Category Archives: business development

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Is your business run by a monkey?

The Chimp Paradox

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Do you find that you waste a lot of time and effort on initiatives that aren’t strictly “on strategy” or don’t produce results that are on your list of KPIs?  These days no business can afford inefficiency, and this kind of wastage is one of the worst, but as pressure mounts in the boardroom to perform in increasingly tougher markets it seems to be happening more and more.  Could it be the “Chimp inside”?

As my regular readers will know, I often compare aspects of sport and sportspeople with people and practices in business.  I have also, in the past spoken both here and in my seminars, on how primal instincts influence purchase decisions.  Now the two topics have come together in a book by the sports psychologist Steve Peters called “The Chimp Paradox”.

Steve is the man attributed with the success of the British cycling team, but has a string of other high profile successes to his name.  His theory, very quickly explained, is that our primal instincts of fight or flight cause us to make advance judgements of our likelihood of success in any given challenge which, even though our rational side may be conditioned to rise to the challenge anyway, will always take the edge off our performance.  Somewhere in the back of your mind when you line up on the starting blocks alongside Usein Bolt, something in the back of your mind will tell you don’t have a payer!  That little voice is your Chimp.

The idea that I have explored in the past relative to purchasing decisions is that our primal instincts pre-condition us to buy the stuff we love.  We try to be all grown-up of course, but that little voice is always telling us “You know you want it” so we take the plunge and then try to rationalise the decision with a load of argument and spreadsheets that confirm we made an entirely emotionless, practical decision.  Forget it, you didn’t.

What Steve Peters does is help athletes train their chimp.  He admits that he can’t take it’s influence out of your personal struggle entirely, but he says his success has come from showing sportspeople how to manage their chimp.  We can all do this, some of us, admittedly, better than others and once we do, the chimp’s influence can be diminished and performance increases, but the tougher the challenge, the more likely you are to revert to chimp mode and its my belief that this is what we are witnessing in many of our boardrooms today.

You have to accept that there is another influence going on here too.  After all, some people are just better at handling pressure than others so their “chimp threshold” is higher, but it seems likely that these factors are tightly bound together.  I’ve seen and heard of many businesses, large and small, whose approach to business has been swinging around all over the place.  Managers have been issued with instructions to initiate unplanned activity or initiatives, or change priorities in ways that appear to have no bearing on the original strategy, not always a bad thing in the appropriate context, but all too often they prove to be a waste of time, money and effort.

This kind of behaviour is the product of poorly managed chimps responding to immediate issues.  For example, a CEO who is driven primarily by sales targets can lose sight of the fact that maybe the sales targets should change or the KPIs switched to something else rather than change the marketing strategy.

Chimps gain greatest influence and do most mischief in organistions with a short-term focus.  The time scales of those businesses that haven’t yet recognised that tactically-driven businesses almost always fail, create acute pressure on senior managers to “appear to be doing something” when sales slip.  I’m not saying that they should just kick-back and let the slide continue, but short-termists rarely take their time to study the big picture and often the actions needed to reverse a short-term decline will counter vital actions within the longer-term strategy.  Short-termists hand control over to the chimp.  If they were good enough at handling pressure to be able to take a step back and view the long-term consequences of their current performance they would be less likely to damage the business that investors actually invested in.

Knee-jerk management is never a good thing, but as pressure mounts it becomes increasingly difficult to manage the chimp.  The paradox is, that its when pressure is at its highest its the time you least need a monkey in the driving seat!

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Customer Loyalty – Stop trying to buy it and start earning it!

Yesterday I came across a great piece by Luca Paderni on iMedia Connection entitled “Why Your Brand Loyalty is Failing”.  Luca covers pretty well all the angles and raises many important issues, but there’s no escaping the underlying truth that kept surfacing among the other well-made points – customer loyalty is simply a product of customer satisfaction.

I run many workshops on this subject with businesses around the world and I’m used to receiving a torrent of ideas from delegates for programmes and initiatives designed to reward loyalty.  Sadly I get fewer ideas for ensuring that the brand promise that brought customers to the point of purchase in the first place is delivered. If my delegates are indicative of the people driving marketing these days, its hardly surprising that the focus of so many businesses appear to be trying to buy rather than earn customer love.  And they do this regardless of the fact that it’s a ludicrously expensive and extremely short-term way to run a business.

These days loyalty is the dominant business driver.  With most customers already claimed/assigned to vendors (apart from in emerging markets there are few emerging customers) the return you’ll get on acquisition investment is always going to be limited and its hard work.  The future lies in selling more stuff to your existing customers and they’ll only buy if they love you.  The problem is there seems to be confusion among marketers over what drives these brandships.

