6 Steps to Beat the Competition: Analysis and Discipline Pay Off

17 01 2017

the-art-of-war-sun-tzu

It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.
Sun Tzu- The Art of War

I am a believer in the Art of War, especially applied to business and marketing. When I talk to groups on business and marketing subjects I use this quote and it has guided me in the way I approach building businesses and helping companies grow. I have listened to numerous investment pitches at TechCoastAngels screenings (a real Shark Tank) and have heard too many times that the entrepreneur believes there is NO competition. There is always competition, i.e. another way to solve a problem or provide a service. Even when a company realizes that there is some semblance of competition, many executives believe they have more attributes, a better business model, and a stronger brand than reality leads them to accept.

Sadly, this problem extends way beyond the startup world. In 2008, Jim Keyes, CEO of Blockbuster said: “Neither Redbox nor Netflix are even on the radar screen in terms of competition.” While Redbox had its glory days and has now faded, Netflix continues to soar as they are able to take advantage of streaming media and they have evolved their business model. Blockbuster and its ubiquitous blue and yellow stores have faded into oblivion after ceasing operations in 2013. When I was at RCA (when it existed as a standalone company) one of the execs in the tube division beat his plan but unfortunately failed to recognize competition from semiconductors. He was fired. And let’s not forget other companies such as Digital Equipment Corporation, Wang, Motorola and Nokia in the tech field. Not only did they fail to understand the competition, their business strategies did not evolve. We are now seeing consumer companies such as Macy’s and Kohl’s which failed to recognize the competitive environment fast enough (can you say Amazon and online shopping) and are now closing many of their stores.

There is hope though, for most companies as they consider their competition, the environment and the competencies they need to put in place to execute a new business strategy. To that end, here are the six steps companies must take to gain and/or retain a competitive edge.

1. The first step to beat the competition is to recognize that there is competition! Competition comes from direct competitors, i.e. those offering the same type of product or service; indirect competitors; and even the do-it-yourselfers. Even if a competitor is small today, should technology or macroeconomic trends change, a small new company can become dominant. That is what happened to Blockbuster. Competition doesn’t have to come from the same players in the industry. Who would have thought Google and Apple, both, would be developing an autonomous car or at one time a smart phone. As we celebrate the 10th anniversary of the iPhone, there was a time when dominant companies in the market such as Nokia and Motorola did not consider Apple a threat and frankly, they did not believe companies like LG and Samsung were threats either. Both Nokia and Motorola have lost their luster.

Keep alert and be paranoid. Use user panels talk to “lead users” who are early innovators of new products, set up Google Alerts on companies that are current competitors as well as those which have the right competencies to become competitors. Your product might be better and that message needs to be conveyed to your target audience. You can recognize the competition through the use of user panels, discussions with “lead users’ and even setting up Google Alerts.

2. The second step is to know the competition. A couple of months ago, I was watching a classic war movie called Patton. Patton was reading the works and biography of Rommel, his nemesis, competition and enemy. Rommel in turn was trying to learn through books and other sources, how Patton thinks and how he would fight. It’s classic Sun Tzu! Even without teams of analysts and staff there are a few tips in understanding and knowing your competition.

Executives can become the equivalent of Undercover Boss. When I was the top marketing executive for US Cellular, I personally visited both my stores and those of my competitors. It’s easy to do even in a business to business environment. Other tools that can be used include Customer Advisory Boards, user panels, cross-functional teams that meet regularly to discuss competition and the environment. At ATX Group (now Sirius Connected Car), every other Friday morning I hosted a cross functional group of executives to discuss new technology and competition. Certain execs were tasked with following specific competitors and sharing that information in Microsoft Exchange folders for our sales, marketing and technologists to use. Other tools include Spider diagrams, focus groups and market research including subscribing to the industry analysts that cover your industry. In the tech field those industry analysists include Gartner, Forrester, IDC and Ovum among others. If a public company is a competitor, read their 10-Ks; it’s amazing how much information is available in that document.

3. The third step is to know yourself. Some of the same tools used to understand the competition can be used to understand your own company. Spider diagrams, side by side market research matrices that can highlight those attributes that are important to your customers and for which you perform well or poorly can help set your company’s strategic imperatives. I am a huge fan of developing a SWOT analysis which covers strengths, weaknesses, opportunities and threats. To do SWOT well companies should seek out key thought leaders in their company, regardless of level and even use newly recruited employees who have a different perspective because of their recent outside experience. Doing mystery shopping even in a business to business company is also relatively easy. At a telecom company in New Jersey, one of my marketing managers set up a false company called The Fred Racciopi Cement Shoe Company of Central New Jersey (obviously we set this up tongue and cheek) and became a customer of each competitor and well as our own company. It’s amazing what we learned and through those learnings we adjusted our training program, branding, positioning and marketing material.

4. The fourth step is to develop and explain the factors that make you different. Customers buy from companies that provide a unique value for their needs. If the value is significant, relevant to the customer, sustainable and credible, the company will have a differentiable advantage. This enables executives to create a “moat” around their company and its products, protecting the company from competitive incursions. The strength of your differentiation is akin to the size of the moat. Even commodities have moats. Think about salt or rice, two very basic commodities. Do you believe that Morton’s salt is better than other salt and worth a 15% price premium? Or how about Mahatma rice vs Kroger-branded rice? What about chicken? What company said: It takes a tough man to make a tender chicken?” (The answer is Purdue Chicken.)

