Today’s Dilbert strip hit on a couple of key thoughts, albeit in traditional Dilbert fashion…
This is a pretty simplistic, yet sadly realistic, manner in which we define corporate agendas. We lay out a concept and expect the organization to translate our words into action. What happens is that often the definition is fuzzy, which allows for all sorts of interpretation and a watering down of execution.
While a little nitpicky here, Increasing Market Share is a goal, not a strategy. Why does this matter? The primary reason is that we need to teach the organization to think along common lines. We need to communicate specificity – tell people exactly what we want. The goal is to increase market share by 5%, and we are going to do this by increasing new product revenues by 10% and by $4mil in cross selling opportunities to our customer base.
Additionally, every company is striving for the same four things – Increase Revenues, Improve Profit Margin, Elevate Market Share, and Enhance Financial Health. It is how we balance these four items that sets us apart from our competition, and how we tell the organization what matters. Will we sacrifice a launch date and potentially our 3rd quarter revenue goal if a product is offline? Will we bend over backwards to keep a customer from defecting? Will we sacrifice margin for a new customer in a new market? The company must know the trade off equation as most decisions impact something else. Without understanding this, people make decisions based on what they want, not what the company wants.
Ask yourself how deep your organization understands its goals? And then compare it to how specific the goals, strategies, and tactics are for the organization? If there is a gap, start somewhere and be very specific of what you want. Changing the culture to be more specific is not all that difficult.
Recently I was cleaning up my Gmail inbox and it was clear to me that some people treat email like free marketing. For example, Dick’s Sporting Goods was sending me 3-4 emails a week. While I shop at Dick’s Sporting Goods and like the brand, it was very clear to me that they really weren’t paying attention. My lack of response, nor opening of any emails should have been a trigger to them. More was much, much less. They were not alone, but one of the worst examples of over-communication.
Thoughts for email marketing:
Use the information effectively. Not only have I asked them to stop emailing me all together, they have hurt their brand standing with me.
Test your campaigns. Because they are free doesn’t mean everyone should get everything. That’s just laziness. There are too many tools out there not to be able to do some type of segmentation based upon gender, usage patterns, social, and economic demographics.
Learn! This is probably the most important aspect. If a customer gives you their email address, then treat it like a valuable asset and learn from it. It is not a resource to be used up. Offer different things at different times, send emails in different patterns, send different offers and test the response. And if they don’t respond to anything, pull back and wait.
I know this sounds way too obvious, but here is an example from someone with the size and clout to know better. Chances are your marketing organization is overusing their free marketing channel and just don’t know it yet. Go ask them for an analysis of how many emails are being sent out to each customer segment each week. Ask them how often they clean up their contact list to trim out people who have never responded. And wait for the dreaded, “we don’t want to skip anyone in case this is the campaign that will get their attention.” Trust me, there is a breaking point.
If you have a moment, take a few seconds to fill out a survey. I’ll post some of the more relevant survey results here over time. Basically 7 questions and a place to fill in your answer if you want to share more.
Strange what a few years means to the technology sector. Google, once champion of the little guy, the individual, the anti-Mircosoft, now becomes the problem. The Michigan – Ohio State rivalry of the tech industry was supposed to be Apple and Microsoft. They have spanned great battles over the years – and better commercials…
Yet, all of a sudden Google is the evil invader in the space. What else could make Apple and Microsoft consortium partners?
The RIM letter to BGR referenced a video from Simon Sinek on TED. While I think he makes an incredibly difficult task seem a little too easy, I think he certainly raises some interesting questions. He talks about the Gold Circle, how we market the what instead of the why.
Execution is far more difficult than transforming the marketing message from the “What we do” to the “why we do it”, it is more about leadership and a unique focus on the customer that is not easily replicated.
When executives feel they have to go outside of a chain of command in order to voice concerns, we see perfect examples of the need for Operational Performance Management (OPM). The current Research in Motion public battle is a great place to start. An anonymous executive sent an open letter to Jonathan Geller, of The Boy Genius (BGR.com), to call out the current RIM culture. What is more entertaining about this is the fact that RIM responds publicly, which only makes this sound like a bigger problem.
