Category Archives: business strategy

Time for a new model from Europe’s car manufacturers

When the world’s car-makers were feeling the pinch a few years back I wrote a piece speculating on the future shape of car manufacturing in Europe.  Now we are facing double-dip recession and a double-dip car-sales slump in Europe, so maybe its time to dust off my predictions and start again.

Last time around, the many trade-in schemes and new cars for scrap programmes put in place by  governments desperate to save their critical motor industries and minimise unemployment were, in typical fashion, exploited by manufacturers with no ideas, intent in salvaging the old ways.  The changes that were really necessary never came about.  We’ve struggled on with a Sellotape solution for a while, but there looks like being three million fewer cars sold in Europe this year than in 2007 and the French and Germans in particular haven’t scaled back production.  It’s true that luxury marques like BMW and Mercedes continue to sell, which also suggests that manufacturing standards also need looking at, but both countries still have all the overheads without the sales.  What’s more, cash-strapped governments aren’t in a position to bail them out again, so it’s becoming clear, even to the industry’s ostriches, that they are going to have to bite the bullet.

The idea I was expounding previously was that car design and marketing would be separated from manufacturing in much the same way that The Coca-Cola Company separates marketing from production.  If the automotive industry were to adopt this approach local manufacturers would build cars for global brands who would design and market them.

If you think this is far-fetched, you should know that its a model that is already up and running.  The Finnish Valmet company already produce cars with other firm’s badges on them and look set to start producing the Mercedes A-Class.  There seems no reason why businesses that specialise in production wouldn’t have a better chance of meeting the quality and volume demands of the shifting market.  There may be other advantages to this arrangement too.  For example the carbon footprint of car production is increased by the distance they often travel from production plant to showroom.  There seems no reason why we shouldn’t see production lines for VW and Fiat running side-by-side in the same specialist local plants.

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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!

Optimism, the power of positive thought and the future of your business

I’m an optimist.  I recognised this many years ago and I’ve been reminded of the fact daily ever since.  I look around me, see and hear the responses others have to situations that we are all facing and its obvious that my responses are different.  I don’t know why this should be and and I’m not about to start trying to understand it, but what I do know is that it impacts in many ways on my life and never more so than right now.

With the economies of just about every country now in turmoil every business, anywhere in the world is having to make significant changes.  If you have followed my work for any length of time, you’ll have probably picked up that I like change.  Change is good, same is bad.  You are only as good as your NEXT big idea.  I can’t stand companies who strike it lucky and then settle into the rut of replicating what they did time and time again to milk it for all its worth.  I don’t like them because there is an inevitable consequence to this approach – failure.  The world moves on, customer needs change, attitudes swing, everything is in a state of flux.  It is a very lucky business that has a product that will be equally successful through time with no change at all and right now I can’t even think of one.

I’ve been inside more companies over the years than I could even list and it has become clear to me that successful companies all have a spirit of optimism.  Talk to their employees and their chatter is about HOW they are going to achieve things not WHETHER they can achieve them and that’s simply because they don’t consider for one minute that they won’t get there.  And why should they?  Anything is achievable.  We are our own limitations.

I have never been far away from sports of one kind or another and the great sporting enlightenment of the last few decades has been sports psychology.  At an elite level most athletes have equal capabilities.  What separates them is most often belief in their ability to succeed.  That’s where visualisation plays its part.  Most athletes these days will sit and visualise their success, sometimes for hours.  This conditions their brain so that it doesn’t consider failure as an option and that in turn enables them to perform to their full potential.  It works, but if you don’t believe me consider this.  Within twelve months of Roger Banister achieving the one-minute mile, 37 other runners did the same thing.  What caused this surge of performance after years of believing it was impossible?  The belief that it could be done!  I’ve seen sportspeople who habitually performed below their skill level, transformed.  What’s more, once they realise it’s working it becomes a self-perpetuating cycle – confidence increases, performance increases, success increases, confidence increases etc…   It also works with sportspeople who are not in the elite group, even weekend warriors.

Anyway, back to business and why its clear to me which companies are going to make the transition that will earn them a place in the new world market.

I hear organisations all over the world acknowledging that they have to change to survive, but very few actually end up making the changes that are necessary.  The reason for this is a combination of comfort with the status quo and fear of failure.  Firstly, these organisations don’t have the change culture that I mentioned earlier (You are only as good as your NEXT big idea) so it’s not their habit to constantly look for improvements or changes. Secondly, they are, both individually as employees and on a corporate level terrified of doing something that will go wrong.

This fear is based on the failure to recognise that we are all capable of succeeding at anything.  Anything is possible it’s just a matter of how badly you want it.  If one company can innovate then you can.  It’s just a matter of self-belief.  My advice is, instead of focusing on the potential for failure, turn your attention to the risk of failing to exploit an opportunity, because that’s all that matters.

Attitude change like this has to start at the top.  If you are a manager who accepts failure as inevitable or who doesn’t assume success, you need to pay a visit to a motivator or business psychologist, or you could quit of course if you think you’ll never make the change! (think about that comment, it’s deep)  If you choose to re-focus your mind your next step has to be to eliminate all the doubters in your organisation.  You can do this either by firing or re-training them.  The latter is the best option of course, but you are going to have to focus a great deal of attention on internal marketing to pull it off.

