Archive for October, 2009

P&G’s strategic review of brands isn’t really strategic

Thursday, October 29th, 2009

The Wall Street Journal today reported that Procter & Gamble’s new CEO, Robert McDonald, had put a number of brands on notice that they had to improve results or risk being sold off.

Many of the brands reviewed, such as Duracell, IAMS and Braun electric appliances, “have long been considered extraneous to P&G’s focus on beauty, health and nonfood household staples,” according to the Journal.

If that’s the case, why is McDonald threatening to sell the brands if they don’t improve results? Why isn’t he just going ahead and selling the brands?

“This business segment is extraneous to our focus, but if it is profitable enough we will keep it,” is not a strategy. It is an anti-strategy. And I would doubt, given the many strategic threats that McDonald is facing, coaxing incremental improvements out of Duracell or IAMS is a place he should be spending any of his management time.

Front-line nurses discover small process innovations can cure medication mistakes

Wednesday, October 28th, 2009

Bob Sutton posted on this San Francisco Chronicle article today, but it had so much good stuff relating to areas I’m passionate about that I need to write about it too.

The article concerns an effort by Bay Area nurses to reduce the occurrence of medication errors, which, according to the Chronicle, cause 400,000 preventable injuries and cost an extra $3.5 billion in medical costs each year. The results of the effort: a 88% reduction in medication errors in the participating hospitals.

Here are a few quotes that talk about areas I’m interested in – listening to and empowering customer-facing (patient-facing?) personnel, and the value of simple, low-tech solutions to business problems:

Striving to reduce interruptions that lead to mistakes, teams of nurses at the different hospitals came up with a variety of methods – often surprisingly low tech – to alert others they were administering medications….

The solutions “have to be low tech because we, as staff nurses, don’t have the money or ability to make high-tech changes,” said Celeste Arbis, a registered nurse in the medical-surgical unit there. “Something as simple as changing the process just a little bit can make a big difference.”…

Nurses attributed much of the program’s success to allowing those on the front lines to develop and tailor their own solutions.

I’ve seen both these situations in action: the ability of front-line personnel to understand and fix problems with the processes they use, and the effectiveness of often-overlooked simple and low-tech solutions. Sutton wrote something very profound in his post on this subject: “I think that people — especially managers — often use spending money as a substitute for thinking, when inexpensive and low-tech solutions work just fine.”

Related posts:
Low tech and on the ground
Don’t just thank front-line personnel, use their insights

We have an innovation problem, and it is miles and miles of indistinguishable stuff

Wednesday, October 28th, 2009

Video 6 0 00 09-27I learned today that Axe Body Spray for Men is running an ad in Uruguay where readers sending an SMS to their address receive on their phone the missing bits of a picture of a beautiful woman. (Those bits are clothed, BTW.)

This tells me there’s nothing about Axe the product that is distinctive, and the ad, despite being fun and engaging (especially for teenaged and 20-something males), won’t do much to make people select Axe over one of the thirty other male scent products out there.Video 6 0 00 17-27

I started thinking about this after listening to Jonathan Salem Baskin’s neat Listrak webinar last week, entitled, “Marketing Ideas for the First Post-Brand Decade.” Baskin did a nice job of showing that while customers and markets have moved beyond the days of “Mad Men” – where a well-crafted, creative advertisement could influence us to buy the latest dish detergent or safety razor – marketers, by and large, have not. Even “social media marketing,” like, say, the Axe campaign, is taking the same old ideas and porting them to new technology.Video 6 0 00 22-12Video 6 0 00 26-07 Houston, we have a problem. Marketers are pushing the same old buttons to sell more variations of the same old products. It’s a negative-sum game. Variations increase cost without enlarging the overall market. Redundancy pushes down prices, invites private label competitors and overloads consumers’ minds.

Clearly, we’ve got to do something different. Marketing needs to pull back from its focus on distribution, packaging, and communication, and refocus on helping create great new products, that deliver distinctive value and make people’s lives better. Then it will be easy to communicate that to prospective customers.

