Remember “Niche Marketing”

Remember how we assumed that markets were already well-defined,”mature” and of relatively fixed size, so we fought only for a fractional piece of them.”Nobody bothered to figure out what if everybody settled for a fractional piece, and nobody made an effort to expand the market, the end result a no growth profit zone. Not many enteprises have learned that lesson.  They have doubled down.  Have you.

 

 

Executive Program in Corporate Strategy, University of Chicago Booth School of Business

The courses offered at the Booth School in corporate strategy are dated. The
program should include; how technology has impacted strategy, challenging the status quo, reinventing the brand and sales cycle and digital darwinism.

Wining the past is not helpful. Winning the future is. The cost $8,675. I would not pay that fee. You decide.

“New Technology and the Art of Storytelling”

This is one of the most basic and most human subjects we’ve ever dealt with.

We say that because of the critical roles that both technology and storytelling have played in the march of human progress.

And because of the way those two subjects – technology and storytelling – have combined and interacted throughout the evolution of human society – from the time we first climbed down out of the trees.

It is largely technology, of course, that makes our contemporary society possible and it is technology that makes it different from the human societies that came before this one.

Technology makes us able to do things our ancestors could only dream about.

Fly through the sky … bore into the ground … sail under the sea.

We can send pictures and words, text and numbers through narrow cables made of strands of glass fiber and if that trick doesn’t impress you enough we can bounce them off satellites and dispense with the cables altogether.

Technology also enables us to alter our world – for better or for worse.

In that sense, it is and has always been, a source of ambivalence for us.  Something to embrace for the power it gives us, something to fear for the unintended harm it may cause.

Technology is the engine of change and change is always a little scary.

What is more, the very nature of technology is disorienting.

First, because technology makes old ways of being – and doing – and thinking about things obsolete.

Obsolescence is the natural side effect of new technology.  In point of fact, it was technology that gave birth to the whole idea of obsolescence.

A second reason why technology is disorienting is because it has another side effect which is even more upsetting than obsolescence and that is what the historian, Daniel Boorstein, calls convergence.

Convergence is the tendency for everything to become more and more like everything else and everyone to become more and more like everyone else.

“Broadcasting” Boorstein wrote in 1978, “is perhaps the most potent everyday witness to the converging powers of technology …

“The great levelers, broadcast messages and images, go without discrimination into the homes of rich and poor, white and black, young and old …

Broadcasting is perhaps the most potent everyday witness to the converging powers of technology …

“No questions are asked, no skill is needed.  You need not even sit still or keep quiet.  To enjoy what the Internet brings, the illiterate are just as well qualified as the educated…”

A third reason why technology is disorienting is that it invents needs.

The need for these things was created by technology itself.  Or, at least, by that part of us which invents things and by the dependencies we develop on the things we invent.  There is, like it or not, a natural feedback loop that exists between us and our creations.

A fourth reason why technology is disorienting is that it is irreversible.  Quite simply, nothing can be uninvented.

There are other reasons why technology is disorienting, but these are quite enough to make the point.

The disorienting nature of technology is what gave birth to the modern story.  And to the idea of history.

Oh, there were stories before that.

The old stories are born out of the disorienting nature of nature itself.

The way the seasons changed.

The way the sun and the moon and the stars moved in the heavens.

The way great storms came out of nowhere and disappeared again just as suddenly.

The way lightning set trees and prairies afire.

The way volcanoes erupted and earthquakes opened great chasms in the land.

The way certain animals hunted men and the way men hunted certain animals and the ways still other animals bonded to humans and became their companions and their helpers.

There were stories of the old world.  The myths of creation, the animal stories and fables, the folk tales and fairy tales and hero tales that enabled the human race to explain its place in the scheme of things.

These stories formed a body of belief that gave families and then tribes and then nations their culture – and gave individuals a sense of belonging, of membership in the group.

These stories explained why things were the way they were and they were passed on from generation to generation.  There was little change.

Life ran in cycles, like the moon and the seasons.  Things came around again to the way they’d been before.

Then came a new kind of story: history.

The idea of history was born with the idea of progress, which was, in turn, born out of technology and its open-ended promises – of change that was irreversible, of events that were unprecedented.

Henceforth, things wouldn’t come around any more to the way they’d been before.  Instead, they would move on – inexorably – to become something else.

A new age, a new era, a new world.

History was the story of changes and the changes were, almost inevitably, driven by technology and by people’s ambitions for it and by the power it gave some men over others.

