission Critical Luxury". Having established this as the overall theme for the relationship, specific engagements / touchpoints could be rendered to fit to this - Failproof operations, Top end customer experience etc. Remember, most people have low attention spans - especially in things outside their immediate domain. For a client to make sense of the relationship an integrated thematic approach can serve as a very powerful glue for the entire engagement.
Engagement teams that manage to do these 15 things well will come across to their clients as relevant, aligned, engaging, visionary and trustworthy. In essence a commodity relationship will translate to a value centric one. From here it does not take much effort to get a happy customer to generate many more. The best part of the treasure within is its impact - it ripples and multiplies.
In Indian IT, the typical sales : delivery ratio is in the region of 1:100. The typical sales productivity ranges from $5 mn - $ 10 mn. Assuming that proactive steps taken by the delivery organisation can have an impact even fractionally correlated with sales productivity - the implications are fairly mind boggling.
I recently had the privilege of conducting a workshop on demand creation with a talented bunch of delivery leadership. We actually used an interactive case study methodology to generate the learnings from within the group. Interestingly - as many as 15 ways of thinking came out of this workshop. If we club these 15 items into a Demand Creation "Hat" - this will be a richly rewarding hat for delivery teams in our industry to wear. Impact is only achievable when the engagement team in totality kicks in. My definition of the engagement team includes the sum total of account management and delivery for the client.
1. Reposition : Indian IT today is roughly comparable to japanese auto in the 80's. The japanese crept up on American Auto with 100 cc bikes. American auto laughed them off and got blind sided while Japanese auto repositioned into high end cars. Indian IT comes from a commodity labor background - and needs to do a similar switch. I have previously written about the three components of positioning - target segment, frame of reference and point of difference. There is little option in the first two - we have to target the business audience (there is play available here in terms of which function / level of business to target) and the frame of reference has already shifted to global mnc's (the global majors are increasingly becoming rate competitive). The engagement team needs to focus on finding the right point of difference in one of the three axes. It could be a unique relationship, unique commercials or unique solutioning. What's your point of difference ? I need one answer.
2. Relevance : Having made a positioning choice - the engagement team should leave no stone unturned to use this to demonstrate relevance to the client. This can only be done if significant effort goes into understanding and living the client's business. Frequently, the client can be a very good participant in this process - you just need to ask. Every proposal should be able to enumerate relevance, every employee should know his or her own relevance, every workspace should visibly manifest relevance etc. Those who soak in relevance build great relationships with clients - the rest grimly hang on to the engagement till they mercifully get consolidated out.
3. Applied Frameworks : In the services business, IP typically manifests itself in frameworks. For instance - we now have a Business Aligned IT framework in HCL which is exceptionally powerful in aligning IT to business process with the express intention of minimising process cycle time. I am sure most firms in the industry have invested in such wonderful frameworks. Unfortunately, I find when the time comes to expose IP / frameworks to clients; most engagement teams call upon the central team responsible for the framework and showcase it in an as is / where is state. Those engagement teams who choose to internalise such frameworks - and present it in the context of the clients specific situation and problems create tremendous impact. The rest just send their clients to sleep.
4. Situation Analysis / Problem Definition : Do look up Bill Bradley in Wikipedia. At one time America's best (white) basket ball player - who more interestingly went on to became a Senator. One of his really neat tricks was the ability to throw the ball over his shoulder straight into the basket while facing away. Whenever asked he used to say it had to do with a sense of where you are. Bill's sense came from complete knowledge of the basket ball court - while maneuvring in a client's business a "sense of where you are" is critical. It makes a lot of sense to put together all data and information we have about the client (including the use of secondary research) to come up with an incisive analysis leading to a very clear definition of the problem/s we seek to solve for the client. If you dont understand the problem clearly - there is no way you can offer a solution. And as they say - if your not part of the solution, then your part of the ........
5. Sizing the addressable market : I think - therefore I am; sounds pretty close to - I have solution, therefore I will sell. Given that I am primarily looking at delivery organisations addressing the task of demand creation - since teams are mostly in the back-end, its quite easy to get lost in the outside in trap. Imagine, a team handling a manufacturing client offering everything but a supply chain solution, a team handling a financial client offering everything but a regulatory / compliance solution, a team handling a retail client offering everything but a POS / CRM solution.... It's only by accurately sizing markets that demand can be created in the most amenable territory. Else you may be selling ice to eskimos.
6. Dimension : This is one of the biggest problems I find most delivery teams struggle with in communications - the inability to appropriately dimension. Statements like -"we saved operating expense by 20%" - can create enormous confusion with clients. Without any qualification - most business people interpret operating expense in P&L terms (not IT operations cost - or as was meant in this statement, IT Operations for a specific business unit in the client's organisation). If this case study refers to a $ 10 BN enterprise - a client who understands this statement to mean an over $ 1 Bn saving is not interpreting the statement incorrectly. When he finally figures out that it actually translates to some measly $ 10 mn the fallout can be awe inspiring.
7. Best Practice : Most of us forget that one of the strongest value propositions in outsourcing is the service provider MUST be working with other firms in the same industry, and with leading firms across industry. Both translate to best practice. When I look back at the last 4 HCL global meets - the biggest value realised by attendees was networking and experience sharing. If this is the case - and engagement team that continuously strives to find best practices (could be within the same client organisation, industry or across industry) will over a period both build confidence, as well as engage really well in cross sell.
8. High impact customer touchpoints : Any marketing person will understand the investment and sweat that goes behind creating a new customer touchpoint. With existing customers these are freely offered - in visits, negotiations, new projects etc. Every such touchpoint offered should be treated with the value it deserves - there needs to be demonstrated thought leadership (leveraging all the previous 7 points) in converting that touchpoint into a delightful experience. Remember, your customer will only hang with you if your company is valuable and refreshing. Else you can hang alone.