Gary Hamel writes in “The Future of Management” that product & service innovation are near the bottom of the innovation hierarchy, and the pinnacle is “management innovation.” To Hamel, products are easily duplicated, quickly eliminating their added value. But as Roberto Verganti pointed out in “Design-Driven Innovation,” companies that create truly visionary products enjoy long periods of competitive advantage and profits.

Life is too difficult for many and too complex for everyone else. Everyone would like to have more fun. Therefore, there’s lots of need for products & services that allow us to manage our lives better or have diverting or engrossing experiences.

I’ve been reading “Change by Design,” by Tim Brown, and he asserts that companies need to adopt “design thinking” to create great new products and services. I can’t disagree with him, but also feel that design thinking is not that different from what great product managers and developers have been doing and should be doing. So, if your new-product group wants to hand over the reins to design thinkers, that’s their prerogative. For me, that’s the fun part of the job and I’d rather not outsource that.

Related posts:
On “The Future of Management”
On “Design-Driven Innovation”

Documenting and testing assumptions early is essential to good new-venture planning

Tuesday, October 27th, 2009

One of the most useful lessons in Rita Gunther McGrath’s and Ian MacMillan’s “Discovery-Driven Growth” is a basic one: when you’re planning a new business venture, your initial plans are laden with assumptions, and treating these assumptions as facts will get you in trouble. Yet it’s done all the time.

This lesson was reinforced in the nice interview with Rita that appeared in yesterday’s Wall Street Journal Business Insight section (”Learning from Corporate Flops“). The headline is a bit misleading – she talks less about learning from your flops than about carefully documenting your assumptions, testing them as early and cheaply as possible, and revising them when you learn they don’t hold up.

Having a detailed list of assumptions allows many people to weigh in on a new business idea – even if you can’t speak authoritatively on the whole concept, you may have very good insight on one particular assumption. And assumptions are expected to be wrong much of the time, so questioning one or showing evidence why it’s not valid is easy for the new product team to accept.

On the other hand, probing and questioning a business plan in which the key assumptions are buried and not distinguishable from known facts tends to invite emotional arguments which rarely improve the quality of the plan.

Related post:
On “Discovery-Driven Growth

Attacking wicked problems by taking a fresh look at outlying data

Monday, October 26th, 2009

In the November Harvard Business Review, Roger Martin (author of one of my favorite books of 2008, “The Opposable Mind“) and autism researcher Stephen Scherer of the Toronto Hospital for Sick Children discuss unraveling mysteries by looking at “outlying” data. In a few words, Scherer says a lot about how to deal with difficult problems:

Autism is a vast problem; no single researcher or lab can take on its full breadth. I focused on just one piece of it: the data that everybody else was throwing away. I call it the garbage-can approach. My belief is that answers to really difficult problems can often be found in the data points that don’t seem to fit existing frameworks.

Scherer looked for patterns in this outlying data. His success in finding some genetic markers for autism reminded me of the plea a couple of years ago to “free the dark data” from failed scientific experiments. And it reinforces the value of the “beginner’s mind” when approaching new challenges.

Related posts:
Top Business Books of 2008
Extracting Value From A Failed Cold Call

Farmers’ market secret ingredient – community

Thursday, October 22nd, 2009

Broad Street Market 2I did a project last year with the Broad Street Market, a farmers’ market here in Harrisburg. (Disclosure: I am on the Market’s board of directors.) We were trying to establish some parameters for a strategic plan for the Market. My project was to interview Market customers to understand why and how they valued the Market, and what common issues might be that the strategic plan should address.

I did 60 open-ended interviews, and heard some great stories – for example, a woman in her seventies discussed coming to the Market as a young girl, shopping at a place that used to sell wonderful pears, taking the trolley that ran down 3rd Street. But some of the best stories weren’t explicitly told – they occurred during the interviews.

Perhaps half a dozen times an interview was interrupted while the person I was speaking to greeted a friend who walked by: “Hi, how you doing?” and an embrace. “Let’s get together,” or “See you Saturday.”