History, of course, was always somebody’s idea of how to reorder chaotic events into a neatly told story that had a beginning, a middle and an end.

It was a literary and therefore, an imaginative, exercise.

A creation designed, no less than the old myths and folk tales to explain why things were the way they were.

To explain the nation’s place in the scheme of things, and to give individuals a sense of belonging and a sense of purpose.

Out of these imaginative exercises, other more creative souls began to fashion new stories, to embroider, enhance, and reorder the materials of history into popular entertainments.

These fictions emerged in the form of songs, plays, stories, and eventually novels, TV, radio shows, movies and blogs.

Their purpose went far beyond even the utility of the old myths.

These new stories helped people adapt to change.

They helped people understand each other and their environments.

They helped people learn from the past.

Most of all, they helped people rehearse the future.

Through all this right down to the present day, one of the more persistent themes of these stories has been technology itself.

And these stories have demonstrated that same ambivalence toward technology that people have always felt.

In many of the stories, the inventors of new technology are portrayed as sinners.  As people who have gone beyond redemption because they have dabbled in things that should be beyond the reach of men – things that should only be reserved for a higher power.

That is the message of the Frankenstein story and of most science fiction and all the current crop of mysteries that have environment-despoiling businessmen as villains.

The message, in a nutshell, is that only God can make a tree – and, if that should turn out not to be true, well then the message is only God should make a tree.

These stories have it almost right.

Every advance in technology makes men and women more Godlike – just as the stories we share make us ever more human.

How we are in the process of adding a whole new armamentarium to the tools storytellers have to tell their stories and audiences have to absorb and respond to them.

These new technologies will change the way stories are told and the way stories are enjoyed.

They may change the relationship that exists between storytellers and their audiences.

And they will, almost certainly find their way into stories as part of the plots.

This will lead to more new technologies and more new stories.

Technology can make good stories better, but it cannot substitute for a good story.

There is, in fact, no substitute for a good story – and that is why good stories are so precious to all of us.

What makes a good story?

Shelves of books have been written on that subject.

We all know the elements:

  • a beginning, a middle and an end,
  • enthralling character development,
  • a captivating plot,
  • built around captivating moments,
  • creating experiences to evoke and emotional reaction,
  • an escape from our surroundings,
  • room for the reader’s imagination,
  • human connections,
  • graceful language
  • and through it all, an internal consistency that won’t violate the audience’s suspension of disbelief.

The most artful stories, of course, defy categorization, break the rules, make the whole idea of the story seem new.

One thing will always be true.  People need stories to help them understand their world.  Our desire for a good story is insatiable.

The message for marketers:

  • Make storytelling a priority.
  • Search for storytellers who are unique.
  • Stories enhance competitive advantages,
  • A great brand cannot survive without the ability to tell stories,
  • Storytelling helps companies create loyalty and build for the future.

We are all storytellers in our daily lives.

The different stories we encounter throughout life help build our way of seeing the world even though it might not necessarily be through our own lens all of the time.

Tattoos. Tattoos. Tattoos.

I have been reading about tattoos. Tattoos are supposed to be new. Tattoos are identifiers. Tattoos are body designers. Tattoos are badges. That is nothing new. What about Indians? Indians use tattoos, (although they did not call them that) to: identify tribes, to identify individuals, to go into battle, to tell stories and as a part of their culture. Understanding the history of tattoos is fascinating. Cultural mavens act if they have discovered something new. Cultural mavens act if they have found the holly grail. They must be getting desperate.

The New Reality

Confidential

To: The CEO

From: The Former CEO, now Chairman of the Finance Committee

Date: October 2012

Re: The New Reality

Thanks for the extremely gracious reception you gave my last memo. I’m glad you found it useful.

Thanks also for asking me to write another memo. I’m flattered. Doubly so because I really intended the first one to be the last. When you asked me to tackle this topic my instinct was to decline. This is a big subject with many twists and turns.

I thought long and hard about this assignment and decided the best way to tackle this was to develop thought starters for debate, discussion and implementation. I am sure that you will be bombarded with e-mails both pro and con. That is exactly what I was aiming for.

