Hat tip to Steel Pulse!
February 2008 Archives
Positive online buzz for cars and trucks doesn't necessarily translate to volume sales, period.
Here's the story in AdAge: "What Web Buzz Does for Car Sales: Not Much"
Turns out that BrandIntel has been monitoring 450,000 comments over the past year. Comments made by "enthusiasts" in consumer discussion forums on auto-information sites such as Edmunds.com, newspaper and magazine sites, and blogs.
Let's look at the print/paper analogy. This is the equivalent counting the number of press-clippings in the trade mags. As a measure of PR efficacy of getting stories published, it worked great. As an indicator of sales, it didn't.
What matters in print and online is the credibility of the messenger and the size of the audience. A story in Rupert Murdoch's WSJ or the NY Times may have a dramatic impact compared to the same story in your local rag.
Online, credibility and audience-size still matter, but so does findability. How easy is the story to find? Does it come up high in Google and to a lesser extent Yahoo? If there is buzz, is the buzz on a hub or a backwater site? Is it getting attention or play through links from other noteworthy sites?
How does one measure that? There is a way - ecosystem relevance - which measures the position and rank of a site within its industry/category ecosystem.
A viable, sustainable economic model is crucial for the future of the planet. Tell 'em, C.K.!
Seth Godin writes about "marketing in a recession" :
The challenge for marketers is to figure out how to change the story they are living so that their customers can change the story they tell themselves. What you make, where you make it, who makes it, how it's priced and sold and ... it all adds up to a perception. If you change these elements the story will change too.
His point is that Starbucks becomes the indulgence of someone who has just traded down to a small rental apartment. Gone are the days of $4.00 coffee just for the heck of it.
I think Starbucks is busy changing their story. They're trying to be a new, upscale McDonald's - rapidly working to add in a "drive-in have a happy meal" component to their business model. The trouble is in the demographics. Bill Tancer at TIME tells us that "the Big Mac customer base has remained relatively stable, while Starbucks' coffee-drinkers have diversified. It used to be that Starbucks attracted customers from a small, elite segment of the country; now, its visitors pervade many more segments across America."
From my own observations at the local Target, I see far more customer buying ICEEs rather than Starbucks coffees. This is the "threat of substitution" that is always around the corner, no matter how good your product is. Seems like the days of mass-luxury are over.
So where does retail find its consumer, er, citizen? Turns out they're not citizens at all - you've got to sell overseas. India and China are experiencing a huge boom in luxury, thanks to an explosion in middle class prosperity. The fortune is in the middle and the bottom of the pyramid.
And if you can't reach those consumers? I wrote about that in an earlier post about advertising in a recession.
I was talking to Bill Dunk this morning, and we got to the topic of trust as an issue in global business.
I told him I'd seen a video in which Jeff Immelt said something to the effect that in China the concept of win-win is an issue, whereas India is much better at partnerships.
Immediately, Bill dug up this article for me - an interview with Nani Beccalli-Falco, GE International's chief executive.
From the article:
This is a difficult challenge and it is one that Beccalli-Falco speaks of with surprising candour. He talks of the problems of striking deals in China, where, he says, the values of equity and fairness implied in the West's 'win/win' approach to business are replaced by a more naked self-interest. "In China, they have a tendency to think 'win for China, OK for you'," he says. "It makes forming partnerships difficult."
If you want to get a global perspective on business, you must subscribe (for free) to Bill Dunk's Global Province >>
And yes, I finally dug up the video:
Watch Immelt's interview with Rajat Gupta, and listen carefully as Immelt talks about India versus China - right at the very end of the video:
"China has a hard time with win-win. That's a problem over the long term.India's much better. There's a much better sense that India can be a real ally..."
China's got the Olympics this summer... wonder if they'll let anyone else win a medal...
We did this interview a year ago, but he's finally (and deservedly) hitting the best-seller lists - thanks to a strong internet-based campaign. The book >>
Why do you claim that "Trust" is the key leadership competency of the new global economy?
Covey: If you look at the nature of the world today, a foundational condition in Thomas Friedman's flat world is the presence of trust. Put simply, today's increasingly global marketplace puts a premium on true collaboration, teaming, relationships and partnering, and all these interdependencies require trust. In the book I point out that partnerships based on trust outperform partnerships based on contracts. Compliance does not foster innovation, trust does. You can't sustain long-term innovation, for example, in a climate of distrust.