If you can differentiate these commodities, you can differentiate any company and its products. There are several ways upon which to differentiate. Intellectual property (IP) or Patents is an obvious one. Even IP may not be sustainable or even relevant to your target market. Other ways to differentiate are based on what Adrian Slywotsky, author of Profit Zone, calls strategic control points which are defined as some type of unique advantage for a company based on competency or partner relationship. All companies can find at least one. These could include their brand, their business partners, distribution partners, unique processes, innovation, low cost of manufacture, unique customer knowledge, access to certain resources be they commodities or people and similar items. A company has to find those strategic control points that are relevant to their markets and be consistent and credible in delivering on those elements.

5. The fifth step is to develop plans: Developing and executing a plan is critical to success. A written plan should include specific elements. By target market, a goal needs to be defined, a strategy clearly enunciated, and tactics developed with specific milestones, costs, and a person responsible for delivering the tactics. Our opinion is that a plan should have one specific leader who is accountable for the entire result. Individuals who report to this leader need to be designated for each tactic and milestone. C-Level Partners also believes that these plans need not be long winded and in fact the best plans have focus and clarity and might even be codified on one or two pages at maximum. I personally am in favor of one page plans with specific deliverables. I like using a method called RACI (responsible, accountable, consultative and informed) to ensure that the right people in a company are involved in the development and execution of the plan.

6. The sixth and final step is to monitor, measure, modify. Each plan developed in step 6 should have a complementary set of metrics to track the success of the plan. Metrics vary depending on the plan and some of the metrics can include: average revenue per sale, total sales, return on investment, market share, win/loss ratio of business, aided and unaided awareness, average order quantity, SEO, the timeliness of performing the tactic, and other operational, business or product criteria. Each month these metrics should be added to a scorecard – preferably balanced – and reviewed with the operational or executive team. If a metric is not on target, then the executive responsible for the metric has to provide a corrective action plan. If the metric is very critical to the business strategy or to the overall goals of the plan, then a separate deep dive should be performed where the elements of the plan can be discussed in detail.

As an executive it is sometimes hard to see the competitor when you are mired in the day to day operations. You can always look to outsource part of these six steps or recruit internally some of the best and brightest less tenured people in the company. Successful companies couple strategy with competitive analysis to create and maintain an advantage. When I first converted from an engineer to a marketer, I cut my teeth on competitive analysis. It was the perfect start to figure out how to gain an advantage for the new products I was developing for my customers. I was fortunate to have the opportunity to help drive the strategic vision of my company at the same time. That integration is, in my opinion, critical to a company’s success.

Once you gain a competitive advantage, you have to stay ahead of the competition. That is a subject for a future blog, yet we at C-Level Partners believe that maintaining a competitive edge means companies have to continue to innovate, with technology, with their people, and through their processes. They must maintain contact with customers and open their ears and even seek out criticism. And they must strive for not only incremental improvements but also stretch for what we call the “art of the possible.”

As a technologist and business executive, I always keep in mind the title from Andy Grove’s book, “Only the Paranoid Survive.” Yet with discipline and a plan as outlined in these six steps we believe that companies will be able to develop a competitive edge and flourish in this hypercompetitive environment.

If you have comments or would like to talk further feel free to contact me at dfriedman@clevelpartners.net or call me on 949 4394503.

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The 5 C’s of Clairvoyant Companies

6 03 2016

Keys to successNo one is psychic at TechCoastAngels.  Yet, we believe there are keys to success for start-ups.  For the past couple of weeks, myself and 6 other angel investors from TechCoastAngels of Orange County have screened more than 120 entrepreneurs in preparation for the  “finals” of our fast pitch competition at TCA’s upcoming Celebration of Entrepreneurship event to be held on March 10.  We have listened to these entrepreneurs’ 60 second pitches which would be provoking enough to take a meeting with them and listen to their pitch decks. In my last blog, I shared the early pitch decks of 7 Unicorns courtesy of CB Insights.

For this blog, I want to put it all together and share what I see are the common themes that came out of the pitches and the pitch decks.  Now, while we have been focusing on start-ups, the principles enumerated in my 5 C’s of Clairvoyant Companies are equally applicable to on-going companies, large and small.

1.       Conveying the story.   The first “C” relates to conveying a story of what problem(s) the company is solving and telling a succinct story to entice the listener to ask for more information.   If it is a start-up, the entrepreneur has to put the listener in the shoes of the person having the problem and convey the solutions.  In the pitch deck (or business plan), the CEO (or presenter) provides the details on how he or she will execute on the plan and drive financial results.  Conveying the story clearly applies to ongoing companies as well, particularly if the company wants to attract new customers and brand itself in the market as something special.  Just think about the stories being conveyed by Nike and Under Armour or your favorite consumer or business product.

2.       Customer Clarity.   The second “C” relates to the target customers.  Who is the ideal customer?  Can you describe them and how do you find them?   If you think about Airbnb, the customers are both the person wanting to rent his property for a short period of time, to the other customer, a person wanting to rent a room or house.   The marketing and business plan should clearly indicate the problem the customer is facing and the solution offered.  Additionally, the company needs to present a cogent case for their marketing tactics to drive awareness, adoption and use.  Without clarity on the customer and how to find them and motivate them to action, financial success will not be achieved.

3.       Competencies of the Company.   This third “C” relates to the existing or needed competencies within the organization that can drive the financial results.  It also relates to the intellectual property (IP) that is required to support the business or product.    How do you acquire and sustain the competencies that are needed for success?  Do you hire software developers on your team to build the product or can you outsource that skill?   What is critical based on your strategy and your competition?