Thought Starters

    1. “The new global reality is that this is a time of change at speed and renewal pace which will surpass anything previously experienced. As a result, it is inevitable that there will be a series of collisions between the World of Yesterday and the World of Tomorrow.” Global Competitiveness Report 
    2. We have to be prepared for the greatest possible range of contingencies.  I did not have B, C and D plans in our technology business and you see what has happened.
    3. I have come to the conclusion that an enterprise does not so much predict the future as invent it.  The difference between being passive and being active.  The risks are there regardless but the active participant has some possibility of control.
    4. The inability of affecting compromise between positions that are extreme opposites (right and left) makes confrontation and non-cooperation the dominant mode of our public life.  It also tends to politicize even the simplest relationships in society and to cast public decision making into an extreme political mold.
    5. In business, originality is not enough–an idea must be translated into a product or service that creates economic value.  A useful way to look at communications is to categorize them by their return on capital.
    6. Enterprises must rethink fundamental assumptions.  The key challenge is always in the assumption no assumption is inviolate.  The assumptions we’re making about Amazon should be revisited and turned upside-down.
    7. Social responsibility is no longer discretionary; it is essential for business survival and profitability.  There should be a detailed plan, clear assignments of responsibilities and a measurement of outcomes.
    8. The marketing department has outsourced marketing to the retailer.  They call the “shots,” we provide the funding. We have to stop the bleeding and restore the balance of power.
    9. If you can’t tell your brand story to a 9-year-old, it is probably no good.  (I use my grandchildren as a beta test.)
    10. Consumer needs will be harder to anticipate, as consumers have become more technologically savvy, more connected in social media ecosystems more fickle and less brand loyal.
    11. Just because something is disruptive, doesn’t mean it is not going to happen.  We should do scenario planning which can provide a view into the great unknown.  The charge:  “Think the impossible.”
    12. Long term strategies rarely win by the time an enterprise has assets in place, there are new and better alternatives.
    13. The majority of business designs are carbon copies of each other.  They are a veritable thrift store of hand-me-down concepts designed for a previous era.
    14. Compete against time – time is of the essence.  It is the difference between capturing market share or losing market share.
    15. Once a sustainable advantage has been equalized, it is no longer an advantage but a cost of doing business.  We have to widen our competitive advantage gaps, extend the time periods, and constantly increase the distance between competitors.
    16. “We need to rethink and remake everything.  Best Practices are obsolete at birth.  It is time to press the ‘restart’ button.”  Idris Mootee, CEO Idea Couture
    17. Learn by doing.  Theory is nice but nothing replaces actual experiences.  The best theories in the world cannot substitute for being in the marketplace listening to customers talking to the trade and our sales people.
    18. Trust is more than a bonus; it is an intangible asset that drives bottom line growth.  To count trust as a core competence we must embed it in the culture. “Trust” is Coca-Cola’s secret ingredient.
    19. Change requires insights, innovation, creativity, and common sense.  It requires a willingness to disregard preferences and practices that are no longer productive and replace them with ones that are.
    20. An enterprise’s future success will require improvisation, flexibility, spontaneity, collaboration and obsessive experimentation.  I was too rigid and should have been more flexible and collaborative.
    21. When companies disengage from community involvement, it creates a competitive advantage for those who participate.  We need to figure out as many ways as possible to interact with communities and to improve the quality of life.
    22. Enterprise will continually obsolete their competitive advantages to stay competitive … they have no choice neither do we.
    23. There is no such thing as a brand lifecycle.  Brands can and do survive even the companies that created them.  The brand lifecycle concept is a metaphor from biology that does not happen to fit commerce.
    24. People respond to kindness, cheerfulness and politeness.  They crave respect and personal acknowledgement and would rather ask nicely to do something than be dictated to.  Say thank you.
    25. Do not bet the farm.  If the farm catches on fire make sure you know where the exits are.  Let’s make sure we know where the exits are.
    26. Disruption is the art of asking better questions, challenging competitive wisdom, reversing assumptions and changing the rules of the game.  If we don’t change the rules of the game, our competitors will.
    27. Getting it right the first time hardly ever happens.  The modern computer industry is a striking example: the most dynamic sector of the economy has also been the one which failure is everywhere you look.  Failure is the price of success.
    28. Consultants like to dig themselves into a corporation, like the people who announce on TV, they cannot resist padding their parts and over-dramatizing the obvious.