Sure customers will appreciate add-ons and freebies, They’ll add to the customer experience, but they only have value if you have already given your customers what they came for and simply will never be an alternative to simply delivering your brand promise.  My advice to any business that asks me about customer loyalty is to start by measuring customer satisfaction.  There’s only one way to do this and that’s by measuring your performance against your brand promise and the pillars that support it. (see the tab for Brand Discovery above for definitions.

Yes, there is no escaping it.  It’s back to my old favourite, the Brand Model again, because that’s where everything in any successful organisation has to start and it’s why my Brand Discovery programme places so much up-front emphasis on this vital business tool.  If you have set about creating your Brand Model correctly and placed the appropriate emphasis on marketing it internally, if you have developed the right briefing processes and checks to back it up, everyone (and I do mean everyone) in your organisation will be focussed on delivering your Brand Promise and none of your customers will be disappointed.  THEN the rewards that everyone seems so keen to give away can make sense.

The dumbing down of marketing

There’s no doubt its tough on the streets.  The post-recession marketplace differs in so many ways to what went before, yet organisations the world around are still approaching business in the same way and wondering why they aren’t getting results. 

Their slowness in adapting is often due to their habitual reliance on processes and infrastructure, which in some ways explains the success of those few start-ups with a clean sheet of paper and the understanding to get it right, but it takes real skills and experience to change a business on the move, so its ironic that just when you need the best brains on the job so many businesses are dumbing down.

Organisations world-wide are recognising that until the recession changed the rules businesses that were “average” could still earn a living and realising that efficiency is the difference between success and failure.  Now its game on, of course.  Average doesn’t cut-it anymore, we are talking fine degrees of excellence separating the movers and shakers from the has-beens.

Sadly, a lot of misguided managers are confusing efficiency with cost-cutting and employing managers with little or no experience and limited skill on the cheap.  It doesn’t work of course, because to succeed in business these days requires the best and the smartest and the cracks are very much in evidence.  I recently encountered a major global concern where the senior management were frustrated that they weren’t getting, what they considered a reasonable return on their marketing investment.  It was easy to see why.  The wastage was apocalyptic – they talked about integration (the only way any business is going to achieve the necessary efficiency) but didn’t understand it, nor implement even the basics and they had a department called “Propositions” whose brief it was to come up with a continuous stream of short-term tactical promotions that were so short they never had a chance to get up a head of steam and were just confusing their prospects.  To make matters worse, the focus on proliferation of ideas inevitably meant standards were sacrificed.  All they needed was one “Big Idea” and what they were doing was throwing half-arsed ideas around like confetti.

Behaviour like this can only be a product of inexperience and limited skills, but the business I mentioned are by no means alone, this is a worrying trend.  The businesses that I see succeeding right now have limited numbers of really smart people with the skills and experience to contribute across the business.  Structures involve everyone having clearly defined responsibilities, while appropriate culture and practices empower capable managers and employees to contribute in areas of the business beyond their remit.  This way you make the most of your resources and the gaps in the skills and experience can be covered by bringing in consultants as and when they’re needed.

Of course, while small businesses have the luxury of starting with a clean sheet, larger concerns will struggle to adapt existing structures and practices, but that’s not an excuse to do nothing and it’s certainly not going to be resolved by anything other than the best, most experienced and highly skilled marketers.  The decision to dumb-down by recruiting on the cheap is a false economy and the sooner businesses that are going this way recognise this and reverse the process the more likely they are to survive the next few years.

Are you running a business or pursuing a hobby?

I realise that TV shows like Mary Queen of Shops, Country House Rescue and my favourite (if only because I could watch Alex Polizzi doing anything all day)  The Hotel Inspector, despite being formulaic and often contrived are the current entertainment of choice, but what I’m really waiting for is a series of “the ones that got away”.

I’m just itching to see the cases that sent the celeb consultants screaming out of the door, if only because I need the reassurance of knowing for sure it’s not just me who occasionally encounters a hopeless case that simply won’t be helped, or for which there is just no hope.

I’m currently going through that process of mental double-checking every option explored or unexplored that I guess every business consultant goes through before declaring a “patient” DOA.  My nemesis has proved to be a small advertising agency with a £1.5million turnover and accumulating losses that came to me at the beginning of the year.

I believe there is a solution to every business problem and the biggest obstacle to success, as in this case, is usually prejudice, laziness or obstinacy of top management, who despite consistent failure, insist on perpetuating the same model or set of practices.  Who was it who said “Insanity is repeating the same thing and expecting a different outcome”? What is really frustrating about this case is that the solution was pretty obvious.

