The Strategy Review

Winning With Purpose

 

 

The biggest block to successful enterprise transformation is ... Addiction?

It's everywhere in our culture. Booze. Drugs. Food. Sex. Gambling. Spending. And so on. 

Anyone who isn't floundering in the net already, or if they're lucky, punching their way out of it, certainly knows someone who is. 

Addiction is a fatal mental illness, in the end, without some form of treatment. And of course there are treatment centres all over the world. The centres that prove to be successful in the long run, moving thousands of addicts from basic survival through to a life more or less worth living, are almost invariably based on the well established 12-step programmes that originated with the foundation of Alcoholics Anonymous - AA - in Ohio in 1935.

This is not the place to go into details of what is, famously, an anonymous fellowship exclusively for those seeking recovery from alcoholism. But based on the success of the movement founded by alcoholics Bill Wilson and Bob Smith 80 years ago, there are today well over 50 distinct 12 step programmes, covering all the familiar manifestations of the condition, and a few that we may never have thought or heard about.

In the face of what had, till the movement began, been an entirely unsurmountable condition, these programmes provide a planned route to survival for using addicts, whose previous fate would have been increasing humiliation, loss of health, social status, family and friends, and all too commonly, an early, lonely death.

These programmes represent, we suddenly grasp, the single most successful secular model of personal transformation we have ever seen.

Right. But what does this have to do with the challenges facing the leadership of many of the world's largest corporations, battling with a way forward to corporate survival and growth against a headwind of disruption and chronic market turbulence?

I didn't consciously realise, when I was writing my recent, mercifully brief strategy book, The Liquid Enterprise: How The Network Changes Value, What It Means for Business, And What Leadership Needs to Do About It (published early March by Infinite Ideas, and now on Amazon worldwide) that I was describing corporate and market phenomena whose resemblance to the problem of addiction is remarkable.

The premise for the work is challenging but simple. I claim that technology, along with a range of other cultural and commercial accelerants, pushes markets and their customers forward too fast for previous models of business strategy to cope with. 

We need to focus no longer on just "doing different things" (for example, customer experience or centricity programmes, efficiency-based digital transformation programmes and innovation). We need to think entirely differently.

We must learn to think about value, about the market, and about the shape and dynamics of the enterprise in radically new ways, in order to weather the storm of network disruption and the chronic turbulence it confers on most industry sectors.

And this is where is gets interesting. It's notoriously difficult to get organisations to think differently. The stark challenges facing the change leader in any substantial business originate derive from human nature. We just don't like change. And we'll go to extraordinary, often illogical lengths to avoid it.

Here lies the connection with addiction. One of the great - perhaps the greatest - insights introduced by the founders of the world's proliferating 12 step programmes, is this. "The problem isn't the drinking. It's the thinking."

Addicts have all, to a man or woman, learned survival tools that, while perhaps helping them along in the earlier stages of their lives and using, become decreasingly useful and eventually toxic. Their obsessions - typically distinguished as either "substance" (alcohol, drugs) or "process" (shopping, gambling) addictions - are attempts to manage - and eventually medicate - a failure to cope with their experience of life.

More brutally put, their wiring is all wrong, and until it's effectively untangled - and this is not the work of weeks, but months and even years - no significant progress is possible.

My core hypothesis in The Liquid Enterprise, when looked at through this new lens of chronically dysfunctional behaviour, is that there are two deeply embedded "addictions" that enterprises struggling to handle disruption and transformation are battling with. 

The "process addiction" is a hunt for certainty of decisioning, based on a now-false premise that the information on which mission-critical business commitments are made remains consistent, reliable and robust over time. This is no longer remotely practical as an assumption. There's so much data flooding across The Network, at such increasing speed and complexity, that the bases for an major change programme are more or less invalid from the start. 

But of course, when you're facing turbulence of this scale, the old blanket of certainty feels impossible to let go of.

The corresponding "substance addiction", which is naturally closely linked to the crisis in decision quality, is a toxic dependence on data. 

When information was in short supply, its effect on competitive advantage was direct and undeniable. Now, given the data tsunami mentioned above, actionable signal is not only lost in a storm of noise, but our ability to go beyond merely capturing and storing petabytes of more or less random information, on the assumption that this warehouse in itself represents enterprise value, to put it to useful work, is painfully limited.