For an on-going company, this is equally as critical.   A competitive analysis and environmental scan may lead to the conclusion that skill sets that were once required are no longer required and new skills must be added.  That may lead the company to a training program, a partnership, or replacement of existing resources with new ones.

4.       Competitive Advantage and Moat.   This fourth “C” is pretty evident.  No company operates in a vacuum.  Both startups and on-going companies need to be aware of the existing and potential competition that exists.   A competitor in the future may not be apparent  today but may have the competencies, technology, leadership and resources to compete in a new and growing market.   Five years ago would GM or Lexus have considered that Tesla would be a competitor or that Google would enter the realm of cars with their automated car program?  A few short years ago, who would have thought that Red would be the camera of choice and used in three of the Academy Award nominees for best film?

With technology and apps changing so quickly, competition can change just as fast.  Technology is the new enabler helping young entrepreneurs compete with established companies and with each other.  Recall what Andy Grove, former Chairman of Intel said:  Only the Paranoid Survive.  Whether you are a startup or an established company, be paranoid and keep your eyes open.

5.       CEO vision and passion.    We at TechCoastAngels say that we have to like the horse (the business concept) but must LOVE the CEO (the jockey and her team.)  As we screened the candidates for our upcoming event, we looked for a CEO with passion and vision and who can relate to us, the investor.  We wanted to find someone who had a history of success, was decisive, yet approachable and coachable.   We believe we found those characteristics in each of the 12 finalists.

Think back to the great leaders of on-going businesses or coaches and CEOS of sports teams.   Who is your model for a CEO with vision and passion?  I personally thought Lee Iacocca was great when he resurrected Chrysler.  Jack Welch turned GE into a world class company with his vision to be #1 or #2 in his markets.   Steve Jobs showed the world a new vision for technology. And Alan Mullaly took Ford after the great recession to a new level of respect and performance.

What else did these CEO’s have in common?  They had the ability to execute a plan.  They were also the keys to establishing a culture in a company that was hard to replicate.  In many ways, they became the icon for their brands.  And they were highly regarded by their employees and feared by their competition.   In a startup it is perhaps hard to discern whether the CEO can execute, yet we can judge their past successes with other companies and who they select as operational execs, advisory board members, and board of directors.

As we near our Celebration of Entrepreneurship, I trust that these blogs and the ideas herein will help executives of start-ups be successful and also be used by executives of on-going companies to help them guide their companies to business success.  I would be glad to continue the dialog on what makes a successful company.  Feel free to reach me at dfriedman@clevelpartners.net and if you enjoyed this blog please like it, repost, and retweet it.





Building Differentiation into a Product or Service: Creating a Sustainable Moat.

4 02 2016

product differentiationThis is a particularly interesting subject as we, investors, think about investing in a company.  And while this blog is directed to those potential entrepreneurs, the ideas suggested in this blog are equally applicable to new products and services developed by a business to increase their revenue, replace existing products/services, or compete in the market.

Many entrepreneurs – and investors alike- think that differentiation is based on the Intellectual Property underlying the product.   That may be true if the IP is really unique.  Yet, as one knows patent protection only goes so far.  If a new smaller company has a patent that “infringes” on a larger company’s business, for example, the larger better financed company can sue for infringement and cause the smaller company to lose focus on their end game.

Differentiation can enable a company to create a moat around their business that would make it difficult for a competitor to penetrate.   At best, it protects the company for the long term.  At worse, it enables protection for a period of time so the new company can establish their brand and get first mover advantage.  And, in the best case, the new company has such an advantage with their product that the larger company buys the smaller company for $1 billion or more and the founders feel pleased that they created a unicorn!!!   (We can all dream, right?)

Differentiation can take place on several levels.  The following diagram shows and input/output schematic for product/service differentiation.  In the diagram, there are 11 different areas where differentiation can take place.    The entrepreneur can focus on one or several of these areas keeping in mind that they are competing for a customer’s mind share relative to what either direct competitors can offer or other solutions that the customer may find acceptable.  For example, when I was commercializing Wi-Fi on airplanes we initially thought that the competition was the on-board entertainment system.  In fact, that was only one competitor; the other “competition” that competed for the customers’ attention included eating, sleeping or reading!!  It was evident in the rear view mirror.

Product Service Architecture for Differentiation

Differentiation can take place at one or several of the components of the product or service.  In this diagram there are 11 different areas where the entrepreneur can focus.  Most of the time, the focus is on the main platform or product and its features.  Yet differentiation can take place in the following areas as well:

  1. Accessibility: How a customer finds the product or service.  This includes channels of distribution, online, door to door, word of mouth and is part of the input process.
  2. Interactivity: Does the product or service require input from the customer? Is this input active requiring the customer to input information or is it more passive, with the input process providing the input by reaching out to other databases?
  3. Input process: Is there a unique way that the product or service uses the data to and integrates or converts the data into elements which can be acted upon by the platform?
  4. The platform: this is the core of the product and the essence of the technology. It is the engine to drive applications and features.
  5. Features: the specific features that provide benefits to the customer and are inherent in the platform.
  6. Applications: the specific uses for the product that the customer may or may not realize. These applications can be developed by the company or by partners.
  7. Maintenance and customer support: Is the product self-testing or do customers have to provide some input into testing and maintenance?  Is customer support online only or a combination of online and human interaction?  Maybe I am old-school, but occasionally I would like to speak with a human and the documentation and self-help guides are not necessarily very clear.
  8. Output process: What is the output process necessary to translate and provide an output to the customer? Can the output process be linked to another product or service from one of the company’s partners or another provider?  For example, if the product/service is a new CRM system for the small business, can that system be integrated into a marketing automation or e-commerce system from Salesforce or Marketo?
  9. Reports and Results: This is what the customer actually sees as an output and is usable.  Maybe this is a timeline, a report, a database, a social interaction, a picture or a posting, or even a data (Think of Match.com.)