9. Hypothesise : Do you remember the Hitch Hikers guide to the galaxy ? The answer to the Life, the Universe and Everything was 42. To get to this answer the worlds best brains spent about a billion years aided by unbelievable computing power. Perhaps a lot could have been saved with a little hypothesis ? Assuming that a good situation analysis is done and problems are clearly identified - remember one thing. Usually nobody has the answer. And if the client does not have the answer it is always best to work off a solution hypothesis - and let the client accept, bounce or improve with this as a starting point. It's incredibly important to have a point of view.
10. Reason to Believe : Unfortunate as it sounds - skepticism is today deep rooted in humanity. And I must confess - IT service providers have not really been the poster boys of governance and integrity. Actually - let me not be unfair. This is the case for most big business. Consequently, gone are the days of the deal sealing handshake - especially in the B2B environment. Communication needs to be couched with reason to believe. This will require the discipline within the engagement team to avoid statements which they cannot prove. The unfortunate reality is - truth is perception.
11. Solution NOT Capability : beyond a point an engagement needs to mature to see itself as a set of solutions. As the engagement team aligns itself to solution-speak ; it doesnt matter if the engagement is largely T&M / Labour oriented - the engagement language will start changing to cover techno / functional domains and increasingly the relationship will genuinely head towards solutioning. Each individual in the engagement needs to recognise the technical or business solution they are part of - if they can do this, and if the problem identification stage has been well done the engagement will start climbing the value chain like Tarzan of the Apes.
12. Length of Answer : A-ha. How scared are you of a scorpion bite ? Small things can have big impact. This is one of them. This is especially true when westerners deal with Indian teams (its a culture thing - please dont bash me up on any other count). During interactions a client asks a simple question. He expects a simple answer. I have seen interactions where the answer goes round the world like Phileas Fogg and reaches a zone which bears no resemblance to the answer asked for or (in some cases) to the original question. When engaged in a discussion - answer a question in less than a minute (even that may be too long).
13. Measurement of Value : Too much is never enough. Every engagement needs to measure the value it delivers the client. Assuming it does deliver such value - this needs to be communicated every opportunity in an ingestible form to the client. Again. And again. And again. Measurement is crippled without appropriate and adequate broadcast. So equal emphasis - measure and communicate. For a quick lesson on how to communicate refer point 12.
14. Thought Leadership : Trusted Advisor. Two words that are achieved the other way around. First comes the thought leadership necessary to be seen as an advisor - only then can the relationship be worked into a level of maturity for the service provider to reach this status. While who plays the trusted advisor role as an individual can be up for debate - the overall engagement team has to be actively involved in thought leadership relevant for the client. There are many routes to this - the problem definition and best practices pieces lend themselves well to it.
15. Thematise : When the time comes to integrate all of the above into one holistic and consistent experience for the client - it is important to thematise the engagement. This serves as a vision and guide for the engagement as it progresses on relationship and value parameters. Themes should be very relevant for the client. For instance - a theme I quite like is one we had built for a major luxury hotel chain - "Mission Critical Luxury". Having established this as the overall theme for the relationship, specific engagements / touchpoints could be rendered to fit to this - Failproof operations, Top end customer experience etc. Remember, most people have low attention spans - especially in things outside their immediate domain. For a client to make sense of the relationship an integrated thematic approach can serve as a very powerful glue for the entire engagement.
Engagement teams that manage to do these 15 things well will come across to their clients as relevant, aligned, engaging, visionary and trustworthy. In essence a commodity relationship will translate to a value centric one. From here it does not take much effort to get a happy customer to generate many more. The best part of the treasure within is its impact - it ripples and multiplies.
posted by Krishnan at 11:48 PM
1 comments
Tuesday, April 28, 2009
Honesty – it’s such a lonely word
Years ago, I used to take great pleasure in reading westerns. The “Sudden” novels were a standout along with Louis Lamour – and there were a diverse list of authors I enjoyed in this genre. One thing that was common amongst all was the importance of a person’s word. The raw economics of the wild west meant most deals were consummated through a hand-shake. To doubt a person’s word spelt economic death – therefore, calling somebody a liar inevitably led one of those famous gunfights. Hidden in the morass of legal and commercial machinery – today’s businesses seem to have forgotten a simple truth.
A business is much like a social platform. It organizes the interactions between multiple communities – customers, channel members, employees, suppliers, shareholders etc – in a manner that optimizes resources held by all these participants. The optimization is a system outcome – and therefore, in many cases will operate to maximize the larger good. The corollary to this is that the individual has to trust the system enough to subsume individual interest in the cause of the larger system. The operative word is Trust. Imagine a traffic cop managing a four way crossing. If motorists did not trust the cop – and took decisions to maximize their own interest (trying to force their way through the crossing as soon as possible) the resulting traffic snarl would lead to each individual being delayed significantly more than if they had trusted the system. The question therefore becomes – what should the traffic cop be doing to inspire individual trust ?
The Management of an enterprise are much like a super traffic cop. Multiple lanes carrying customer preference, employee talent, shareholder capital etc are all at the crossroads represented by the Enterprise. When Management loses the trust of one or more lanes – the snarl starts. The most obvious way to do this is to be partisan to a particular lane. The quarterly quest for growth in revenues and profits (in short greed) traditionally panders very specifically to the investor community. Other communities obviously start focusing on self interest exclusively – and the business goes into decline.