Look at where the precious, challenging and - till a few years ago - inspiring business of advertising has got to. Putting aside the adblocking crisis - in itself a symptom, far more than a cause of anything - many of advertising's most senior and committed practitioners (and there are plenty of big digital thinkers among them) are publicly expressing their dismay, and their desire to get out and do something that matters. That is useful and creatively exciting.

In The Liquid Enterprise, I argue that the fundamental shift in thinking and behaviour that's demanded now, is that enterprise leadership let go of evidence-based strategy and management, and move towards confidence-based models of assessment and commitment.

This is not, in itself, from another planet, as a way of thinking. Strategists and practitioners have been playing with real options as a mechanic for actively managing change and complexity for some years now.

But perhaps we're getting ahead of ourselves.

As mentioned above, it's close to impossible to get an individual, let alone a whole organisation, to fundamentally change embedded behaviours that - rightly or wrongly - it believes are crucial to survival.

But we must. As the song goes, the drugs don't work anymore.

One phenomenon that will be familiar to anyone who has dealt with a family member, friend or colleague in the grips of an active addiction is their diamond-hard, impenetrable denial about their condition, and its effects on their own life and those of others.

In treatment circles, there's a tactic called an "intervention". With the help of an experienced facilitator, family and friends sit with the addict and try to break through their denial with personal accounts of how their behaviour is damaging everything: family, money, work, kids, and so on. 

These can of course be powerful, deeply moving and hopefully life-saving events. But what's equally interesting for this discussion is the counter arguments that the patient offers, seeking to defend and justify behaviours that to them seem, for now at least, natural and utterly irreplaceable. 

"So and so has the problem. I've got it under control." "I still have my job." "How do expect me to cope with x, y or z without a drink?" And so on. You know the form.

Scarily, this type of argument manifests every day in the corporate world. And at the risk of perhaps losing some friends, my belief is that the 3 core responses that most major enterprises are adopting are based on denial, on a fierce and frightened defence of the norm: they combine in various flavours, but tend to boil down to digital transformation, customer experience and innovation.

Nothing wrong with any of these responses per se. But as long as they continue to support a way of doing strategy, a paradigm of business thinking, that is rooted in simpler, happier times when everything was slow and easy, we are fiddling. When we should be burning Rome.

The role of pointing out to the Emperor his lack of clothing is, inevitably, an invidious one. But it has to be done. Radical, exhilarating new ways of thinking about enterprise and customer value are urgently needed.

Is the problem really that bad? Well, in some circles, perhaps no. 

Manufacturing, till recently a classic poster child, along with the record industry, of the destruction that unfettered information can wreak on a sector, is rising again, propelled by the efficiencies and brand new value conferred by the IoT. Have a dig around for "Industrie 4.0" if you don't agree ... it's compelling and invigorating.

But the leaders of most incumbent consumer-facing businesses are suffering a lot of sleepless nights. Neither digital or data, along with all the big rethinks and transformations they demand, offer truly convincing solutions to the challenge, "How does this defend and grow my brand?"

And there's no problem with either data or digital per se. It's the thinking. 

Survival is, for many of these enterprises, hard to honestly envisage. As for growth ... well, what does that even look like?

The game's not over yet. But as long as we fail to revisit, revise and radically reimagine strategy, we're on the road to nowhere.

Now. Who's got the balls - the brains are assumed - to make that intervention?

Introducing "The Liquid Enterprise"

I'm pleased to announce the publication of my latest book, The Liquid Enterprise, How The Network is transforming value, what it means for business, and what leadership needs to do about it by Infinite Ideas, Oxford, on the 29th February.

Here is a synopsis and some kind endorsements, and you'll also find a taster for download.

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We know everything. And it tells us nothing.

As the world’s most venerable corporations scramble to keep up with an ever-faster, ever more chaotic market, a profound paradox is emerging at the heart of business strategy. Information – that touchstone of understanding, decision and action – has begun to attack confidence, competitive advantage and growth.

The speed, precision and potential for innovation that the digital revolution has conferred on business is undeniable. And yet we have never felt more distant from the consumer, never felt less sure of what to do next, never felt less confident about the dynamics of the context in which we live and work.

Beneath this brutal conundrum lie disturbing truths about culture, technology and value. Where leadership has relied upon tangible, manageable evidence to guide the enterprise through change to sustainable growth, the chronic turbulence that defines every major market sector demands that we now look to seize advantage from uncertainty itself.