In each of these elements, the entrepreneur has a few choices.  We use the concept of PPT: people, process (automated), and technology to look at ways the element is enabled, used and managed.  It is up to the entrepreneur how he/she wants to balance each of these three components because they will affect effectiveness and efficiency.

I want to point out one other way to differentiate and develop a moat for your company and product.  In a book called Profit Zone, authors Adrian Slywotsky and David Morrison point out ways that a company can protect its profit and revenue stream.  In developing and commercializing a new product the entrepreneur can think about the following elements as well.  Strategic control points are normally industry specific yet we can general from most protective to least protective:

  1. Owning the standard through technology and IP
  2. Managing the value chain- including channels of distribution, input materials, shelf space etc.
  3. Developing a super dominant position by dint of their market share in specific markets, through specific channels, or with specific products. This is probably less likely for a start-up.  Yet, perhaps the technology originated in a university and by dint of that they are super dominant in that market and want to expand beyond the university.
  4. Process including a unique way to provide information to a customer. Think Amazon
  5. People including the relationship of their customer support team to addressing issues. Think Nordstrom or Zappos.
  6. Own the customer relationship by focusing and understanding the unique preferences of a well-defined niche.
  7. Brand and trademarks. Think McDonalds, IBM, Google, Snapchat.
  8. Development lead time enabling the company to be first to market and build up first mover advantage.
  9. Cost advantage or cost parity enabling the company to compete should there be a price reaction from a competitor.

I trust this blog- perhaps a little lengthy- can provide some useful information for the budding entrepreneur and even those in corporate America engaged in developing and commercializing new products, services, or businesses.  There is no easy answer; yet having a framework or two and breaking a complex problem into smaller manageable components can perhaps lead to success………. and the next unicorn.

You can hear and see entrepreneurs pitch their products at the TechCoastAngels Celebration of Entrepreneurship at the Segerstrom in Costa Mesa on March 10.  Check out http://www.techcoastanagelscelebration.com to get tickets.  Also, feel free to continue the dialog or contact David Friedman at dfriedman@clevelpartners.net or via phone at 949 4394503.  Or retweet this to people who would like a good read.





What Makes a Company Great

21 12 2015

Company cultureI was at a very interesting meeting hosted by Brett Olinger and Susan Howington, founder, Power Connections on Dec. 16, 2015.   There were about a dozen high level executives around the table with titles ranging from VP to COO to CMO to CEO.  Susan got us together to talk about business issues and she asked a relatively simple question: What makes a company great? And the subordinate theme of what kind of company would you want to work for or build?

As a tech executive and one involved in the entrepreneurial eco-system in southern California, I would have imagined that I would hear about things such as the latest and greatest technology that captures people’s hearts and minds.  Or maybe I was hoping to hear about the great opportunities for career advancement or companies doing social good.

I did not hear of specific industries, technologies, functions, unique characteristics of the leaders or anything that you might glean from an employee survey.  Remember the ones commenting have been and are successful executives.   After listening intently – and contributing as well- I captured their thoughts into three areas:  Culture, Leadership, and Customer Focus.   And I have to admit that is probably the order of importance because to me, culture is a platform upon which to build and enact leadership and a customer philosophy.  As you read the following, just ask yourself about the companies for which you worked.  What made them good?  Why did you like coming to work?  What drove your passion?  What made these companies great for you?

Culture

Culture was the number one item.  Culture was a necessary but not sufficient condition for making a company great.  Think about Tony Hsieh of Zappos.  He has instilled a clear culture in that company that focuses on the customer.  Do what is right for the customer. Certainly his vision and bent is the customer.  But without a cultural underpinning, Zappos would not be as successful as it has been.

Culture is also unique to a company.  It is hard to duplicate and is normally set by the CEO.  Think about other companies that are successful and have a truly unique culture.  Think about Disney and the culture about Imagineering.  Think about Intel and the culture of innovation.  Think about 3M and their culture that they encourage people to invest their time on new ideas.  Without a culture of innovation and support for innovators, many companies may not achieve success.

We discussed other components of culture as well.  Those components included telling it like it is……. but respectfully and constructively.  (As an aside, I can certainly relate to this coming from Brooklyn, NY and have seen direct cultures like New York and oblique cultures like I have seen in the Mid-west.)  Another element was pushing employees to the next level, i.e. making them believe they can succeed and giving them opportunities to succeed.   In the process of encouraging people, the culture must also accept failure (fast failure is preferred) and must set up a reward system for those that are successful.

Culture is also critical as the underpinning of being customer focused.   Think about a company that is just focused on the bottom line versus a company that is trying to help a customer and wanting them to be happy.  Think about your experience with Zappos.  Or if you have web service or webhosting from 1and1, think about the great customer service you have received from them.  Was it easy to talk with the company and its reps?  When they talked with you did you believe that you were the only person in the world on their mind or did you feel that you were imposing by asking them a question?   We heard a story this morning about how Steve Wynn chose people to work for him.  Applicants were told to go to another part of the building and when they got there, Steve was sitting behind a desk, rose to greet the applicant and wanted to see their reaction.  If they were friendly and responsive, they were hired.  True?  I am not sure but it makes a good story.