This is where Ethics starts making very sound business sense. Ethics deals with a code of conduct that distinguishes right and wrong basis a set of clear rules that are acceptable to all communities involved. In our traffic cop example – these would be traffic rules. The violation of ethics is not getting caught (as many who apply this superficially believe) but in breaking the rules. A drunk driver may get home safe, or may get caught, or may kill a child in an accident – in all three instances, the driver has acted unethically. Ethical business is a buzz-word today – though I get the feeling it is still a bit like the blind men and the elephant (everyone sees it in parts). Lets take a look at the parts and try and bring them together.
Green Mountain Coffee has deliberately built a reputation as a socially responsible Enterprise. A majority of their Coffee varieties carry the Fair Trade Label – in consumer perception, they dominate this niche. Green Mountain’s fiscal 2009 first quarter sales represent a 56% growth year on year – where’s the recession / depression ? Today Sara Lee, P&G, Nestle and even Dunkin’ Donuts are jumping on this bandwagon – and let’s not even talk about Starbucks. Ethical business works with consumers.
HCL Technologies follows the well known Employee First Customer Second philosophy. In the latter part of 2008 (as the recession became imminent – and no-one knew the ramifications); CEO Vineet Nayar announced a “No HCLite left behind policy”. The policy was announced with key caveats requiring increased flexibility from employees (in terms of location and nature of work). HCL has stuck to its promise – and in the first quarter of calendar 2009, announced 18% YoY revenue growth and 20% YoY operating income growth. That’s not all – in this quarter HCL was rated as the best employer in India across all industries and among the 25 best employers in Asia by the prestigious Hewitt survey (which primarily uses employee engagement scores). All this at a time when compensation was frozen, variable components were increased and the entire industry was shrinking. Ethical business works with employees.
Infosys has built a strong reputation with shareholders on ethical business. Infosys also has the largest p/e multiplier of all Indian IT stocks. Satyam went the other way – and saw its entire market cap erode in a matter of days. What is interesting is – the Satyam incident drove down share prices of all Indian IT companies. Except Infosys. Their share price rose. Ethical business works with shareholders.
Many more such interactions can be examined – relationships with Suppliers, Policy makers etc. In my book – no single one of these examples truly represents ethical business. Given that a business is an integration platform for multiple stakeholders to plug into to maximize system resources, the only way ethical business can be run is through transparency. The platform is the same for all – the rules are clear, what other communities are doing and experiencing are clear, decisions are accepted by all as greatest good maximization etc. The entire system operates on elightened self interest. This to me is ethical business. Right and wrong is the same for all – and known before hand.
How would I go about spotting (or building) an ethical business. I can hazard some guesses around the following symptoms that would define an ethical business for me. I believe these can be scaled both ways – as leaders of functions we can adopt them for our specific unit and they can also be applied to enterprises at large.
1. Transparency : there is nothing to hide. The management is open and speaks with one voice to all stakeholders.
2. Fairness : In all decisions, the interests of all stakeholder groups are carefully considered. If a decision favors any one community – it is done in a fashion where it is understood and appreciated by all others.
3. Risk Management : The only areas the business accepts risk is in core business / competency areas. Risks are taken basis consideration and scenario planning. An ethical business does not gamble – especially in areas which are not part of its own business. Ethics break down with stress – risk is the source of stress. It is best to play with risk in areas best understood and within control.
4. Argument : any organization that promotes healthy debate is a healthy organization. Within and across various communities there should be forums and permission to interact and debate. The best example I have seen is the HCL global meet. In the last meet we had 500 customers, 200 employees and over 40 investors / analysts meeting each other in open discussion and debates. Stamping out argument in an enterprise leaves the sycophantic “obeying orders” syndrome.
5. Self Awareness : we need to have a very strong sense of our strengths and weaknesses – unclouded by rhetoric and insularity. Ethical management would have the ability to step into the shoes of any community linked to the enterprise and “see” the enterprise through someone else’s eyes. The knowledge of right and wrong is closely dependent on unbiased self realization.
6. People Development : the fundamental reason for ethical break-down is self interest overcoming system interest. This is directly triggered when an individuals desire outstrips their capability. For instance, greed is not necessarily a bad thing – it can be the motivator for great human endeavor. Greed is bad when it leads to management subverting the principles of transparency, fairness, risk etc in order to narrow the gap between want and have. This gap requires bridging only if an individual believes that existing capability cannot close it. This is a problem that needs tackling at an individual level – and can only be handled if the system continuously invests in people development, setting up a virtuous progression of capability creation – whose velocity convinces the individual that no want can remain out of reach for long.
7. The present and the future are equally important : leading on from the previous point, the dimension of time clearly has an effect on ethicality. An ethical enterprise will place equal weightage on present as well as future implications of decisions that are made.
8. Spirit of the law NOT compliance : forgetting this can destroy the very foundation of ethics in an enterprise – as this behavior can potentially spread like wild-fire through employees. For instance, many organizations skirt the law in things like employee compensation. To save tax – certain aspects of compensation fall under “reimbursement” and the fact that employees may be fudging bills is handled with a nudge and a wink. Unfortunately, the management has clearly indicated to the employee that in certain kinds of self-interest can take precedence over system interest (in this case the system is governmental). Once this is endorsed, it is but a small step to put self interest above other forms of system interest – like that of the enterprise itself. At the end of the day, ethics is grassroot oriented.
9. Dealing with the powerless : The junior most employee, the smallest shareholder, the most inconsequential customer. Ethics is about a set of transparent rules applied uniformly to all. It is ok to discriminate treatment to the less powerful in any community if this is so stated and agreed to in that set of rules (an airline frequent flyer program will clearly distinguish between low and high frequency flyers). It is unethical if different rules are arbitrarily applied to such segments (a store which refuses a goods return from a small customer, though the customer has brought it back on time as per the policy).