And when the board reviewed the stories, a theme emerged: community as an important value. We had expected customers to discuss safety and cleanliness (and they did), the types of vendors (a bit), fresh and local products (yes) or the hours of operation (a lot). But the theme of community, something we hadn’t been looking for, kept coming up. For those customers, the Market was more than just a place to shop. It was a place to meet friends, to stay connected, even to return to after they’d moved out of town.

This is an interesting observation for all brick-and-mortar retailers, restaurants, etc. Even in this technology society, people yearn to get together, to be with friends and acquaintances. (Note how tech-based getting-together solutions like Meetups, Tweetups and Foursquare have emerged.) How aware are you of the community you serve? How can you engage it, and nourish it? How can you honor the value that your customers place in it?

Related posts:
The Values Proposition

How B2B customers talk

Wednesday, October 21st, 2009

Some years ago, our company supplied billing services for a mid-sized telecom provider. It was old technology, and we were very interested in migrating them over to a new platform we’d just begun to offer. They were referenceable and complimentary of our work with them. The IT group, our liaison, was happy to set up a meeting with the various groups that would be involved in a decision to change platforms.

At that meeting we learned the other groups didn’t hold us in such high esteem. Not only were they not ready to migrate, they had a list of issues with our current system they wanted fixed. And while we were there, they let us in on a lot of other ideas they had about what we could do better, ideas they had clearly been storing up for years.

We (me included – I headed the group that managed customer satisfaction) had made a big error – we had mistaken good feedback from our direct customer, the IT group, for good feedback from the whole user base.

When B2B customers talk, it’s a lot different from how consumers talk. It’s not uncommon to have a B2B product used by hundreds or thousands of employees in a single company, spread across multiple departments and geographies. “How are we doing?” in this case is a much harder question to answer. Weekly status meetings and yearly customer surveys sent to a handful of people will not let you know whether the company as a whole likes and values what you do for it – or whether there are pockets of dissatisfaction that could derail your strategic initiatives with this customer.

Don’t get seduced by the viewpoints of the people you deal with every day. It’s the people in the field, who use the product, who aren’t saying anything aloud – they are the customer you need to listen to.

Rakontu, open-source story-sharing software, is here

Tuesday, October 20th, 2009

If you’ve read this blog regularly, you may have encountered me discussing how nice it would be to gather stories from front-line personnel and share them with the rest of the company, or to have a repository where staff members could share information that’s pertinent to the company, its customers, competitors and markets.

One barrier to these ideas was the unavailability (or unaffordability) of software that was adept at storing, annotating, tagging, and presenting this messy kind of narrative data. Well, that barrier is down, effective immediately.

Cynthia Kurtz, one of the pioneers in the story-listening world and author of “Working With Stories,” has developed an open-source package called Rakontu, which is the best thing I’ve seen at collecting and presenting narrative data, involving a community in adding to it, and making it generally useful to a group of people–the contributors included.

It’s a beautiful, elegantly-designed application, far more polished than users of new software have a right to expect. There are a couple of webcasts available on the Rakontu website which you should watch if you are interested.

(Disclosure: I’ve done a bit of collaboration with Cynthia and was an alpha tester of the software. No money changed hands ;)

By the way, Cynthia has started a blog, “Story-Colored Glasses,” which you should put into your RSS reader immediately.

Related posts:
Gathering customer intelligence from your front-line staff
Bringing the outside in

Vendors Are Talking: Grocer is “not going to let someone steal my customer”

Friday, October 16th, 2009

Language, especially spoken language, is very revealing when it comes to someone’s values. This is why corporate executives are subjected to media training to keep them on message while speaking in public – meaning, of course, to appear to say something while not really saying anything.