Leadership

We all know that leadership is critical.  Leadership starts with the CEO and filters down to people in the organization.   The leader sets the culture.  When I was head of marketing at US Cellular, our founding CEO, Don Nelson, was a great leader.  He selected an eclectic group of people, set the objectives and measured results meticulously and religiously.  But what distinguished him was his willingness to listen to his people, set and change vision and set a clear direction for the company.  The result, during my tenure was that the company grew fourfold in revenue in only five years.

Think back to the CEOs and possibly mentors you have had in your career.  What has distinguished them?   This morning, the executives around the table believed that not only did the CEO establish and set the culture for the company, in essence being the chief culture officer, but also set a clear and compelling vision for the company.  As the Cheshire Cat said, “if you don’t know where you are going, any road will get you there.”  Leaders know where they are going.

Coupled with the vision is the ability to articulate the clarity and alignment of the messages across the entire company, and in my humble opinion, do it in a personal way.   As companies grow, become more complex, and are geographically disbursed, having a common vision and alignment of messages are critical to ensure everyone is marching in the same direction.   In this case organizations become both effective in generating profits (the end game for most) and efficient in doing so.

The group believed that a great company has a servant-leader.  A servant-leader focuses primarily on the growth and well-being of people and the communities to which they belong. By focusing on people first, it empowers employees to be successful.  It also has a mentoring quality enabling employees to trust the leader such that when these employees are pushed to success by the leader, they trust that their best interests, and in turn the company’s, are aligned.    To be a true servant leader, two other elements must ring true.  The leader must be authentic and must be transparent.  There should be no hidden motive or ego at play.

 Customer Focus

As a businessman and marketing executive, I have written extensively and talked about customer focus.  The customer, the one who buys your company’s products and services, must be foremost in your mind.  Companies who are customer focused truly understand the behavioral drivers of the customer and why they buy your products and services.

The executives at our meeting believed that great companies connect with the customer.  These connections may come from a better user interface, or the way they train their front line people to interact with customers.    We bandied about the concept of Customer Experience Officer because customers, who are not happy, not satisfied, become disloyal.   And, all of us recognized that retention of customers is critical to a company’s success.  Further if you connect with the customer and relate to the customer, if a company makes a mistake there are positive “chits” that have accrued over time and forgiveness by the customer of any faux pas is normally granted.

Note that customer focus relies on a specific culture.  Again, think back to Zappos or think about any experience you have had at a retail store or an online store.  Systems are critical to help achieve customer focus but in reality it is the people, those front line sales people and customer support people that guarantee that the customer is important. Most of us go to Starbucks to get coffee.   Think about your experience.  They ask your name and if you visit the same store more than a few times, the baristas and others will get to know you.  How do you feel?  Pretty loyal I would assume.

Starbucks, Zappos, US Cellular and other companies have realized something very critical.  The people who interact with the customers ARE the brand.  Leadership sets the vision and a customer centric culture is established.  Yet customer focus is executed by the people.   All of us agreed that great companies are those that have this passion for the customer, exercised by supporting a customer first philosophy on the front line.

Going back to the original question posed by Susan Howington of What makes a company great, it comes down to three areas:  culture, leadership, and customer focus.   All three are interrelated.  In short, great companies balance the needs of customers, employees, and owners.  What companies would you want to work for?  What makes a company great in your mind?  Let’s continue the dialog.

For more thoughts and ideas, feel free to contact me at dfriedman@clevelpartners.net  or visit us at www.clevelpartners.net.  I will also guarantee that if you write or call me, I will pick up the phone and talk with you.  Why?  Because we, too, love our customers and we have implemented a culture in our company of helping and sharing.





StreetSavvy Marketing Predictions for 2016

21 12 2015

prediction-forecast-crystal-ball-future-ss-1920-800x450It’s that time again when just about everyone has predictions for the New Year. In November, Forbes contributor Kimberly Whitler posted predictions from the C-suite.   Adam Davidi, from the Guardian, posted predictions on branding based on conversations with “experts.”   I am sure we will see predictions from Forrester, Gartner and others as well.

As a Managing Director at C-Level Partners, I don’t want us to be left out.  My colleague, Vince Ferraro, and I have been C-level executives in marketing and general management for many years. We now consult with companies on marketing and their go-to-market strategies.   We decided to look at “Big M” marketing, relating to predictions for how companies and brands go to market and how they interact with customers.  So without fanfare and any biased perspective, we share these predictions for Marketing for 2016.

Let me be candid.  While most of these are predictions based on our work with clients, with start-ups and in talking with our marketing colleagues, there are also some “aspirational trends” that we hope come true for the profession as well as we believe they are important for marketing professionals and the businesses they manage.  Some of these trends overlap and leverage each other.   To us, that will represent the power of good marketing.  In no particular order, our top sweet 16 are:

  1. Cognitive Commerce has begun. Marketers will use information on customers from their databases, the internet, and other sources to build stronger relationships, build predictive algorithms, personalize content, and deliver products and services to meet their specific needs.
  2. The distinction between offline and online will disappear as real time analytics will unite both camps. Marketers will consider all (omni) marketing channels to optimize their marketing programs based on cost, effectiveness, ROI and the satisfaction quotient from building relationships with customers.
  3. Branding will be from the inside out. Companies will not push the brand but the brand will be built on trust, engagement, referrals, authentic dialog, and transparency.
  4. Digital Marketing will cease to exist as a standalone part of marketing. There isn’t a need for separation anymore. World class marketers will know how to market in a digital world. Traditional and online marketing not only will coexist, but one will leverage the other and work better together.
  5. Advances in video broadcasting and continued growth in mobile devices will change TV marketing forever. Marketers will use new technologies to enable a more immersive experience and TV and other broadcast video usage will expand on all screens – laptops, desktops, tablets, smartphones, HDTVs and even screens in cars,( i.e. telematics).
  6. Content will be created specifically with video channels in mind. Further, there will continue to be a migration to mobile video which will become de rigor on a company’s website, in blogs, in training, and on Youtube.  Youtube channels for marketers will continue to expand.  In addition, the use of video podcasting and live streaming are also in a growth mode.  The world is clearly digital and going video and marketers will take advantage of that.
  7. Personalization will grow as its ROI is measured and as customers come to expect to be treated as individuals. We, at C-Level Partners, have written that there are now 7Ps of marketing and personalization is one of them.  Technology and marketing automation will enable this to happen.  This personalization will improve company branding and the ability to build stronger relationships with customers.
  8. Marketers will get back to basics. Solid, well planned marketing will trump the sexy marketing in the past.  The CMO and business leaders will focus on marketing as a strategic investment to generate profitable revenue.
  9. The human touch will return to marketing. How many of you love to listen to an automated customer service system saying that “your call is important to us…”  That’s bull!  Companies will realize that you are important and will show it by having more touch than tech or at least do a better job of integrating the two.  Being human will also apply to helping customers understand the value of the company’s products and determining what motivates buying behavior.  This is like getting back to the future… and I love it.
  10. Employee experience (EX) will be as important as customer experience (CX). Engaged employees are critical because at the front line – in retail, sales and customer service- they ARE the brand, or at least a fair representation of it.   Engaged employees also feel part of the company, behave like owners, and will be promoters of the company’s products and services.  According to our anecdotal evidence, only about 30% are engaged today.  Think Zappos, Starbucks, 1and1, and Jet for companies who provide both good EX and CX.
  11. Marketing and Data Science will be the new dynamic duo. This will be key to understanding the customer persona from many angles – demographics, psychographics, sentiments, and buying behavior.  Vince and I, both being engineers, can relate and understand this dynamic.  We expect to see the CIO and CMO becoming BFF’s.
  12. As a corollary to #11, data will be the new currency for the younger generation. Data will enable the ability to personalize the marketing message and make that message more meaningful and differentiated for a particular customer. But it doesn’t only apply to the younger generation; big data will be used to help understand buying behavior of all customers and couple that information with the dynamics of profitable revenue growth for the corporation.   The new marketer will be, must be, a datahead or recruit the right people in his/her organization who have the skills to analyze the myriad of data available from business and marketing systems.
  13. Marketers will provide more original insights into business. Marketers will not be mere curators of data and content.  The key word is  By having more insight into business, the CMO will be able to justify his/her seat at the executive table.  (This is a belief and expectation!)
  14. Customer success will be determined by a combination of satisfaction, retention, and referral. We have always believed that the combination of the three components will yield the most loyal customers.   In conjunction with this, customers themselves, through social media, will become the company’s best sales people. Technology to help build customer engagement will continue to evolve and become more sophisticated.
  15. Marketing and selling will be in an omni-channel world. Marketing execs will understand the buying persona of their customers and will use math and analytics to optimize the sales and distribution channels.  But the key here is that it will not be one channel vs. the other.  The marketer will blend online and offline, retail and wholesale, third party distribution and direct to ensure the buying experience matches the customer and to improve the profitability of the company.
  16. Chief Marketing Officers will evolve to become strategic businesspeople first and “marketing” executives second. This is our wish and expectation; therefore, we took the liberty to include it as one of our predictions.  The CMO will be the linking pin from the outside world of the customer to the inside world of production, manufacturing and operations.  He/she will have a unique view on building and capturing valued.  In the past, we have not seen this from most of our traditional marketing colleagues as many have been focused on one area e.g. advertising, digital, brand, and product.  The new marketing executive will be a generalist, a businessperson with a focus on top and bottom line growth, steeped in data analytics, change management, and growth levers, coupled with creative and innovative bent.  We may be wrong about this one for 2016, but we believe it will eventually take root over time.

We would be interested in hearing your thoughts on your sweet 16 predictions for 2016.  Let’s keep the dialog going at www.clevelpartners.net.   And feel free to contact me at dfriedman@clevelpartners.net or Vince at vferraro@clevelpartners.net for a complimentary discussion on how we can help you achieve value creation and profitable revenue growth.





The New 7Ps of Marketing: Disregard at Your Own Risk!

7 12 2015

Marketing CloudI was reading an article in the recent Forbes online CMO Network by Kimberly Whitler entitled: What are the top predictions for marketers heading into 2016?   Ms. Whitler surveyed some experts, including CEOs, Presidents/GMs, CMOs, authors and executive recruiters.  In a different but recent article, Forbes CMO also ranked the top 50 CMOs.  To me, I would have rather heard their predictions.

I always enjoy reading “predictions” because they keep me on my toes- maybe I missed something- and makes me challenge what I believe are the upcoming trends.  As a businessman and marketer I certainly don’t want to be caught short.

I found the article very interesting and certain worthy of consideration.  I feel after reading the comments that each person is looking at the “elephant” from their unique vantage point.  And frankly, I am not sure they are predictions or wishful thinking based on the viewpoints of the interviewee. Nevertheless, they are certainly food for thought.