Why is ethical business becoming so important ? Why will we not survive if we are not trusted ?
The best answer to this is here : http://www.trendwatching.com/trends/generationg/
Generation G (Generosity not Greed) where giving is the new taking and sharing is the new giving. That’s what the internet is rapidly doing to humanity. As online becomes “the culture” the world is rapidly being transformed by Wikipedia, Facebook, Flickr and so on. The trendwatching article gives a number of excellent suggestions for how an enterprise can participate in the Gen G world. However, we can only do that after……
As Generation G takes over the world – sustainable organizations will be ethical ones. For an unethical business, jumping on the generosity band-wagon will create a backlash like no other. Whatever your generation alphabet – hypocrisy will remain universally detested. Remember the other Gen G problem – information spreads rapidly and aggressively.
If employees, customers and shareholders of tomorrow are Gen G – its time to pick up that ethics tome, dust it off, roll up your sleeves and wade in. It makes sound business sense.
A business is much like a social platform. It organizes the interactions between multiple communities – customers, channel members, employees, suppliers, shareholders etc – in a manner that optimizes resources held by all these participants. The optimization is a system outcome – and therefore, in many cases will operate to maximize the larger good. The corollary to this is that the individual has to trust the system enough to subsume individual interest in the cause of the larger system. The operative word is Trust. Imagine a traffic cop managing a four way crossing. If motorists did not trust the cop – and took decisions to maximize their own interest (trying to force their way through the crossing as soon as possible) the resulting traffic snarl would lead to each individual being delayed significantly more than if they had trusted the system. The question therefore becomes – what should the traffic cop be doing to inspire individual trust ?
The Management of an enterprise are much like a super traffic cop. Multiple lanes carrying customer preference, employee talent, shareholder capital etc are all at the crossroads represented by the Enterprise. When Management loses the trust of one or more lanes – the snarl starts. The most obvious way to do this is to be partisan to a particular lane. The quarterly quest for growth in revenues and profits (in short greed) traditionally panders very specifically to the investor community. Other communities obviously start focusing on self interest exclusively – and the business goes into decline.
This is where Ethics starts making very sound business sense. Ethics deals with a code of conduct that distinguishes right and wrong basis a set of clear rules that are acceptable to all communities involved. In our traffic cop example – these would be traffic rules. The violation of ethics is not getting caught (as many who apply this superficially believe) but in breaking the rules. A drunk driver may get home safe, or may get caught, or may kill a child in an accident – in all three instances, the driver has acted unethically. Ethical business is a buzz-word today – though I get the feeling it is still a bit like the blind men and the elephant (everyone sees it in parts). Lets take a look at the parts and try and bring them together.
Green Mountain Coffee has deliberately built a reputation as a socially responsible Enterprise. A majority of their Coffee varieties carry the Fair Trade Label – in consumer perception, they dominate this niche. Green Mountain’s fiscal 2009 first quarter sales represent a 56% growth year on year – where’s the recession / depression ? Today Sara Lee, P&G, Nestle and even Dunkin’ Donuts are jumping on this bandwagon – and let’s not even talk about Starbucks. Ethical business works with consumers.
HCL Technologies follows the well known Employee First Customer Second philosophy. In the latter part of 2008 (as the recession became imminent – and no-one knew the ramifications); CEO Vineet Nayar announced a “No HCLite left behind policy”. The policy was announced with key caveats requiring increased flexibility from employees (in terms of location and nature of work). HCL has stuck to its promise – and in the first quarter of calendar 2009, announced 18% YoY revenue growth and 20% YoY operating income growth. That’s not all – in this quarter HCL was rated as the best employer in India across all industries and among the 25 best employers in Asia by the prestigious Hewitt survey (which primarily uses employee engagement scores). All this at a time when compensation was frozen, variable components were increased and the entire industry was shrinking. Ethical business works with employees.
Infosys has built a strong reputation with shareholders on ethical business. Infosys also has the largest p/e multiplier of all Indian IT stocks. Satyam went the other way – and saw its entire market cap erode in a matter of days. What is interesting is – the Satyam incident drove down share prices of all Indian IT companies. Except Infosys. Their share price rose. Ethical business works with shareholders.
Many more such interactions can be examined – relationships with Suppliers, Policy makers etc. In my book – no single one of these examples truly represents ethical business. Given that a business is an integration platform for multiple stakeholders to plug into to maximize system resources, the only way ethical business can be run is through transparency. The platform is the same for all – the rules are clear, what other communities are doing and experiencing are clear, decisions are accepted by all as greatest good maximization etc. The entire system operates on elightened self interest. This to me is ethical business. Right and wrong is the same for all – and known before hand.
How would I go about spotting (or building) an ethical business. I can hazard some guesses around the following symptoms that would define an ethical business for me. I believe these can be scaled both ways – as leaders of functions we can adopt them for our specific unit and they can also be applied to enterprises at large.
1. Transparency : there is nothing to hide. The management is open and speaks with one voice to all stakeholders.
2. Fairness : In all decisions, the interests of all stakeholder groups are carefully considered. If a decision favors any one community – it is done in a fashion where it is understood and appreciated by all others.
3. Risk Management : The only areas the business accepts risk is in core business / competency areas. Risks are taken basis consideration and scenario planning. An ethical business does not gamble – especially in areas which are not part of its own business. Ethics break down with stress – risk is the source of stress. It is best to play with risk in areas best understood and within control.