In issue after issue, the data is clear: high trust organizations outperform low-trust organizations. Total return to shareholders in high trust organizations is almost three times higher than the return in low trust organizations.
So we assert that trust is clearly a key competency. A competency or skill that can be learned, taught, and improved and one that talent can be screened for.
Trust is the one thing that affects everything else you're doing. It's a performance multiplier which takes your trajectory upwards, for every activity you engage in, from strategy to execution.
How do you identify a high-trust or low-trust organizations?
Covey: Trust is a powerful accelerator to performance and when trust goes up, speed also goes up while cost comes down -- producing what we call a trust dividend. How do you know if you have a high trust culture? By observing the behavior of your people. In high trust, high performance companies, we observe the following behaviors:
• Information is shared openly
• Mistakes are tolerated and encouraged as a way of learning
• The culture is innovative and creative
• People are loyal to those who are absent
• People talk straight and confront real issues
• There is real communication and real collaboration
• People share credit abundantly and openly celebrate each others' success
• There are few "meetings after the meetings"
• Transparency is a practiced value
• People are candid and authentic
• There is a high degree of accountability
• There is palpable vitality and energy--people can feel the positive momentum
Another very visible indicator is the behavior of your customers and suppliers. What is your customer churn rate? Do you have a history of long-term customer and supplier relationships? What is your reputation or brand equity in your marketplace?
Conversely, when the trust is low, there's a trust tax which changes your trajectory downwards. In our work with organizations, we find that low-trust, low-performance organizations typically exhibit cultural behaviors like:
• Facts are manipulated or distorted
• Information and knowledge are withheld and hoarded
• People spin the truth to their advantage
• Getting the credit is very important
• New ideas are openly resisted and stifled
• Mistakes are covered up or covered over
• Most people are involved in a blame game, badmouthing others
• There is an abundance of "water cooler" talk
• There are numerous "meetings after the meetings"
• There are many "undiscussables"
• People tend to over-promise and under-deliver
• There are a lot of violated expectations for which people make many excuses
• People pretend bad things aren't happening or are in denial
• The energy level is low
• People often feel unproductive tension--sometimes even fear
These behaviors are all taxes on performance.
The work we do is to establish trust as your organizational operating system. That's a high-tech metaphor, but it's appropriate. We know how trust works, how to measure it, how to establish it, grow it, extend it, and sustain it - with all stakeholders.
Why is trust such a hidden variable to many otherwise competent managers?
Covey: Unfortunately, too many executives believe the myths about trust. Myths like how trust is soft and is merely a social virtue. The reality is that trust is hard-edged and is an economic driver.
For instance, strategy is important, but trust is the hidden variable. On paper you can have clarity around your objectives, but in a low-trust environment, your strategy won't be executed. We find the trust tax shows up in a variety of ways including fraud, bureaucracy, politics, turnover, and disengagement, where people quit mentally, but stay physically. The trust tax is real.
There are many myths about trust, and in my book I present them in a table your readers may find helpful:
Seth Godin helps you wake up... you can't be average anymore.
- Don't be safe...
- Don't be boring...
- Skip the BMW ad...
- it's Otaku time!
The December 2007 HBR had an interesting article by Kevin Coyne called Breakthrough Thinking from Inside the Box. There's far more to this article than just the 21 questions, so I urge you to go grab it here!
The approach Coyne and friends describe supposedly works better than brainstorming or strict quantitative analysis >>
“De-average” buyers and users
Which customers use or purchase our product in the most unusual way?
Do any customers need vastly more or less sales and service attention than most?
For which customers are the support costs (order entry, tracking, customer-specific design) either unusually high or unusually low?
Could we still meet the needs of a significant subset of customers if we stripped 25% of the hard or soft costs out of our product?
Who spends at least 50% of what our product costs to adapt it to their specific needs?
Explore unexpected successes
Who uses our product in ways we never expected or intended?
Who uses our product in surprisingly large quantities?
Look beyond the boundaries of our business
Who else is dealing with the same generic problem as we are but for an entirely different reason? How have they addressed it?
What major breakthroughs in efficiency or effectiveness have we made in our business that could be applied in another industry?
What information about customers and product use is created as a by-product of our business that could be the key to radically improving the economics of another business?
Examine binding constraints
What is the biggest hassle of purchasing or using our product?
What are some examples of ad hoc modifications that customers have made to our product?