The people at this agency are getting on in years and looking for an exit that they quickly discovered didn’t exist.  Their stated losses were modest enough, but when I took a closer look I discovered that the three partners, who were independently wealthy, weren’t paying themselves a salary, which made the real picture rather more of a nightmare.  Strangely, this isn’t the first time I have come across a business where owners were not paying themselves and been forced to point out that they were not a business (which makes money), but a hobby (which burns it)

Working as I often do with marketing services firms I always start with the perspective that whatever discipline they may lead with, a marketing services firm is a consultancy.  A position which carries with it two clear responsibilities.  The first is that you must know more about your subject than your clients do.  This may sound obvious, but I often find client/agency relationships that are a bit like the blind leading the blind.  Assuming you qualify on the first point you should be advising your client not taking instruction, otherwise there is no reason for your existence.

Explanations for the failure of this business were turning up under every stone I turned:

  • The principal of this business told me with pride that he had never in his life stepped foot in any other advertising agency and didn’t know what they did or how they worked.
  • In fact they had never conducted a competitive review and were oblivious to who their competitors were or what they were offering.
  • Neither had they undertaken a client review.
  • None of the employees had worked in other marketing services firms either, so their “training” had all been at the hands of their agency principal.  Consequently their perspective was as narrow as the business.
  • In an era where integrated marketing is accepted as essential this agency operated in a very narrow field indeed.  All they offered was local press advertising!  Account handlers positively resisted the idea of offering additional comms, probably because they didn’t know anything about them.
  • The business operated on the commission model where, as an NPA recognised agency (remember those?) they received a 15% commission payment from publishers, which they used to pay for the design and artwork they provided.  I don’t know of another agency that still operates this system, simply because it doesn’t work.  For one thing any agency, regardless of “recognition” gets 15% discount from publishers these days and for another, 15% of the space cost is rarely enough to cover the cost of design and production when the majority of the space you are dealing with is in local newspapers.
  • They “sold” advertising space rather than advised on media strategy and account handlers were paid on commission, just like a media sales rep.  They also did pretty much what their clients asked if it meant selling some space.
  • Senior management had no contact with clients and I was refused access to them because the account handlers wouldn’t allow it!!!  Work that one out!
  • Their in-house management system, including job-bag management and invoicing was all done BY HAND!  Yes, you read that right.  What’s more, they were adamant that this was better than a computerised system.  I haven’t seen that much paper since Wiggins Teape was a client of mine!

The list goes on, but you get the idea.  However, without giving too much away, after speaking to local businesses, business networks, competitors, local media and other marketing services providers, I identified an opportunity for my client to create a model that catered for small businesses and even outlined a plan for growing the business nationally.  This was obviously going to take the founders out of their comfort zone, but they weren’t planning on being around for long, so that was hardly the point.  My job was to make their business attractive to potential investors.

I wasn’t entirely surprised though, when the owners decided not to adopt my strategy.  It had become clear to me early on that they weren’t removing themselves from the situation.  Comments like “But we like the business as it is” and “What we really want is someone to come in with a few new clients” were commonplace, despite me pointing out that the business was losing significant sums mainly because there aren’t any clients left for whom the agency’s offer was relevent.

So, this is one for the “ones that got away” file.  A fruitless exercise, but maybe not a waste of my time because its always good to have an insight into markets and in this case I have awoken to an opportunity that some other small agency might make work.  It also reinforces my belief that businesses fail, largely because they deserve to and that a great many small businesses should start by deciding whether they are running a business or pursuing a hobby.

Communities of interest – A lesson for the Big Society?

I just love and have always promoted the idea of communities of interest.  They make the otherwise impossible, possible for business and, for small concerns particularly, are often the difference between success and failure.  Just because it doesn’t slide neatly into one of our business-model pigeon-holes, doesn’t mean it’s not legit.  In fact marketing is nothing if not about doing things and going places that nobody has gone before.  That’s why I particularly like this idea.

When an international film-maker gets together with the owner of a historic monument that’s desperately in need of renovation, a bit of creative improvisation around the age-old bartering theme can give you a solution like this.  Not only is it a great outcome for the building owner it was great marketing too.  There are so many ways that the film producers and promoters could leverage this initiative I can’t wait to see what they do with it – beyond making the series, of course.  Maybe there’s a lesson here for the Architects of David Cameron’s Big Society?

UK needs to catch up on in-store music.

I’m feeling guilty that I’ve been neglecting my blog for the last few months.  Time flies when you are having fun and I’ve been engrossed in developing a new offer with Immedia Broadcast, who lead the UK in the design and delivery of bespoke live radio solutions for commercial enterprises.