4. Argument : any organization that promotes healthy debate is a healthy organization. Within and across various communities there should be forums and permission to interact and debate. The best example I have seen is the HCL global meet. In the last meet we had 500 customers, 200 employees and over 40 investors / analysts meeting each other in open discussion and debates. Stamping out argument in an enterprise leaves the sycophantic “obeying orders” syndrome.
5. Self Awareness : we need to have a very strong sense of our strengths and weaknesses – unclouded by rhetoric and insularity. Ethical management would have the ability to step into the shoes of any community linked to the enterprise and “see” the enterprise through someone else’s eyes. The knowledge of right and wrong is closely dependent on unbiased self realization.
6. People Development : the fundamental reason for ethical break-down is self interest overcoming system interest. This is directly triggered when an individuals desire outstrips their capability. For instance, greed is not necessarily a bad thing – it can be the motivator for great human endeavor. Greed is bad when it leads to management subverting the principles of transparency, fairness, risk etc in order to narrow the gap between want and have. This gap requires bridging only if an individual believes that existing capability cannot close it. This is a problem that needs tackling at an individual level – and can only be handled if the system continuously invests in people development, setting up a virtuous progression of capability creation – whose velocity convinces the individual that no want can remain out of reach for long.
7. The present and the future are equally important : leading on from the previous point, the dimension of time clearly has an effect on ethicality. An ethical enterprise will place equal weightage on present as well as future implications of decisions that are made.
8. Spirit of the law NOT compliance : forgetting this can destroy the very foundation of ethics in an enterprise – as this behavior can potentially spread like wild-fire through employees. For instance, many organizations skirt the law in things like employee compensation. To save tax – certain aspects of compensation fall under “reimbursement” and the fact that employees may be fudging bills is handled with a nudge and a wink. Unfortunately, the management has clearly indicated to the employee that in certain kinds of self-interest can take precedence over system interest (in this case the system is governmental). Once this is endorsed, it is but a small step to put self interest above other forms of system interest – like that of the enterprise itself. At the end of the day, ethics is grassroot oriented.
9. Dealing with the powerless : The junior most employee, the smallest shareholder, the most inconsequential customer. Ethics is about a set of transparent rules applied uniformly to all. It is ok to discriminate treatment to the less powerful in any community if this is so stated and agreed to in that set of rules (an airline frequent flyer program will clearly distinguish between low and high frequency flyers). It is unethical if different rules are arbitrarily applied to such segments (a store which refuses a goods return from a small customer, though the customer has brought it back on time as per the policy).
Why is ethical business becoming so important ? Why will we not survive if we are not trusted ?
The best answer to this is here : http://www.trendwatching.com/trends/generationg/
Generation G (Generosity not Greed) where giving is the new taking and sharing is the new giving. That’s what the internet is rapidly doing to humanity. As online becomes “the culture” the world is rapidly being transformed by Wikipedia, Facebook, Flickr and so on. The trendwatching article gives a number of excellent suggestions for how an enterprise can participate in the Gen G world. However, we can only do that after……
As Generation G takes over the world – sustainable organizations will be ethical ones. For an unethical business, jumping on the generosity band-wagon will create a backlash like no other. Whatever your generation alphabet – hypocrisy will remain universally detested. Remember the other Gen G problem – information spreads rapidly and aggressively.
If employees, customers and shareholders of tomorrow are Gen G – its time to pick up that ethics tome, dust it off, roll up your sleeves and wade in. It makes sound business sense.
posted by Krishnan at 4:36 AM
2 comments
Tuesday, March 10, 2009
Only the poor can save the rich.
It’s interesting to note that I have not posted from the time the “recession” ballooned into the full blooded “depression” we recognize today. The world is now awash with comparisons back in time to the 1930’s. Debates are fiercely raging from politics, to sociology, to economics et al. I have managed to get off my seat and start thinking of a marketing view. It’s interesting that most of us will not live through such an economic crisis again – however, if we do encounter it we should at least have a point of view.
Lets segue back to why it happened. Through the morass of analysis and diagnostics being thrown in me – the only reality I can distil is a macro economic one. The poor have been subsidizing the rich. To make it sound even funnier – the poor have been subsidizing the future lifestyles of the rich. This is not an intra country statement – it is a product of globalization.
In 2001 a Goldman Sachs economist coined the term BRIC. By 2008 end – the BRIC nations held over 40% of global foreign exchange reserves. In what currency ? – you guessed it. The US Dollar. The US GDP today is about $ 13 trillion. Global forex reserves are today at about $ 5 trillion. Imagine your situation if half of your income at any point in time was money you owed other people. This would be pretty good if you were using that money in prudent and productive investments – so that when asked for, you could return it and pocket the gains. The US actually used this to make the cost of money (interest) almost nil – and fuel speculative bubbles not just in domestic housing, but in global markets as well. The rich felt richer and spent like kings. This drove the global economy and the BRIC started winning – both in income (GDP growth) and wealth (equities, housing etc). Across the developing world benefits accrued like poverty reduction – though income inequalities rose as the wealth mechanisms (eg the stock market) were accessible only to the rich in the developing world. These benefits however were massively outweighed by the huge burden of the consumption imbalance. Consumption creates investment. When consumption is driven by a feeling of wealth - it creates investment in the wrong areas. Thats why we live today in a world of food scarcity while automobile capacity is many multiples of demand.
Today, both the rich from both developed markets as well as developing markets are hurting. Their realization that they are wealthy no more – has made their consumption pattern more realistic. For the real poor in the developing nations this has two implications :
1. Reduced consumption globally by the rich leading to lower demand for their production – therefore having a negative impact on jobs and income.
2. Reduced consumption by their domestic rich leading to lower inflation – and therefore making life a bit more affordable.