Highlights of the RIM letter:
You have many smart employees, many that have great ideas for the future, but unfortunately the culture at RIM does not allow us to speak openly without having to worry about the career-limiting effects.
We often make product decisions based on strategic alignment, partner requests or even legal advice — the end user doesn’t care. We simply have to admit that Apple is nailing this and it is one of the reasons they have people lining up overnight at stores around the world, and products sold out for months. These people aren’t hypnotized zombies, they simply love beautifully designed products that are user centric and work how they are supposed to work.
Teams still aren’t talking together properly, no one is making or can make critical decisions, all the while everyone is working crazy hours and still far behind. We are demotivated.
Strategy is often in the things you decide not to do.
We simply must stop shipping incomplete products that aren’t ready for the end user. It is hurting our brand tremendously. It takes guts to not allow a product to launch that may be 90% ready with a quarter end in sight, but it will pay off in the long term.
The truth is, no one in RIM dares to tell management how bad our tools still are. Even our closest dev partners do their best to say it politely, but they will never bite the hand that feeds them.
25 million iPad users don’t care that it doesn’t have Flash or true multitasking, so why make that a focus in our campaigns? I’ll answer that for you: it’s because that’s all that differentiates our products and its lazy marketing. I’ve never seen someone buy product B because it has something product A doesn’t have. People buy product B because they want and lust after product B.
RIM has a lot of people who underperform but still stay in their roles. No one is accountable. Where is the guy responsible for the 9530 software? Still with us, still running some important software initiative. We will never achieve excellence with this culture. Just because someone may have been a loyal RIM employee for 7 years, it doesn’t mean they are the best Manager / Director / VP for that role.
However, overconfidence clouds good decision-making. We missed not boldly reacting to the threat of iPhone when we saw it in January over four years ago. We laughed and said they are trying to put a computer on a phone, that it won’t work.
Reach out to all employees asking them on how we can make RIM better. Encourage input from ground-level teams—without repercussions—to seek out honest feedback and really absorb it.
All of these are examples of what happens in almost every business culture I have witnessed. It is certainly not unique to RIM. If you think this is not happening within your business you are sorely mistaken.
What can you do….
Foster honest discussions. Stop punishing those who do not follow the company line. Reward critical thought. Ask people to do their homework prior to the meetings.
Listen. Tap into the collective intelligence of the organization. 1,000 eyes see a lot.
Act out. Stress your opinion if you have a dissenting idea.If you love your company and passionate about what you do, chances are your opinions probably do matter.
This is again perhaps a little off topic for me, but it does pose some really interesting strategic points for consideration…
The cigarette of today’s generation is fast food, sodas, and poor eating habits in general. Obesity in the US is projected to be about 20% of our annual health spending – or roughly $350 billion (USA Today) by 2018. This means the number will double from 10% of the spending to 20% by 2018. Food related deaths account for more than half of our causes of death (CDC) and we focus very little attention to it. And for the first time in decades the US life expectancy is projected to decline by 5 years (National Institute of Health) with this generation.
So from the viewpoint of Strategy, this poses a wild number of potentials. Depending upon your industry this either opens you to a tremendous opportunity, or a concerning level of risk.
Opportunities:
Food industry – being an early mover to healthier versions of your food may attract more customers
Education – providing content for school, churches, communities, etc may open more doors for you
Healthcare – with increasing costs, providers that can target care to show health gains with children, or keep their clients healthier may see improved demand for their products while at the same time controller their costs.
Marketing – Branding your self as a healthy alternative
HR – being seen as a healthier employer may improve your retainment and attraction to new employees. You may also see a reduction in your health care costs over time.
Risks:
Fast food – This entire industry may be about to come under ever increasing levels of attack. The attacks will likely be on menu, ingredients, nutritional labeling, and potentially lawsuits.
Sports drinks – As parents become more aware of the level of sugar in these drinks, demand is certainly at risk. As one of their core segments is children, it is also possible that even the marketing placement will be called into question.
Education – As Jamie Oliver’s Food Revolution has clearly pointed out, he is certainly targeting the school system menu. Once the parents get involved school district lunch menus will likely need to change dramatically.
Healthcare – spiraling costs will force most healthcare companies to make very difficult decisions to remain profitable.