The liquid enterprise throws down the gauntlet to the leaders of tomorrow. It provides a radical rethink of how the new Network Dynamics drive markets, the implications for enterprise and brand, and how we must overturn the principles of traditional business strategy in order to survive and thrive in the unforgiving, chaotic environment that is the market.

Endorsements

The Liquid Enterprise is the first work to take an unflinching look at the unenviable job of transformation leadership, through the eyes of the leader. Taking us far beyond the usual digital platitudes, Michael Bayler once again challenges his readers to discard everything they know, in exchange for an entirely fresh view of strategy that, finally, is fit for today’s and tomorrow’s purpose. - Richard Mosley, Global Vice President of Strategy, Universum, author of Employer Brand Management

Everyone’s talking about change and disruption, but no one seems to have the instructions. Until now. The Liquid Enterpriseexplains exactly what we’ve all been worrying about, why that is, and how to rethink business strategy for a future that demands we constantly transform – or die. - Brian Wong, Founder and CEO, Kiip

The Liquid Enterprise squares up to a Gordian Knot that is the single most important problem facing big businesses today – how to convert the chronic uncertainty that undermines our confidence in the future into our most powerful strategic weapon. Michael Bayler slices through that knot with simplicity, brevity and wit. - Tony Ageh, OBE, BBC Controller

We need a completely new set of rules to navigate such a turbulent world. This easily digested book shows the way. Read, ponder and decide for yourself just how much of our classical management theory is still relevant. - Dr William Webb, CEO Weightless SIG, President of the Institution of Engineering and Technology, 2014–2015

Download Liquid Enterprise taster

Adblocking ... just one symptom of something far bigger

One advantage of being, well, a man of a certain age, is that one has a sense of the trajectory of recent history.

My first serious job was as an assistant at a suburban branch of Our Price records. At the time, even the most corporate of record shop chains were temples of cool. And this is where I began a career in music that carried across some 12 years. Happy days. 

A little logo began appearing on the backs of album covers (CD's took another few years to land) around 1980. "Home Taping Is Killing Music (And It's Illegal)" it said.

This was absurd. The sheer time and effort involved in lovingly compiling cassettes of mixtapes - analogue playlists, early social profiles, if you like - made it an infrequent endeavour undertaken only by the rabid fan or lovestruck swain.

There was no evidence - nor is there today - that anyone suffered more than the noble curator themselves in the practice of this dark art.

But this "sledgehammer to crack a nut" response to what was largely an imagined offence, was also a sign that, after decades of delightful decadence, the music industry was falling under the influence of its new masters ... the lawyers. It had swung decisively from being a giant creative cottage industry to being a machine for - increasingly aggressive - copyright protection.

From open innovation, we could say in today's terms, to closed and hostile patenting.

Ironically, as the music business picks itself up after 20 years of battering by a ruthless information economy, those same dedicated curators would be pursued and lionised by not only the music business, but by the stars themselves. There's nothing more enticing, in these flaky times, than a passionate and influential tastemaker.

And then there was Napster. The love-in bubble burst, and all the majors began trying to sue consumers for piracy. This was as we now know a comprehensive commercial and PR disaster for Big Music.

But what was less easy to take - especially as a former insider of the business - was the whining, hand-wringing and finger-pointing that accompanied all this highly vexatious litigation. This was "Home Taping Is Killing Music" for the big screen. And it was craven nonsense, a tacky costume change from a cackling Scrooge to a cowering Uriah Heep. 

"But look at what you're doing!" "You're hitting your favourite artists where it hurts!" "We can't continue to sign great talent if you continue to cripple the business like this."

This was utter nonsense. And it was embarrassing too.

At the time, and indeed up until 2005, which disc sales peaked and began their steep decline, manufactured music and video too were riding the CD wave all the way to the bank. And the record companies were squeezing buyers for every dollar they could. CD prices were almost criminally high - this was far worse in the UK than the US, by the way.

Many, many suits were also fought by the artists who could afford it, to achieve a fairer share of the royalties that were being hoovered up by the labels.

Alongside this two-sided daylight robbery, not just the artistes (as is their right) but the record companies themselves, flushed with their apparently endless CD rights windfall, rode around in limos, flew first class, and continued to party like it was 1999.