I have a feeling both of these probably cancel out. Today the poor are not hurting – certainly not in any comparison to what the rich are going through. My neighbouring kirana store owner is doing alright – and is blissfully unaware of the investment banker turned janitor in New York (who probably still enjoys a quality of life superior to the kirana owner). But the former is happy – the latter is devastated. However, I seem to be trailing into philosophy; so I shall get back on track.
If the world has to recover – someone has to start consuming. The rich do not appear to be in shape to drive consumption any more. By elimination, it is clear that we will not see global economic recovery unless the poor drive consumption. Without doubt, the BRIC countries will have a large role to play in putting the world back on track, economically speaking. Is this going to happen in 12-18 months ? I do not believe so. It sounds to me like something which will happen very slowly – 5 years or more. Is this what the world is expecting ? I do not think so – most businesses seem to be operating on an assumption of recovery in a certain number of months.
So lets move the subject to marketing. Basis the thinking above, I can derive the following 10 hypotheses :
1. Luxury industries are in trouble – and will remain so for a long time to come.
2. Businesses in the developed world will be in trouble for a significantly longer period of time than they think.
3. If the developed world does not actively participate in improving income and consumption levels in the developing world – global recovery may take longer. Such participation will of course be political suicide – and is unlikely to happen.
4. The Glocal world will start talking Local again.
5. Every single business buy will require significant internal justification – every single buyer will be on the hunt for value whether buying a toilet seat or a company.
6. Trust will not be an easily available commodity – who you are buying from will become very critical.
7. All business cost will come under the scanner and will be approached zero based / from first principles. No spend will remain a “must have”.
8. On the supply side – price wars will become debilitating to all parties.
9. As things get worse – the political influence of the BRIC countries will expand.
10. The third world war could break out.
In at least 9 of these scenarios – marketing can help. Specifically in the context of B2B marketers I would derive the following areas of focus :
1. There is a new business model (for your business) waiting out there. The first to find it and invest and execute well will get so far ahead of competition that they will be running a completely different race. Marketing needs to wear the strategic hat.
2. The current customer mix is probably wrong. Re-examine the mix and establish whether the winners of tomorrow outweigh the guys in trouble today. Refine and re-balance the target segment. Marketing needs to wear the sales excellence hat.
3. Every single customer is important. Those who focus on customer segmentation, feedback, experience and delight will be able to generate the unique value required today. Marketing needs to wear the Customer Intimacy hat.
4. Concentrate with intensity on the local market. In the IT industry specially we have not done this well. Winning in the local market will become important both from a business perspective as well as value proposition development. Marketing needs to wear the local hat.
5. Rexamine , re-align and re-invest in the product / service portfolio. Commodity offerings will spell death for the business. Less will be more and vice versa in what we take to the market. The ability to bring depth of execution and outstanding ROI assessments to each offering will make a real difference between success and failure. Marketing needs to wear a product management hat.
6. Sweat every single dollar. Tear the budget up – and go back to first principles. Ask if each dollar is contributing value. Ask if the dollar in each spend area is contributing value comparable to other areas of spend. Measure everything. Marketing needs to wear a finance hat.
7. Intensely focus on the employee. It is difficult to maintain above-the-line branding spends in this environment. Nor is it necessarily a good thing to do. People will trust references and experience – not advertising. Creating employee delight and converting employees into evangelists will have a large impact on brand. Marketing needs to wear the employee hat.
8. Make the engine efficient. “Enough opportunities are coming into the funnel – only a small proportion are being converted”. Statements like these indicate a poor front office engine. Or – “We took a loss leader deal – because of lifetime value. However, we have not managed to make it profitable”. Statements like these indicate a poor back office engine. Find out whether the engine is working – and where is the problem. There is no point bringing footfall in – which either does not convert, or converts and gently bleeds away. Marketing needs to wear the Analysis hat.
9. Think digital. Not merely for customer acquisition – but knowledge, customer retention and probably as part of all the above 8 suggestions. There is a complete digital strategy out there – we need to find it. This is not one element in the marketing mix – it is a different way of thinking, performing and spending.
Just because there were 9 scenarios I managed to think up 9 focus areas. Obviously doing 9 things mean you have no focus – pick and choose what you wish to do . Do it well.
I just put in the 10th scenario because economic distress and war go hand in hand. In its own turn, war and music also seems to have some correlation. If 10 comes to pass, there is clearly only one thing to do.
Sing.
Lets segue back to why it happened. Through the morass of analysis and diagnostics being thrown in me – the only reality I can distil is a macro economic one. The poor have been subsidizing the rich. To make it sound even funnier – the poor have been subsidizing the future lifestyles of the rich. This is not an intra country statement – it is a product of globalization.
In 2001 a Goldman Sachs economist coined the term BRIC. By 2008 end – the BRIC nations held over 40% of global foreign exchange reserves. In what currency ? – you guessed it. The US Dollar. The US GDP today is about $ 13 trillion. Global forex reserves are today at about $ 5 trillion. Imagine your situation if half of your income at any point in time was money you owed other people. This would be pretty good if you were using that money in prudent and productive investments – so that when asked for, you could return it and pocket the gains. The US actually used this to make the cost of money (interest) almost nil – and fuel speculative bubbles not just in domestic housing, but in global markets as well. The rich felt richer and spent like kings. This drove the global economy and the BRIC started winning – both in income (GDP growth) and wealth (equities, housing etc). Across the developing world benefits accrued like poverty reduction – though income inequalities rose as the wealth mechanisms (eg the stock market) were accessible only to the rich in the developing world. These benefits however were massively outweighed by the huge burden of the consumption imbalance. Consumption creates investment. When consumption is driven by a feeling of wealth - it creates investment in the wrong areas. Thats why we live today in a world of food scarcity while automobile capacity is many multiples of demand.