From a holistic view, my prediction – or wishful thinking – is that marketers need to start with the customer and realize that marketing has become multi-channel and multi-dimensional.   The smart CMO must orchestrate the new marketing mix. That means they need to simplify messages sent to consumers through whatever channel is relevant to them i.e. digital, small screen, large screen, Point-of-Purchase.  And they need to determine which is most relevant for the target personas.   Moreover, the smart marketer should consider all the tools in his/her toolbox and select those tools that are most effective for getting the right message and INTERACTION with the customer.

When I put this together, i find that the old model of 4P’s is antiquated.  I believe the new prediction is that good CMOs are now considering 7Ps in a holistic view: the original 4 (product including product/service development, price, promotion, placement (digital or traditional), and the new three consisting of process (including customer engagement, referral and loyalty), people as brand messengers at point of purchase or via customer care, and personalization (through technology).

The “traditional” 4Ps of marketing are well known.    In the day, marketing was about creating demand, and to a large degree it still is today.  But the focus was on selling a product to meet a need.   In general, promotion was based on advertising push.  The marketer’s mantra was to shout out the virtues of the product by mass advertising. To some who read the history books, the “soaps” on TV were called that because the consumer goods manufacturers such as Tide, All, and Fab were sponsoring and advertising on the TV shows aimed at the housewives and other stay at home folks.

Pricing was simple.  Manufacturer’s set price and used a price point philosophy of good, better, best. Placement represented where the consumer could buy the product i.e. at the neighborhood store or a mass retailer or even door-to-door sales and home delivery.

Because of technology such as the internet, and the movement away from a manufacturing to a service company, even the original 4 P’s have changed.

FROM                             TO

Product         –>       Solution

Promotion    –>       Information

Price               –>       Value

Place               –>       Access

 

Consumers and businesses want solutions to their problems and want to understand how the product/service will perform.  Due to the internet, both as catalogs of information and online reviews that are omnipresent through a myriad of sources, information has replaced pure promotion.   Certainly consumers and businesses want to find the right product at the right price, yet price by itself has been replaced by value with the value add sometimes being generated by service agreements and extended warranties.  And primarily due to the internet, place (distribution) has increased to a multi-channel access.  Think about the changes from the 1990s when e-commerce was first getting started to today.  Consumers and businesses now have electronic exchanges and other online venues from which to buy goods and services.   And now, coming full circle, we see Amazon opened its first brick and mortar store in Seattle.

Now let’s add the new three elements to the marketing mix.  First is the element of PEOPLE.    When I was head of marketing at US Cellular, we changed our brand and positioned our company using the tag line “the way people talked around here.”   Why did we do that?  In part, we recognized from our research in the late 90s and early 2000s that customers in our market wanted something more than what other cellcos offered.  We were not going to be the most technologically advanced (although our network and engineering were superb), nor were we going to cover the most customers in the country.  What our customers wanted was a relationship with our company, represented by our front line sales and customer service people.  They wanted a company they could trust.  At that point, we realized that people were the brand messengers and in our touchpoint marketing system, represented a way to affect the relationship and alter the buying habits of our consumers.  And it worked.  Our retention rate i.e. loyalty, was the best in the in the business.

The second new element is PROCESS. Many companies loathe the word process because they feel it is bureaucratic.  To me, process is the mechanism for repeatability. We want processes to help the customer in building its relationship with the company and also empower the employees to do their job to satisfy the customer.  Clearly, it is a tricky balance!   The processes today – mostly enabled by technology- relate to tools that help the company serve the customer.    There is a dizzying array of tools that the marketer has to understand and use.  See Marketing Technology Landscape by Scott Brinker or some of the Lumascapes by Luma Partners.  Some of these tools include ways to mass customize a product or service to the customer needs.  Witness the new companies entering the market to build relationships with consumers and business buyers.  There are processes enabled by digital and web technologies that enable social engagement and the marketers use these new tools to build and maintain relationships with their customers.   This improves value through new services and interactive engagement in the eyes of the buyer.

The final area is PERSONALIZATION. Several of the interviewees pointed out that understanding the customers’ persona is critical to segmentation.  Once you understand who they are, the company has to satisfy their unique requirements.  I have always been a fan of mass customization (read Joe Pines original work) or macro-niching as I use to call it 5 years before mass customization became vogue.   Personalization is easy today with technology.  You can see it when you buy a car.  Go into a BMW or Jaguar dealer in their store or online and the system will build the car for you.  Buy a house from Toll Brothers and you get a platform and options to tailor the house to your needs.   Go on the web and find a case for your smart phone and you can easily customize it with your school logo and colors.   Consumers want to feel special and that ensures a solid on-going relationship with their customers.

Traditional and Social Media MarketingMarketing has changed and will continue to evolve over the next several years.  Clearly there will be a natural bonding between the CIO and CMO as marketing technology has become more important in defining the marketing mix.  While Ms. Whitler did not ask my prediction for 2016, I will share it with my readers.    I predict that marketing will be more about the customer and the great marketer will find the right combination of the 7 elements to build and sustain relationships with that customer.  At least I hope so.

I would be glad to continue the dialog or share additional thought.  Feel free to visit us on our web at www.clevelpartners.net or contact me at dfriedman@clevelpartnes.net.





Maintaining the Innovative Edge

12 02 2015

Exploding Innovation

I was having coffee at Dana Point Harbor in California with a friend and a former colleague of mine, Gary Wallace, who is a VP at Sirius Connected Car.   We were talking about business and the Feb 1, 2015 issue of Fortune magazine with a Unicorn on the cover.  The unicorn symbolizes start-ups that have cracked the $1 billion valuation mark, notwithstanding any sustainable revenue to support that valuation.  (Can you say Dotcom bubble?)