For which current customers is our product least suited?
For what particular usage occasions is our product least suited?
Which customers does the industry prefer not to serve, and why?
Which customers could be major users, if only we could remove one specific barrier we’ve never previously considered?
How would we do things differently if we had perfect information about our buyers, usage, distribution channels, and so on?
How would our product change if it were tailored for every customer?
Revisit the premises underlying our processes and products
Which technologies embedded in our product have changed the most since the product was last redesigned?
Which technologies underlying our production processes have changed the most since we last rebuilt our manufacturing and distribution systems?
Which customers’ needs are shifting most rapidly? What will they be in five years?
Finally, if you want to hire Kevin Coyne, he's available here >>
Microsoft and Yahoo need to listen to this carefully...
One of Ram Charan's recent attempts to change the world is entitled: Know-How: The 8 Skills That Separate People Who Perform from Those Who Don't.
It's not just another one of those "I-worked-with-Jack-Welch- and-Larry-Bossidy-so-step-aside fool" books, but rather serves to create a modern day Ben-Franklin list of virtues based on performance.
Let's have some fun comparing the two lists:
RAM CHARAN'S LIST of VIRTUES for MODERN BUSINESS (2008)
1. Positioning and Repositioning: find ideas for the organization that meets customers' demands and makes money.
2. Pinpoint External Change: identify patterns that place the organization on the offensive.
3. Leading the Social System: get the right people with the right behaviors and the right information to make better decisions and business results.
4. Judge People: assess people based on their actions, decisions and behavior and match them to the job's non-negotiables.
5. Mold a Team: The ability to coordinate competent, high-ego leaders.
6. Set Goals: balance goals that give equal weighting to what the business can become and what it can achieve.
7. Set Priorities: define a path and direct resources, actions, and energy to accomplish goals.
8. Deal with Forces beyond the Market: deal with pressures you cannot control but which affect your business.
Charan also identifies personal traits of leaders that help (or hurt) these "know-hows".
1. Ambition: the drive to accomplish something but not win at all costs.
2. Tenacity: The drive to search, persist and follow through, but not too long.
3. Self-confidence: The drive to overcome the fear of failure and response, or the need to be liked and use power judiciously but not become arrogant and narcissistic.
4. Psychological Openness: The ability to be receptive to new and different ideas but not shut other people down.
5. Realism: The ability to see what can be accomplished and not gloss over problems or assume the worst.
6. Appetite for Learning: The ability to grown and improve know-hows and not repeat the same mistakes.
Well, what's not to like? This sort of checklist is usually what the HR people hand out in those 360 degree-assessments which are supposed to separate the good leaders from the bad leaders. The problem is - it's too easy for a bad manager to do well on these things, by using some old-fashioned fear and coercion on his subordinates.
Now let's take a look at Ben Franklin -
BEN FRANKLIN'S LIST of CLASSIC AMERICAN VIRTUES (c. 1776)
The seven personal virtues relate to your attitudes toward activities and their challenges. Good personal character traits will better your chances of success in achieving your goals.
1. Temperance: Eat not to dullness; drink not to elevation.
2. Order: Let all your things have their places; let each part of your business have its time.
3. Resolution: Resolve to perform what you ought; perform without fail what you resolve.
4. Frugality: Make no expense but to do good to others or yourself; i.e., waste nothing.
5. Moderation: Avoid extremes; forbear resenting injuries so much as you think they deserve.
6. Industry: Lose no time; be always employed in something useful; cut off all unnecessary actions.
7. Cleanliness: Tolerate no uncleanliness in body, clothes, or habitation.
These six "social virtues" concern your attitudes toward people with whom you have dealings. Good social character traits result in other people wanting to do business with you or to just hang out with you.
8. Tranquility: Be not disturbed at trifles, or at accidents common or unavoidable.
9. Silence: Speak not but what may benefit others or yourself; avoid trifling conversation.
10. Sincerity: Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.
11. Justice: Wrong none by doing injuries, or omitting the benefits that are your duty.
12. Chastity: Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another's peace or reputation.
13. Humility: Imitate Jesus and Socrates.
I think I like old Ben's virtues a bit more. Looks like Ram Charan's been reading up on Ben Franklin, though, doesn't it?
Let me venture to add two more virtues of our age: greed + laziness. Get as much as you can with as little effort as possible (right, Richard Koch?)
Which reminds me - what happened to Dr. Deming's 14 points?