Here is Jamie Oliver’s presentation on TED.
Here you can see the growing obesity problem in the us (CDC).
Over the holidays I heard a story on Zombie Processes. It reminded me of the number of these I have come across in business. One of the luxuries of being a consultant is you get to ask “why do you do that” or better yet “what would happen if you didn’t do that anymore”. As businesses grow and scale we often pick up a number of new initiatives, or increase the subtasks, and never kill off old ones. We also inherit more and more “stuff” that people do that does not necessarily add value.
Zombies: A Zombie initiative/task is something that continues on because no one has done the favor of saying it is either over or complete. It can also be a task that exists that no longer needs to exist. Basically it is inefficient effort and time.
Do these exist in your organization? Absolutely and everywhere. The key is not trying to fix them all at once – this will get you nowhere. What makes the most sense is to identify your strategic goals and initiatives and start with the processes that support those goals.
Where do you start? Take a look at your critical initiatives across the organization. Ask yourself which ones are going to provide the most strategic value over the next 12 months. Pick 3 and define the value of those initiatives. Are they about increasing/decreasing time, revenue growth, cost cutting, elevating customer value? Figure out how improvements should be measured. Set up serious targets and a process to manage improvements. Roll up your sleeves and get rid of the Zombies. And while again this is self serving, it does not make it less true – hire a consultant. Have someone independent to the organization ask the questions. Especially if this is a new concept inside the organization. People don’t like change, they fear it will expose them or put them at risk. This can lead to the wrong motivation for process improvement.
Stuff: This can be projects, tasks, subtasks, processes, or simply job justification work.
We hear and often bemoan comments in many professions, as the judgements often seem settled from the outset. For example, while reviewing an x-ray he took on my first appointment, my chiropractor remarked succinctly, “You are an ideal candidate for chiropractic therapy.”
Surgeons see operations, lawyers see risks, dentists see cavities, policemen see crimes, and consultants see problems. When you are a hammer, life looks like nails.
One of the core reasons strategy management consulting works well is it trains companies to let strategies align wallets. All too often we take the advice of the squeaky wheel, or allow personal politics to drive decision making. Strategy management is about a consistent process geared to drive decisions, fund initiatives, and find those that no longer serve their purpose.
How often do you hear employees complain about certain initiatives?
How often do feel your organizations fund pet projects?
How consistently are decisions based upon closing strategic gaps?
I thought this was worth sharing….Periodic Table of Visualization Methods. This is a nice visualization of the different types of visualization. It shows some good examples, and some not so good examples of visualization. Make sure you mouse over the different elements.
Rules of visualization designed to create action:
Keep it simple, clear, and concise – with the emphasis on simple. Don’t use complex charts to explain simple ideas.
Know your audience. Don’t present glorious details of each step in the analytical process to executives – trust me, they don’t care.
Find a chart style that works well with the data. Line charts show historical trending, bars charts do a better job of showing relativity.
Don’t use 10 charts when 1 could suffice.
Label well. Take the time to make sure all of the information is explained. The last thing you want to happen is for someone to look at it and say “what does it mean?”
Understand there is a difference in analysis and presentation. If you are trying to convince someone to act, then make sure the data (and you) tell the story.
Start with the big picture, then explain (if necessary) how you got there. People learn by seeing the picture first, then seeing how the parts go together.
Document your assumptions.
Explain your conclusions, don’t expect your audience to jump to the same answer.
Highlight the relevant points within the data that augment your argument – use a color scheme that calls out the item if you can (red bars vs gray). Do not be afraid to use the power of a printed report and some hand written notes with arrows to the corresponding areas.
Understand where and why the data does not support your conclusions. Be prepared to defend against those points, because your audience will likely be looking for ways to contest your conclusions.
Practice what you want to say. The more proficient you sound the more convincing you will be.
Perhaps not all signs agree with the National Bureau of Economic Research that the recession ended in June 2009. It is pretty clear that the economy is still not as healthy as everyone would like. Our unemployment rate is still hovering around 10%, and Mass Layoffs is trending in the right direction, but still high. Looking at the chart below, it is clear that Mass Layoff events are declining (though there could be some other explanations as well) and getting closer to the roughly 1250 average during better times.