Once you have introduced your organisation to positive thinking you’ll be surprised what you can achieve.  Someone asked one of my contractors this week how sure they were that they would deliver a particular task.  “Absolutely” was the unhesitating reply, but the questioner wasn’t convinced.  “How can you be so certain?” came the response, to which my contractor replied “Anything can be done, its just a matter of how much time or money or effort you put behind it”.  That task would never have been attempted until we came on the scene, but they’ll do it now and it will work and it will improve their business performance and I know that because my contractor recognises that anything is achievable.  What’s more, like the cycle of positive thought I referred to earlier, the achievement will fuel further, bigger achievements for the company concerned.

It definitely pays to be an optimist.

The very sad loss of Graham Rust.

Some days are just sad and today has been made so for me by the news that Graham Rust died in Prague yesterday.  You may have read the piece I posted here a few months back when Graham announced that he’d had enough of chemotherapy and was instead taking a trip … around Europe.  My feelings then were a combination of anger at the injustice and delight at the way he responded. I think those of us who knew him realised the inevitabilty of his all too early exit, but it nonethless leaves a hole in your life when someone you respect dies.

Tributes are already emerging from people who knew him longer and better than I, but at the risk of being as unoriginal as many of us look alongside Graham I just want to add my tuppence-worth.

I am sure there are many people around who met Graham without realising just how impressive his life has been, such was his humility.  A genuine mould-breaker he seemed to love what he did and did what he loved and it showed in the great ideas he has left us.

The agency he founded in Prague is a reflection of his personality and approach to life and work.  He achieved balance in most things that I particularly respect, tough and sympathetic, creative and organised – I loved the way he made work lists like an engineer, but tackled the problems they represented like the most liberated creative and he never lost his absolute glee for a neat solution.

We were the same age, but Graham taught me things that I am grateful for as he did the people who he took on and mentored at his agency.  There are many ad. people in Prague and elsewhere who owe their place in the business and their understanding of the work to this truly good bloke.

Aplogies to Richard Laurence Baron from whose blog I stole this great photo.  My only excuse being that I’m in Saudi Arabia at the moment and don’t have a shot of my own to use.

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.

In successful companies employees dance on tables

You don’t need me to tell you, its tough out there.  Many businesses that I come across are struggling to adjust to the new rules of business and a few are still realising that many of the old ways of running a business simply don’t work anymore, but, old habits die hard.

I’m seeing a disappointing return to purely tactical focus and its hard to persuade the companies heading in this direction and whose priority is to pay this month’s wage bill, that  it’s a dead-end street.  A still more worrying trend I am witnessing though is towards whip-cracking.  Much as I sympathise with the desperation of managers who simply don’t understand why the approaches they have used successfully for years to build or run a business don’t work in the era of new model marketing, flogging your staff is the desperate last twitch of management that has already failed.  High-pressure tactics like this are doomed to failure in both the long and the short-term.

I overheard a conversation last week where a middle manager was bemoaning the loss of the “good old days”.  “I remember …” he said “… the days when, if I was out of the office for a day, I’d return to find my stuff all pushed to one end of my desk because someone had been dancing on it!”.  Extreme perhaps, but there are offices throughout England where the atmosphere is so dour and depressing that its hard to imagine that this kind of thing once happened in successful businesses.

My mind goes back to a quote by Tom Peters in one of his early presentation where he begged business leaders to ask themselves if there was a spring in their employees’ step as they walked across the parking lot from their car to the office each morning, saying “If there isn’t, it’s your fault!”.  His overarching point being that unless employees are happy and enthusiastic about their work, your business will fail.

How many organisations, who today are battling to put together a business strategy that works under the new rules, are paying attention to the absolutely vital element of employee engagement?  Without the backing and buy-in of employees, no business will stand a chance of delivering its brand promise, and when you fail at that you’ve just failed!

For those tempted to respond with “… but we never did any of this stuff before”, I’ll underline what I have said earlier and many times before – If you got away with this omission in the past, it was only because the competition (despite what you may have thought then) wasn’t that tough.  Now its “game on” and there’s no room for slack.  No business can afford this level of inefficiency and, believe me, trying to deliver a promise without having first secured the committment of your employees is inefficient in the extreme.

If you think its par for the course for managers to be hated by employees, forget it!  If you confuse respect for you as a manager with distant or non-existing relationships with your staff you need to take a reality check.  Successful businesses have always had figureheads who employees are happy to stand behind – Richard Branson, Bill Muirhead, Maurice and Charles Saatchi, Stelios Haji-Ioannou, Steve Jobs … I could make a long list, but you get the idea.  Developing and leveraging relationships like these are all part of the internal marketing task.  Don’t side-step the issue.  These internal “brandships” are the key to the “brandships” you have with customers and that’s what drives your business.  When you need all the help you can get to keep afloat, the last thing you should do is abandon your internal relationship-building, so double-check your marketing strategy to ensure you are doing all you can to get your employees dancing on the tables!