Today, both the rich from both developed markets as well as developing markets are hurting. Their realization that they are wealthy no more – has made their consumption pattern more realistic. For the real poor in the developing nations this has two implications :
1. Reduced consumption globally by the rich leading to lower demand for their production – therefore having a negative impact on jobs and income.
2. Reduced consumption by their domestic rich leading to lower inflation – and therefore making life a bit more affordable.
I have a feeling both of these probably cancel out. Today the poor are not hurting – certainly not in any comparison to what the rich are going through. My neighbouring kirana store owner is doing alright – and is blissfully unaware of the investment banker turned janitor in New York (who probably still enjoys a quality of life superior to the kirana owner). But the former is happy – the latter is devastated. However, I seem to be trailing into philosophy; so I shall get back on track.
If the world has to recover – someone has to start consuming. The rich do not appear to be in shape to drive consumption any more. By elimination, it is clear that we will not see global economic recovery unless the poor drive consumption. Without doubt, the BRIC countries will have a large role to play in putting the world back on track, economically speaking. Is this going to happen in 12-18 months ? I do not believe so. It sounds to me like something which will happen very slowly – 5 years or more. Is this what the world is expecting ? I do not think so – most businesses seem to be operating on an assumption of recovery in a certain number of months.
So lets move the subject to marketing. Basis the thinking above, I can derive the following 10 hypotheses :
1. Luxury industries are in trouble – and will remain so for a long time to come.
2. Businesses in the developed world will be in trouble for a significantly longer period of time than they think.
3. If the developed world does not actively participate in improving income and consumption levels in the developing world – global recovery may take longer. Such participation will of course be political suicide – and is unlikely to happen.
4. The Glocal world will start talking Local again.
5. Every single business buy will require significant internal justification – every single buyer will be on the hunt for value whether buying a toilet seat or a company.
6. Trust will not be an easily available commodity – who you are buying from will become very critical.
7. All business cost will come under the scanner and will be approached zero based / from first principles. No spend will remain a “must have”.
8. On the supply side – price wars will become debilitating to all parties.
9. As things get worse – the political influence of the BRIC countries will expand.
10. The third world war could break out.
In at least 9 of these scenarios – marketing can help. Specifically in the context of B2B marketers I would derive the following areas of focus :
1. There is a new business model (for your business) waiting out there. The first to find it and invest and execute well will get so far ahead of competition that they will be running a completely different race. Marketing needs to wear the strategic hat.
2. The current customer mix is probably wrong. Re-examine the mix and establish whether the winners of tomorrow outweigh the guys in trouble today. Refine and re-balance the target segment. Marketing needs to wear the sales excellence hat.
3. Every single customer is important. Those who focus on customer segmentation, feedback, experience and delight will be able to generate the unique value required today. Marketing needs to wear the Customer Intimacy hat.
4. Concentrate with intensity on the local market. In the IT industry specially we have not done this well. Winning in the local market will become important both from a business perspective as well as value proposition development. Marketing needs to wear the local hat.
5. Rexamine , re-align and re-invest in the product / service portfolio. Commodity offerings will spell death for the business. Less will be more and vice versa in what we take to the market. The ability to bring depth of execution and outstanding ROI assessments to each offering will make a real difference between success and failure. Marketing needs to wear a product management hat.
6. Sweat every single dollar. Tear the budget up – and go back to first principles. Ask if each dollar is contributing value. Ask if the dollar in each spend area is contributing value comparable to other areas of spend. Measure everything. Marketing needs to wear a finance hat.
7. Intensely focus on the employee. It is difficult to maintain above-the-line branding spends in this environment. Nor is it necessarily a good thing to do. People will trust references and experience – not advertising. Creating employee delight and converting employees into evangelists will have a large impact on brand. Marketing needs to wear the employee hat.
8. Make the engine efficient. “Enough opportunities are coming into the funnel – only a small proportion are being converted”. Statements like these indicate a poor front office engine. Or – “We took a loss leader deal – because of lifetime value. However, we have not managed to make it profitable”. Statements like these indicate a poor back office engine. Find out whether the engine is working – and where is the problem. There is no point bringing footfall in – which either does not convert, or converts and gently bleeds away. Marketing needs to wear the Analysis hat.
9. Think digital. Not merely for customer acquisition – but knowledge, customer retention and probably as part of all the above 8 suggestions. There is a complete digital strategy out there – we need to find it. This is not one element in the marketing mix – it is a different way of thinking, performing and spending.
Just because there were 9 scenarios I managed to think up 9 focus areas. Obviously doing 9 things mean you have no focus – pick and choose what you wish to do . Do it well.
I just put in the 10th scenario because economic distress and war go hand in hand. In its own turn, war and music also seems to have some correlation. If 10 comes to pass, there is clearly only one thing to do.
Sing.
posted by Krishnan at 12:57 AM
3 comments
Wednesday, November 26, 2008
The New Deal
The industry continues to be stressed and challenged. In this environment – a bird in the hand is truly worth many in the bush. From a marketing context, while we remain segment and campaign aligned – the trick is to leverage our competencies to improve deal win probability. If good campaigns are run – the pipeline should be healthy. But pipelines need to convert and the time has now come to bring the marketing engine to the party to make this happen.
Lets take a look at what a Category Manager can do to improve deal winnability. We have begun calling this the “Win Theme Custodian” role.