    29. “It is pretty clear in the future every company will be a tech company as consumers become more gadget obsessed and markets of all types deal with tech enabled tools.”  Advertising Age 10/9/12
    30. Act as if everything you say is going to be instantaneously available on the Internet … because it is.
    31. I have learned that people’s relationships to the brands they buy are as individual as their relationships to each other – a fact guaranteed by the truth that no two people are actually alike and the range of product choices is sufficiently wide to permit an infinite number of combinations and permutations.
    32. We are in an economy where access to thought and intellectual property is more important than access to capital.
    33. Core competencies cannot be relied upon when our company must suddenly compete against rule changers.  Core competencies revolve around what you have been doing better and doing well.  When the rules change you need to be able to do things differently and well.
    34. “It is not enough to be creative, if you cannot execute.  It is not enough to execute if what you make is something people do not want.  It is not enough to execute and be creative if you do not have the structure and culture to be viable long term.”  John Kao, Jamming.
    35. Building brand equity relies upon the brand manager protecting the brand from company’s worst instincts.  That means do not let the brand be cannibalized by too many line extensions.  Do not let anybody “improve” the product by making it into something cheaper on the theory that the consumer will never notice it.
    36. No business is safe from innovation: Yahoo could think it owned search only to find itself trumped by Google, Motorola thought it had control of microchips for cell phones only to discover Intel eating their lunch.
    37. We ought to start thinking about every consumer as critical to your business.  A person can’t afford to lose and refuse to give up on.  Even if they stop buying our products at times, we should still keep a light shining in the window for them.  Maybe some night they will come home to us.
    38. We now are faced with a new reality.  The things that worked for us before are not working quite the same way anymore.  It is taking an increasingly massive effort and expenditure to stand in one place.  Instead of just throwing money at the problem, let’s start using some imagination.  It is time to rethink our approach to business in our most mature markets – especially in the United States.
    39. Product quality is not an absolute, it is relative to changing consumer tastes and experiences and it is especially relative to the quality of competitive offerings.  In that sense, I think, our very success works against us.  We have more to lose than most of our competitors so we are more reluctant to change.  That tends to put us behind the curve when it comes to product improvement.  Being the one to beat, we sit on our hands while our hungrier competitors keep experiments – making their products better and better and reinventing themselves to try to attract new consumers.
    40. “The ability to define your own identity and that of others is becoming the battleground of the future.  Terrorist organizations such as Hamas, Hezbollah and others give their recruits a sense of purpose and belonging.”  A Crowd of One, John Clipper.
    41. Asset cycles will surpass everything previously experienced.  Industries characterized by high asset intensity industries will struggle to keep up. 
    42. “The Internet of tomorrow will be as a dramatic change as the Internet today.  The Internet precipitates one of those rare occurrences in economic history when we must think more broadly in order to understand how the entire infrastructure of wealth is change.”  Don Tapscott, Harvard Business Review.
    43. Just because everybody is following the same set of instructions, does not mean it is the best way to do something.  I believe that a more rapid rethink is necessary and we must disregard previous instructions and come up with fresh insights and ideas.
    44. Regardless of what term you use to describe (Generation Y, Generation Me, Millennial) one consistent trait connects them, they are coming of age in the collaborative economy.
    45. We need more “unreasonable” people.  People who want to change their wold, not adapt to it and who want to challenge or the lazy rather than rationalize away its inconvenient bits.  It is our responsibility to make our enterprise a place they will want to work.
    46. We need to win the talent war.  We have to build our brand in the talent marketplace as the best place to work in our industry.
    47. The future is a realm for actors rather than spectators.  It is the difference of being passive and being active.  The risks are there regardless, but the active participant has some possibility of control.
    48. Challenge your enterprise to think about how they can spend more time imagining, creating, innovating, collaborating and not having more meetings. … we have too many now.
    49. Striking the right balance between competing today and acting tomorrow is a key ingredient for creating long term sustainable competitive advantages.
    50. Think about allocation of resources in this way.  “How would a company best allocate their capital among different asset classes if you knew you were going to be forced to go away for three years and would be unable to change allocations.”  Investment Strategies For The Age Of Global Economic Change by Mohamed Ed-Erien, CEO Pinco
    51. The question is not whether or not we can afford to have growth.  If we do not grow we will die.  The question is rather what the quality of that growth is to be and how rapidly and imaginatively we can initiate it and achieve it.