Sometimes, however, executives defy their training and say what they’re really feeling. Let’s parse this recent statement from Stater Bros. CEO Jack Brown, from an interview as quoted in the Wall Street Journal. The Journal article concerns grocers who had cultivated a premium image, now feeling forced to cut prices to retain customers who are considering trading down to discount grocers:

We are scraping the bottom on prices. I’m not going to let somebody steal my customer, because when this (recession) is all over, I don’t want to go looking for my customer.

Brown’s words are property words. It’s akin to saying: “I’m not going to let someone steal my bike, because when this is all over, I don’t want to go looking for my bike.” Customer = his property. (You can’t get any less VRM than that.)

I’ve been reading the new book “Collaboration” by Morten Hansen, and he writes that executives who successfully collaborate practice what he calls “T-shaped management”: they manage down (their line responsibilities) and across (collaborative projects across the company). This may seem obvious, but, as pointed out in the 2008 book “Senior Leadership Teams,” senior managers are often promoted because of their ability to deliver results from their groups, not for being good at collaboration.

I’m more interested in interactions between companies and customers than within companies. Yet Hansen’s “T-shaped” concept also applies, I think, to succeeding in being a customer-centric company. An executive must understand the needs of the company (the vertical line of the T), and identify with the needs of customers (the horizontal line). She must balance both.

It probably goes without saying that getting angry for people “stealing” your customers, or the inconvenience of “going looking” for them, is focusing completely on the company and not at all on the customer. It’s I-shaped, not T-shaped, practice. And for a grocer, perhaps the ultimate consumer company, it’s reveals some old-school attitudes that won’t work well in the future.

Related posts:

Considering the mind: Mini-reviews of “Buy-ology,” “Free Market Madness,” “Management Rewired”

Thursday, October 15th, 2009

These three recently-published books take research on cognitive science and behavioral economics and apply it to business and public policy. A common theme – people aren’t particularly logical, and this has huge impacts on how they behave, yet our business practices and government regulations often ignore this.

free market madnessFree Market Madness: Why Human Nature is at Odds with Economics–and Why it Matters,” by Peter A. Ubel (Harvard Business Press, 2009) – a wide-ranging book that presents a brief history of economics and a critique of market-based solutions to intractable social problems, all the while circling around perhaps its true theme: how to fix health care. Key quote:

Standard economic theory holds that if commuting is a source of unhappiness, then people…will choose long commutes if they believe such commutes will raise their happiness in some other ways, like by bringing them higher pay or better living conditions. If this economic theory is true, then when you ask people how happy thay are with their lives, those with long commutes should be just as happy as those with short ones….

Yet when economists Alois Stutzer and Bruno Frey studied the German populace, they found that the longer people commuted each day, the less satisfied they were with their overall lives.

Management RewiredManagement Rewired: Why Feedback Doesn’t Work and Other Surprising Lessons from the Latest Brain Science,” by Charles S. Jacobs (Portfolio, 2009) – comparing left-brain and right-brain approaches to management, strategy and leadership. Lots of good discussion of the role of narrative in learning, leading and communicating. Key quote:

Regardless of what structure, systems, and processes are used or how effective they are, it is impossible to prescribe how people should behave in every instance now and in the future. There are just too many variables, unpredictable changes, and ways to work around control systems. In fact, the more we try to prescribe what people do, the more we lose the advantage of the mind’s ability to change how it works through learning.

BuyologyBuyology: Truth and Lies About Why We Buy,” by Martin Lindstrom (Doubleday, 2008). A consumer marketer uses fMRI to peek inside the brains of research subject to see how brands, logos and messages affect our minds. (If you don’t think Lindstrom can market, consider this: he’s the first of his profession I’ve ever seen get an article in Parade Magazine.) Key quote:

[Our study] discovered that when people viewed images associated with the strong brands – the iPod, the Harley-Davidson, the Ferrari, and others – their brains registered the exact same patterns of activity as they did when they viewed the religious images. Bottom line, there was no discernible difference between the way the subjects’ brains reacted to powerful brands and they way they reacted to religious icons and figures.

Related posts:
On “Brain Rules”
B2B buyers purchase on emotion, not facts