1. Bid Qualification : Large RFPs land up on our desks for many reasons – not all of them with a view that we are the party who can deliver. Does more the merrier work in large deals ? Not really. A large deal pursuit is not only a significant cost – it also saps organizational energy with high quality professionals dedicating themselves to winning a deal. When a deal comes in, it is important to do some secondary and primary research – including speaking to relevant analysts and influencers to gauge if it is the “real deal” with a fair win chance. Marketing needs to bring market intelligence into play in a bid – no bid decision.
2. Bid Discovery : The better the situation analysis of the clients industry, environment and business performance – the better the chance of hitting the right win theme. This is the stage where the CM should create a bid primer for all involved. The Bid primer should marry primary and secondary research to detail the clients industry, environment, competitive reality and business model. It should create deeper understanding through P&L and balance sheet analysis, news and earnings announcements and investor briefings. The situation analysis should lead to a deep understanding of the client hot buttons, sourcing problem statements and criteria for final provider selection. I cannot downplay the importance of this stage – in a large enough deal, it makes sense to bring in an Analyst / Advisor to help in this activity. The input is now ready to design the win theme.
3. Bid Solution : At this stage, it is critical that a solution team for the deal is in place. The CM and the solutioning team need to go into a brain storm involving the sitanal and study all documents relevant to the deal. All solution components should be put on the table in a holding framework so that there is an overall solution hypothesis and not a jumble of discrete pieces. The CM needs to marry the solution and the hot buttons into a high value win theme for the deal.
4. Bid Response : This is the stage at which output starts going back to the client – in the form of an RFP response etc. This is really the time the custodial part of the role kicks in. Every single output going to the customer – including the exec summary and relevant solution documents; need to be run through the WTC to ensure synergy with the win theme.
5. Bid Engagement : Post response, there are typically some facets of engagement. These may include client visits, bid defence etc. What is interesting at this stage is it offers interaction and an experience for the buyers. The WTC role becomes crucial in thinking through experience “wows” and keeping every element of the experience aligned and value adding to the win theme.
6. Bid Closure : There may be certain things which can be tactically / opportunistically done when the buyer team goes into a huddle to close the decision. At this time the WTC should be on call to provide appropriate responses. More importantly – there must be a communication plan put in place for either eventuality of a win or a loss. Both are opportunities to expand the relationships which would have been formed during the bid lifecycle.Focus on deal conversion is good stuff. It is actually reminiscent of the retailer who focuses more on conversion rather than footfall. This is good strategy – especially in a downturn. If the business engine is a healthy convertor – investment can easily be made at any appropriate time to increase footfall. That my friends, seems to be the new deal.
Lets take a look at what a Category Manager can do to improve deal winnability. We have begun calling this the “Win Theme Custodian” role.
1. Bid Qualification : Large RFPs land up on our desks for many reasons – not all of them with a view that we are the party who can deliver. Does more the merrier work in large deals ? Not really. A large deal pursuit is not only a significant cost – it also saps organizational energy with high quality professionals dedicating themselves to winning a deal. When a deal comes in, it is important to do some secondary and primary research – including speaking to relevant analysts and influencers to gauge if it is the “real deal” with a fair win chance. Marketing needs to bring market intelligence into play in a bid – no bid decision.
2. Bid Discovery : The better the situation analysis of the clients industry, environment and business performance – the better the chance of hitting the right win theme. This is the stage where the CM should create a bid primer for all involved. The Bid primer should marry primary and secondary research to detail the clients industry, environment, competitive reality and business model. It should create deeper understanding through P&L and balance sheet analysis, news and earnings announcements and investor briefings. The situation analysis should lead to a deep understanding of the client hot buttons, sourcing problem statements and criteria for final provider selection. I cannot downplay the importance of this stage – in a large enough deal, it makes sense to bring in an Analyst / Advisor to help in this activity. The input is now ready to design the win theme.
3. Bid Solution : At this stage, it is critical that a solution team for the deal is in place. The CM and the solutioning team need to go into a brain storm involving the sitanal and study all documents relevant to the deal. All solution components should be put on the table in a holding framework so that there is an overall solution hypothesis and not a jumble of discrete pieces. The CM needs to marry the solution and the hot buttons into a high value win theme for the deal.
4. Bid Response : This is the stage at which output starts going back to the client – in the form of an RFP response etc. This is really the time the custodial part of the role kicks in. Every single output going to the customer – including the exec summary and relevant solution documents; need to be run through the WTC to ensure synergy with the win theme.
5. Bid Engagement : Post response, there are typically some facets of engagement. These may include client visits, bid defence etc. What is interesting at this stage is it offers interaction and an experience for the buyers. The WTC role becomes crucial in thinking through experience “wows” and keeping every element of the experience aligned and value adding to the win theme.
6. Bid Closure : There may be certain things which can be tactically / opportunistically done when the buyer team goes into a huddle to close the decision. At this time the WTC should be on call to provide appropriate responses. More importantly – there must be a communication plan put in place for either eventuality of a win or a loss. Both are opportunities to expand the relationships which would have been formed during the bid lifecycle.Focus on deal conversion is good stuff. It is actually reminiscent of the retailer who focuses more on conversion rather than footfall. This is good strategy – especially in a downturn. If the business engine is a healthy convertor – investment can easily be made at any appropriate time to increase footfall. That my friends, seems to be the new deal.
posted by Krishnan at 2:22 PM
2 comments
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Previous Posts
- Marketing Muse has shifted
- Back to the Consumer
- The business of creation
- The treasure within...
- Honesty – it’s such a lonely word
- Only the poor can save the rich.
- The New Deal
- Mind the Gap : The time for solutions is here
- No Midas touch - the rules of marketing spends
- Unstructure @ HCL
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