Housing starts are on the rise again, yet the DJIA has only recovered a little of the value from the losses from 2008 and early 2009. While we may still may be feeling the effects of the recession, it is clear that most indications are moving in the right direction.
OK, so I upgraded to iPhone 4. I had to do it…it was like an addiction. For some reason, the iPhone has a tremendous amount of cache to it. How do we create brands with this much power? And how do we use this for our own advantage for the longest time?
From a Strategy standpoint, we can discuss and debate a great deal about their relationship with AT&T….
AT&T Exclusive….
From the very beginning the AT&T thing has been called out and questioned. Apple has always been about propriety…and while somethings work it is clear that others do not. I think in the Cell Phone market, this tactic is about to hurt them. By creating the exclusive arrangement with AT&T Apple created motivated competition. Verizon, whom most feel is the superior cellular network, was extremely motivated to come up with a competitive plan as was Google who was just entering the mobile market. It created a substantially sized hole for Google Droid to take advantage of.
What Apple felt was a compelling advantage with the App Store, is now just a “me too”. The Android market is coming on fast, and momentum (prior to the iPhone4) was clearly leaning to the Droid. It is also being argued that the pressure from the Droid momentum had pushed Apple to rush the iPhone 4 to market, thus causing it to make some well known missteps and product issues.
By making a conscious choice to go with the weaker carrier, it created a vacuum….and in the business world vacuums don’t last long. Verizon and Google have created a very viable competitive piece to the iPhone legacy.
Data Hog
With the iPhone 4 and its video functionality, it is going to need a much better network than AT&T can offer.
AT&T has already leveraged the iPhone platform to change its terms and conditions which the user community is less than thrilled with at this time. The first change was the cloaked ‘Smart Phone Cancellation Policy.’ To cancel a smart phone account, the penalty fee has now doubled.
The second main item was dropping the unlimited data plan. Users are now going to be hit with overage penalties, though AT%T claims the fees are not going to be excessive. While AT&T is offering two levels of data plans, one which allows minimal usage (200 MB per month) for $15 and the other which offers 2GBs per month for $25. The third option is for tethering but is still limited to 2GBs per month.
While I have been told the fees were primarily geared to get people to be smarter with when they were downloading, this is really a ploy to offload the supply and demand issues that AT&T is having with their cellular network. This tells me that AT&T expects their dropped call issue to either continue or perhaps get worse. When you combine this with the unprecedented demand for the data hungry iPhone 4s, I think AT&T is going to have some issues.
So how does AT&T deal with this mess, they are arguably a year behind in launching their 4G cellular network compared to Verizon.
I am sure in the end that Apple has to be less than thrilled that their cellular carrier is the weakest link in its product. It was embarrassed during the iPhone 4 launch when the demo could not find a connection (arguably not an AT&T issue), when a member of the audience responded to Steve Job’s delay in what to do with “try Verizon”.
So in the end by choosing the weaker of the cellular carriers…
1. They created a vaccum which Google Android has exploited extremely well. Apple iPhone may struggle over the next few years as the Android market continues to expand.
2. It created a faulty product due to poor service, and in some ways product and marketing snafus due to the increased competitive pressure around the iPhone 4 launch.
3. Strangely they have become what they once fought against – they are the machine (see video below).
4. If they Apple iPhone market is over taken by the Droid market in the next couple of years, it is perhaps fair to blame the relationship with AT&T. If they would have worked with all markets the Droid market would have materialized much slower.
In a recent MyMidwest (Midwest Airlines) inflight magazine there is a story by Kimberly Douglas of FireFly Facilitation on Meeting Management. If we look at a couple of the numbers from Douglas’ research we can begin to quantify the impact of meetings.
38,000 msft employees say that their 5.6 hours per week spent in meetings are unproductive. That’s over 11 million hours of meetings. Now if we say the average msft employee makes 100k per year (including benefits), that translates to ~ $50/hr. If we do the math, that’s ~ $550 million a year in meeting costs.