 

 

Summary

The ideas come from many sources only some of which I have been able to acknowledge.  It comes in bite-sized bits, which for time-starved people makes it more digestible.  Changing a big company like ours all at once would be like trying to swallow at one gulp.  I do not think it can be done.  But changing a piece at a time ought to be fairly easy.

If you have any questions or want to discuss any of this, please do not hesitate to call.  Let’s go to lunch next week.

Build A Bear: Target Audience.

I have never seen an 8 year old drive a car.  I believe that is against the law.  I have never seen 8 year olds go to malls between the hours of 9:00 to 3:00 they are in school.  I believe that 8 year olds go to BBW web-site.  If they purchase bears over the internet that might negate purchases bears in stores. If they purchase a product over the web mothers will pay for it.  The primary influencer might be 8 year olds adults do the rest.  BBW needs a best in breed marketer if they ever going to succeed in the market place.  The market seems to agree the stock is selling at $4 a share.

 

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Crystal Ball: Best Buy – Going out of Business (Revised)

Best Buy has had its lunch handed to them by Amazon and poor management. Best Buy sells commodity and low margin products. Consumers go to Best Buy stores to see the products, take a test ride and then buy the products from other retailers. As has been reported, Best Buy has too many stores and, too many square feet per store.

Although not asked for, I will give them free advice.

The Brief

The goal is to re-introduce Best Buy… they need to reinvent, reintroduce and redesign the store and on-line experiences. Consumers have high expectations for physical transactions and the higher they are the greater the opportunity for Best Buy. That is in their favor and a barrier to entry.

The Challenge

We checked off the product boxes. Best Buy’s problem was not the number of products, and demand for those products. Their brand is about consumers not about the technologies. It is about the word “experience”–to engage fully with the store the consumers expect a new experience and story line. A large number of creative solutions are needed in a short period of time.

The Solution

The store is a stage and platform expressed as a multi-media, multi-platform program, each product category acting like a touchpoint to engage with the store. Best Buy has a great opportunity to create collaborative experiences that encourage consumers to build their own “digital castles.”

They should give each consumer an account, and password to their own representative and technology concierge.  (A lot of consumers are tech savvy; but there is still room for education experts in the same way a gourmet cook and suburban moms like cooking tutorials at the grocery store.)

Social media offers a whole new level of flexibility, interaction, engagement and story lines. It is vital that Best Buy developed a collaborative experience, which will really hook the consumer and incredibly wide target audience.

General Electric

“General Electric, during the Jack Welsh era, when the company’s flagship product was not an industrial turbine or a refrigerator or medical imaging device but a quarterly earnings number that reliably met or ever so slightly exceeded earnings guidance.  Because of Environmental’s demands for reliability, work is only secondary in the business of making stuff and selling it.  It is primarily a matter of ensuring that existing heuristic or algorithm produces a consistent result over time.” Roger Martin is dean of Rotman School of Management at the University of Toronto, and professor of strategic management at the school.

Six Sigma, which was hailed by General Electric as an indispensable tool, relentlessly simplifies algorithms to the bare minimum, taking reliability to its logical extreme. Many organizations – most famously General Electric – promote Six Sigma techniques and promote managers who use it.  Left brain thinking is rewarded; right brain thinking is left at the altar.

” Margins Come In First, Consumers Are Second”

“Restaurant operators are in a position where they don’t have much choice but to raise prices because they operate on such thin margins” Costlier Food Puts Restaurants in Bind, New York Times, August 29, 2012.

Really.

As far as I know, margins do not buy fast food, margins do not increase customer traffic; margins do not feed families of four; margins are not people.  Analysts do not worry about how the recession has impacted consumer-spending power.  Analysts are short sighted, stupid and hazardous to an enterprise’s health.

Don Thompson, McDonald’s chief executive acknowledges “if commodities look like they are going to really ramp up we want to make sure that we’re in a position to minimize the erosion by taking appropriate price increases.”  Even McDonald’s feels it has to maintain margins and they are the best of the best.

It is not radical to think that consumers come first; margins come second.  It is not a radical thought to meet the needs of the consumers first. It is not radical to believe that in hard times it is even more important to be on the side of the consumer not the street.

It is outrageous to think that maintaining margins is the number one priority and the consumer comes in second.

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The Ideal Corporation – Redux

I have been asked by the senior management of several enterprises to define the Ideal Corporation. The first task was to develop a historical perspective. The second task was to explore the usual ways we define a corporation. These methods always yield unsatisfactory answers simply because we deal with the past while the question deals with the future. Therefore in asking what we should expect we are really asking what a corporation should be above and beyond what it has been.

My point of view can be a starting point for vigorous discussion and debate. I look forward to your comments.

Please read my blog of August 15, 2012.

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