As we talked about these companies we focused on the concept of innovation.  Why were these companies successful in coming up with an idea and just as importantly, what happened to the high flyers, the innovators in the past that have gone “subterranean” and in many cases have died on the vine.   Since this is a blog and not a research tome, let’s look at some of the companies that were stars at one time but have lost their luster.  My goal in this blog is to provoke thought on how to be an innovator and to ensure that complacency doesn’t reign in the future.

Since Gary and I come from the technology world of networking, wireless, and computers, it was easy to find examples of these lost innovators.   And because I am an angel investor with TechCoastAngels in Southern California and lead mentor to start-ups through the Center for Entrepreneurship at Chapman University, I have a good perspective on innovation and what it takes to be successful. Gary, in turn, is a very successful tech executive and was one of the executives who helped build ATX/Agero into a telematics powerhouse.  He is very smart businessman with a tremendous breadth of knowledge.

We pondered if it was an issue of focus, execution, leadership, or a combination of things?  We talked about a few companies:  Nokia, Motorola, Blackberry, Northern Telecom, Jawbone.   I know the first four of them having dealt with them as an executive at telecom/wireless companies.  I know Jawbone because I was a huge fan of their headsets and Bluetooth speakers and the recent article in Fortune (same issue with the Unicorn) made me remember their previously fantastic products.

Nokia was a classic company that started in the rubber industry and through bold leadership became a telecom powerhouse and the darling of the wireless industry in the 90’s and early 2000’s with its Nokia 1100 and then the Nokia 3000 series phones.  Heck, I bought a bunch for my family.   Fast forward to 2013 and Nokia sold off its wireless phones to Microsoft.   Note from the graphic below courtesy of CNET the market shares today based on the operating systems.  And the subsequent chart on Global Smartphone market share tells a powerful story.

Smartphone platforms

Similarly, Blackberry which use to rule the “smart phone” world with its business oriented devices. Unfortunately, has lost its way and while it still produces phones it is focusing on applications and recently introduced the Blackberry Classic, harkening back to the glory days of the late 2000s.   Many people I know still like that classic design because all they do is email and text from the device.

Motorola in a sense invented cellular service.  Martin Cooper made the first private handheld call in 1973.   They came out with a brilliant design for a small clamshell phone called the Startac in 1996.  Great phone that was a must have.   In 2011 Motorola sold off its mobility division (cellular service) to Google and subsequently Google sold the division, sans its patent portfolio, to Lenovo.

Smartphone market share

Similarly Nortel, formerly Northern Telecom, once a power house in telecom infrastructure with nearly 100000 employees and a huge market cap on the Toronto Exchange, filed for bankruptcy in 2009.  They had great product and when I was an engineer I highly admired their technology.

Jawbone is a little different in that they still have a great technology and a superb well thought of CEO in Hosain Rahman.  They introduced several products that made the market but then other competitors came in to take share.  Currently they are pivoting to focus in part on the wireless fitness craze in competition with companies such as Fitbit (a relatively new Unicorn established in 2007).

When Gary and I talked we thought about our experiences with these companies and ruminated what they could have done differently.  Now this is not a scientific study by any means but here is what we thought resulted in the downfall.  And for context, remember Andy Grove’s cautionary words: Only the Paranoid Survive.

Could these companies have survived and changed?  I don’t have the answer but it is an interesting discussion.  By looking at what we believe were their failings, Gary and I posited that these four areas could have been changed.

  • This is the opposite of arrogance.  These companies relied on their past successes and thought that their view was the right view.  They became insular and lost touch with the customer.  From personal experience these companies except for Jawbone would not accommodate unique requirements.
  • Customer perspective. While these companies focused on their products they did not really listen to their customer wants and needs and did not accommodate their needs. Other competitors eager to take share were more accommodating.  Companies need to have a direct pipeline to their customers.  Engineers should visit customers.  Customer panels and advisory boards need to be implemented.  Lead users, i.e., innovators and early adopters, need to be identified and used in early product trials.
  • The telecom companies grew fast with introduction of new products and excellent technology.  But the leadership seemed to lose focus on execution.   I give credit to Nokia and Motorola for spinning off their mobility groups to Microsoft and Google to give those entities a better chance of survival.  Regardless of anything else the basic notion is that P=R-C where P is profit. Execution needs to be de rigeur for all companies through a solid business battle rhythm of managing the business, and tools such as balanced scorecards to help guide the way.
  • All the companies I mentioned and certainly those in the Fortune article achieved success through innovation.  Innovation takes place on several fronts and all characterized as “new.”  Newness and the pursuit of newness on several vectors give companies an advantage.  You can have a new product(Fitbit), new application in a market(think baking soda in toothpaste), new pricing ( Solar leasing, ATT’s Digital One Rate), new technology offering new benefits (drones, Space X, First Solar), new processes (Amazon, Tom’s shoes), new support systems, new branding, new partnerships, new eco-systems.  And the list goes on.

Achieving sustained success is very difficult.  Companies need to develop the right strategic imperatives, the right innovation centers, the right product development processes, the right customer interface processes.  Many companies can do this on their own but also many companies are so focused on today and execution they may need help from an outsider, sort of an alter ego, to help with guidance, advice and tools.    Feel free to comment on this blog or contact me to chat about your business needs.  My contact info is dfriedman@prodigy.net.