Having set the bar for the last ten years in the high-ticket radio  and TV solutions that have made them famous Immedia are keen to apply their skills and experience to the volume end of the market and I’ve been working with the  amazing technical, radio production and music psychology experts in Newbury in the South of England, to create what we have called Dreamstream, an off-the-peg music solution that smaller businesses can access for a minimal monthly subscription.  It’s still a work in progress, but take a look and let me know what you think of it so far.  www.dreamstream.co.uk

The journey has been fascinating and among the interesting processes we have encountered along the way, we commissioned a significant research piece that involved talking to 800 small store proprietors.  This as a bit of an eye-opener and maybe a pointer to why our small stores aren’t always realising their potential.

While I’m used to retailers in the US and elsewhere, who, regardless of their size, already recognise the business case behind in-store music, their UK counterparts definitely need help joining the dots.  There’s research everywhere (and its a fundamental of my “Brandships” principle) to establish beyond doubt that music, that reinforces and reflects your brand will make customers feel at home.  It also shows that as a result of this they stick around longer in the store and return more frequently and we all know that once you have achieved this you’ll see an increase in sales.

There’s another angle to the in-store music argument though and that’s the impact it has on employees.  Those of us who have worked with this tool will know that store staff are responsible for a lot of the complaints about in-store music.  It’s also often the employees who exacerbate the problem by messing around with the content and volume in the stores where they work.  However, retailers that get their music right will find that their employees are energised and more enthusiastic about their work and this in turn increases productivity and sales.  Its pretty conclusive – increased customer propensity and greater employee engagement and there are case studies on the Internet where retailers have shown increases of 20% in sales just from music, without any announcements or commercials.

Sadly, some UK independents remain sceptical.  Our research even found a few who believed that in-store music actually had a detrimental effect on business.  The reason for these opinions can only stem from their experience of some of the absolutely awful in-store music that we hear in the UK.  I think there’s a major education challenge facing the sector and, with current challenges of the new economy, and the drift towards “clone towns” we need to get cracking on this quickly.

It beggars belief that a cash-strapped shopkeeper will pay more than £300 each year on PPL and PRS music licences, only to waste it by playing local radio or worse still the dregs of their own music collections.  Music that works is the product of the marriage of science and art that you can only get from professionals.  These small businesses need to understand that the DIY approach is a recipe for disaster and local radio is not going to do it for them either.

UK independent retailers have a long way to go to catch up with their counterparts in the US and until they understand how to make the most of the opportunities like in-store music that are definitely available to them, their self-pity and claims of a market biased toward multiples aren’t going to receive much sympathy.

Strategic alliances – success in numbers

Developing a business has never been easy, but until relatively recently you could “get by” while being half-arsed.  The trouble with that reality is that it has bred a generation of managers who aren’t that creative when it comes to taking on a real challenge.

These days, only those on top of their game will survive and you simply have to be innovatve in opening up and leveraging opportunities.  Business is  a battle so maybe we should be taking lessons from some of the old generals.  For example, a strategist once told me that only three percent of battles in history have ever been won with a head-on attack.  Being a strategist he was probably making that fact up, but its an unbeliveable thought.  Be creative in your strategy and you could out flank your competition.  In the Czech mobile market the third operator, who wasn’t given a hope in a population of just 12million people, became the world’s most successful third operator and the fastest growing mobile operator ever, by taking a different approach.  While everyone else was building networks from  the population centres out into the rural areas Oskar started in remote spots and headed the other way, becoming  “liberators of the common people” who didn’t have fixed lines worth a fig and badly wanted to gain access to the rest of the world! Oskar’s success was well documented.

Think about it.  Most of our best new businesses, brands and products are successful because they are different.  Anything “me too” is usually consigned to obscurity and probably ridicule forever.  As I keep telling my audiences – You are only as good as your NEXT big idea, and being different is a large ingredient in a successful formula!

Today I’ve been talking about the benefit that communities of interest and strategic partnerships can bring to a business with great ideas and limited resource.  I’ve taken particular pleasure over the years in helping business form and leverage relationships like these.  There’s no better way for an entrepreneurial concern to make it to the big time than by piggy-backing someone else’s sales network or manufacturing capability, but look for your own solutions, be creative!  There are many ways to forge and benefit from links to other business and however small you are, there’s a likelihood that you have skills, expertise or other resources that you can barter.  The entrepreneurialism of a small business is often a sttrength in these situations and an SME can easily find itself in the driving seat of a partnership with a cotrporate.  In fact, I advise all my clients to devise a strategy for seeking out partners and forging alliances.  If you approach another organisation with a partnership proposal you are by that very fact already controlling the agenda.  Keep it that way.

Throughout history, conquering armies have created alliances that swelled their numbers and added to their resources.  Your partners don’t even have to like the idea of sharing with you, but they’ll warm to the notion of being on the winning side.