A recent review in Bloomberg BusinessWeek on David Owen’s new climate change book, “The Conundrum” replicates a parallel that I see playing out in 2012 corporate budgets. That conundrum is: how corrective actions to reduce marketing spend and deliver greater return, often produce the antithesis (greater spend and/or decreased success).
The book’s point is that ‘green’ salvation eventually enslaves. Seemingly the good actions (changed behavior) wrought by leveraging new efficiencies…in fact promote repeated abuse of those efficiencies. Cited is a great example of how the goal of reducing aluminum consumption via thinner cans in the beer industry failed: the cheaper packaging led to cheaper beer, which led to more affordable (and more) beer consumption per person, and an increase per person in aluminum waste.
Similarly, this same principle plays out in business: the goal of improving margins by replacing more resource-intense strategic planning processes with less resource intensive social media/analytical tools, often leads to an increased the total marketing spend and disappointing . This occurs for two reasons:
1. Insider Executives Have Myopia (They “Breath Their Own Exhaust”)
Here’s an illustrative story on how this works: Back in 1996 when I held a key marketing role at Hyperion, a very scholarly, but disastrous, new CEO was brought in. He lasted less than a year. We’ll just call him Peter D. The company was positioned for potentially explosive growth in the then new and burgeoning OLAP (on-line analytical processing) space, and was outgrowing its pure-play financial consolidation roots. I advocated aggressive external market trending/validation aimed at exploiting the new opportunity. Instead, PD spent multiple months doing internal executive assessment evaluations using an outside workforce consultant who was the author of a depressing little career management book called “The Doom Loop” . A year was wasted on meeting after meeting of the company insiders “breathing each other’s exhaust” in a workforce bonding kumbaya experience. Hyperion’s biggest threat at the time was Arbor, which (contrasted to Hyperion) had exciting strategic-thinking management who grasped the opportunity, and went quickly from a fraction of Hyperion’s size, to besting them. Frustrated, I left to join Lawson in early 1997, and Hyperion and Arbor subsequently merged 2 years later in a “if-you-can’t- beat -‘em,- join- ‘em “ move. Today of course, Hyperion is owned by Oracle.
There are some wonderful cartoons/jokes about selective hearing …mostly aimed at spousal or teenage iterations of the issue. Be the cause corporate vision statement myopia, bandwidth constraints or ‘doom looping’ themselves into executive analysis paralysis, companies are often the last to really see what are their best opportunities and biggest challenges.
Net Take Away: Inward focus versus strategic planning yields outward stagnation (and more, not less, marketing spend overall).
2. Customers Don’t Know It All
We all hail to and love our customers, and we surely want to sell them more “stuff.” Re-selling to the base is a tried and true formula for reducing cost of sales, right? You can grow your revenue and build your margin, right? You can tighten the bond that keeps customers close and inhibit competitive pilfering, right? True, true and true. But here’s the two-fold rub: a) your closest held customers today, may not be your ideal (most lucrative) customers of tomorrow; and b) reduced focus on the acquisition of net new customers is a fast track to obsolescence.
Meaning: while you’re busy building out feature/functionality requests on your CURRENT “stuff” – your competitors are innovating NEW “stuff.” Customer conferences/surveys/advisory boards have their role in resales and extensions, but they must never replace multi-dimensional external audits and trending assessments. A third-party, independent evaluation of your offerings/operations relative to both future trending and the external landscape is sometimes brutal, but life-extending to businesses.
Net Take Away: You can’t be sure of your long-term trajectory, unless you look beyond data points provided by customers.
Successful companies don’t get that way by accident; it is the result of solid market assessment of opportunities and challenges, a strategic plan with milestones tied to real results and periodic external assessments to shed fresh light, perspective (and reality) on the state of business affairs.JRocket Marketing’s 90-day Plan-IT program provides that fresh perspective, ties it back to an actionable plan, and trains up (or hires) appropriate workers to get the job done.