Microsoft’s 2009 annual income was $58.4 billion which makes just their meeting costs roughly 1% of their annual income. Let’s make a couple more assumptions: that half of that value is waste (more people than needed, run longer than necessary, etc) and we could reduce that by 10% which should be easy. The result is ~ $22.5 million. I am guessing here, but it should be worthwhile to at least try and improve upon meeting management and find some other way to leverage that $22 million.
What % of time do you spend in meetings?
Would your employees feel that meeting management and effectiveness could be improved upon?
What would you do with an additional 1% of your annual income?
In what ways could you improve meeting management?
How much time do we spend making the customer experience simple?
Is the customer on-boarding process painful, or straight forward?
Do customers get lost in our beauracracy, our legal needs?
How many customers do we lose in those final steps?
We spend tremendous time developing technology – whether externally for paying customers, or internally for process improvement. Yet, we often spend very little time planning for the adoption phase.
What do our customers want – stuff just to work the first time, to be easy to use and provide the value they paid for. If we are spending millions, if not billions on product development, why do we not start with the end in mind (see Jonathan Becher’s – Manage by Walking Around blog)? Especially in the age of the internet, people need to be able to sign up and get started without complexity, nor mind-numbing data entry. There is a time and a place for each of those, and it is not necessarily right after “hello”.
One great shiny example is Apple. Most of their products are far more simple to operate than their competitors. Think of how easy to use each of their products are, then think about using them as part of a network of parts and it gets even more simple to use.
“What we’ve got here is a failure to communicate”Luke in Cool Hand Luke (played by Paul Newman)
A friend of mine sent this video along to a number of friends in the Business Intelligence space, saying we need to be better story tellers (Thanks Katie McCray). We do spend an enormous amount of time talking about data structures, common data dictionaries, ease of use, speed, consistency, etc. What we typically fail to do is tell our clients how to create information, to tell the story in a convincing enough manner to create attention, and more importantly, enable action.
As analysts we typically spend more time talking about data discovery, and the calculations we used than starting off by making our point. We try to create 50 charts to explain everything, and not the one chart that most simply illustrates our point. This not only wastes time, but we lose our audience.
Watch the next couple of presentations you sit through and watch the number of slides that build up to the point trying to be made. What happens is that with each slide our listeners pay less and less attention as they have lost the point trying to be made. As learners, we need the point to be made first. We need to see how it all comes together, then have it explained how to get there. It provides the context for the point to be made. People now understand what to listen for and why they are listening.
On a slightly different note, last week I wrote about the housing market and the Dangers of Leading Indicators. I had to update the post due to a new story with a different viewpoint that ran in the Globe on the 23rd. Amazing how story tellers can tell such dramatically different things.
UPDATED12-23, 2009: Boston.com story about home sales – seems like we have stories with divergent viewpoints. Good example of how a single version of the truth depends upon the story teller…
CNN Opening Paragraph: NEW YORK (CNNMoney.com) — After surging 10% in October, sales of existing homes jumped again in November, growing 7.4% compared with October to an annualized rate of 6.54 million units, according to the National Association of Realtors. (full article)
Boston Globe Opening Paragraph: WASHINGTON—Sales of new homes plunged unexpectedly last month to the lowest level since April, a sign the housing market recovery will be rocky and heavily dependent on the generosity of Uncle Sam. (full article)
Read each…Ahh, the politics of spin, or is it the spin of politics of spin.
November saw a healthy jump in home sales. The good news is that home sales and housing starts are usually very good leading indicators about the health of the economy. Yet the bad news, in this case we have a potentially baked number. The market is being artificially inflated with both lower interest rates and a government subsidy for first time home buyers. What makes this worse is we have created a situation where we know less – we know a number improved, but we have no understanding if the economy is better.
This is one of the fears about designing the right KPIs. We want to find the perfect KPI, or create a list that tries to include everything. What we need are a few KEY indicators to trigger the right conversations about what actions (business levers to pull) to take or not take. We also need to discuss performance and action in a holistic manner and not get caught in panic mode because one indicator seems to be below expectation. We also do not want to trigger an action to artificially improve a number.
For example…Days Sales Outstanding (DSO) can be used as a measure of customer satisfaction. The interpretation is that people pay the bills of the people they like first. If you are able to shrink the number, then you at least have an indication that customers are generally happier than they were last month. If the Marketing VP were compensated on Customer Satisfaction and we used DSO, the VP might change the payment terms. While we might see improvement in DSO, we are probably not seeing an improvement in Customer Satisfaction, which was the goal when we started.
As you are designing KPIs:
Start with your high level annual goals for the year
Build out a system to discuss the implications (don’t just look at the number)
Assign someone to write up the implications on a regular basis
Create a commonly understood definition of the KPI, and document it where it can be easily accessed
I was having a discussion with one of my clients this week and I thought he did a nice job summing up Predicative Analytics.
So in the World According to Reed (WOTR) – “queries answer questions, analytics creates questions.” My response was “and Strategy Management helps us to focus on which questions to answer.”
Reed Blalock is exactly right, traditional BI is about answering the questions we know. Analytics is really what we create with data mining – we look for nuances, things that might give us new insight into old problems. We use human intellect to explore and test. And yes, there is a little overlap. But what is really happening is that we have a different level of human interaction with the data.
BI is about history, analytics attempts to get us to think, to change, and idealistically to act.
The danger with both of these is that they can be resource intensive. Neither tool, or mindset should be left to their own devices. What is needed is a filter to identify the priority and purpose. This is where strategy management and scorecarding comes into play. We have built out massive informational assets without understanding where, when, and how to use it. We have pushed out enormous reporting structures and said “it’s all there, you can find anything you need” yet we scratch our heads when we see adoptions levels are low.
What we have typically not done all that well is build out that informational asset by how it helps us be more productive along product lines, divisions, sales region, etc. We have treated all dimensionality the same. Why, because it was easy. The BI tools are tremendous in how quickly you can add any and all dimensions.
“But because you can, doesn’t mean you should”
As we built out these data assets, we did not align them to performance themes. We have gotten better with some key themes, like supply chain management, and human resource management, but what about customer performance? We might look at sales performance, but that is a completely different lens than customer performance.
How do we determine which assets to start with…what assets do we need to be successful 3-5 years from now, or what are our biggest gaps to close today. Think about customer value, or employee satisfaction (and that doesn’t mean more HR assets). Think about your gaps in Strategy.
How often do we discuss…
Are our customers buying more or less frequently?
What are our best, and better customers doing?
What are the costs associated with serving our least profitable customers?
On Friday, the BLS released the Employment Situation report. Everyone jumped on the news that the unemployment rate actually dropped for the first time in months. While this is a great indicator, the basis for the jump was an increase in temporary help and healthcare jobs. With Christmas looming, I fear this is an artificial indicator as this is temporary help for a season that requires more than normal levels of help. We need a number of industries adding jobs for this report to be positive, until then it is just a little less negative.
We lost 11,000 jobs compared to the 130,000 that Wall Street expected. Or perhaps we have cut so many jobs the last few months, that we could not find a place to cut anymore. I am also curious if this isn’t a little manipulated either in timing or impact as the President has been calling for job creation.
What I would really like to see out of Congress and the White House are very specific plans around job creation. Just like a company saying we want to see 20% growth, yet not laying out the specific marketing, sales, and operational plans to get there it is all just hope. And hope is not strategy.
I was flying to a client this week and one of the flight attendants was on her last leg of a 40 year career with the same airline. The pilots and other flight attendants made a number of announcements to make her feel special. 40 years is unique in this day and age. In a way, I was expecting to see a banner when we were walking off the plane welcoming her home and I felt bad for her when there wasn’t.
A few years back Jordan’s funiture closed their doors one day and flew all of their ~1,200 employees to Bermuda for a beach day (here is a little more about it). Why would you spend the money to charter 4 private jets and loose a day’s worth of business?
“We’re the highest-volume per-square-foot furniture retailer in the country because of our people,” says Barry. “We want to put a smile on their faces.”
If people are our greatest, why do we find it so difficult to reward them.
How do we treat our employees?
Do we do things to make them special?
How do we celebrate major milestones?
Are compensation plans created and distributed with a “take it or move on” attitude?
When was the last time you did something different for your employees?
People will do what they like, or what is easy if they do not understand priority or value. The hard stuff is messy. There is too much risk in the hard stuff…
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