There were of course exceptions. Many are still happily in business today, by the way. Martin Mills of Beggars Banquet doesn't do limos, continues to thrive through good and bad times, and partners with many of our most beloved and enduring talents. And, by the way, they love him.

And who can forget Geoff Travis's 80's dream of a socialist record company collective. That was - and still is - the glorious Rough Trade. Today, probably the best record shops in the world.

Coming back to today, the current flood of concern and dispute about the now-ubiquitous adblocking is showing signs of echoing music's crisis. "Adblocking Is Killing Content!" Or along those sort of lines.

The discourse here is nearly all about lost commercial and consumer value. I recall several years ago - I do hope to his eternal shame - a senior CNN executive seriously and loudly claiming at a high-profile industry event that ad-skipping (a la Tivo et al) is copyright theft.

But this type of "theft" began, if not before, then certainly with the TV remote. The ability of the technology-empowered media consumer (or audience, or indeed citizen) to switch off what they don't wish to see is part and parcel of the modern world.

The debate about relative value will not, in the end, get us anywhere. To suggest that the solution to adblocking is, well, better ads is to miss the point. While not in any fashion denying the power and value of great creative work, it's sadly the wrong tool for the job. To remind music consumers that by illegal file sharing they are - immediately or eventually - thereby missing out on "great content" is also not a valid argument.

And let's not even begin to dream that this is another chapter of the better targeting motif.

Some years ago I was advising a group of the major movie studios' home entertainment divisions on the impacts and implications of digital. What become starkly clear was this ... If only piracy was the most serious problem they had to face. In fact the worst threat to these giants of entertainment was not high profile issues such as the Netflix effect and the increasing truncation of the hallowed release window.

It was, and still is, Facebook, a media environment where consumers could happily mess about sharing their own stories and lives, with nary a movie, an album or, more importantly, a rights exploitation opportunity, in sight. Social media is surely, if nothing else, a savage drain on monetisable attention.

The lens of value will continue to be placed over the adblocking conundrum. But alongside that, if we fail to take into account the radical shift in media power to the audience that digital media has conferred on every stakeholder at the table, we're missing the biggest point of all. 

The file sharing revolution was not, in fact, about fair value. It was, we could say, about unfair power. 

Let's not forget one of the biggest scandals to hit a major media conglomerate in recent years, the Sony root-kit fiasco. The company, as you may recall, was caught covertly installing spyware on any user's PC, using audio and video CD's as vehicles. That speaks of a business model forced into playing dirty in order to regain a power that had already been lost.

Adblocking, no matter how distasteful the players and the practices may currently be, will not go away. In order to find viable commercial solutions, we need to dig deeper, to uncover and accept the real drivers of this unfortunate, but entirely predictable and inevitable, cultural shift.

With a glance back again at the Napster uproar, perhaps we might say that adblocking is the darker instrumental flipside of the unfettered consumer targeting we've been focusing on so hard.

Are consumers, now, targeting brands?

Will data kill the consumer brand?

Barbarians in the kitchen

It’s a surprise, and something of a concern, that consumer brands are not more publicly focused on the significant potential impacts of automated shopping and replenishment offerings such as Amazon’s Dash and Echo.

Such services surely signal a determined home invasion, only the first of no doubt many forays into the home territory of our most well-known heritage products.

Already under unrelenting pressure from powerful retailers and, more recently, empowered consumers, not to mention an economic austerity that will not lighten in the foreseeable future, how should a household staple respond to this latest wave of disruptive, data-enabled friendly fire?

The received wisdom is that the present and foreseeable health of consumer brand marketing will be defined and driven by the sophisticated use of data.

And yet, despite the sharply increasing range and depth of data available to practitioners, alongside a lively scrum of martech and adtech service providers, we are if anything more distant from a meaningful connection with consumers than ever.

Down to the crossroads

Should we sit tight and wait for the answer to emerge, or do we challenge the current assumptions and seek alternative approaches? Whatever our choice regarding the former, the velocity of change in market and the ongoing feeling of uncertainty surely demand a regular and rigorous health check.

Are the heavy expectations that lie on digital marketing, advertising and data justified? Or does the way we think about the future of the consumer brand need a radical rethink?

Here I’ll argue for the latter. Having worked in digital media, marketing and advertising for a quarter of a century, and advised leading players on both demand and supply sides, I’ve come to see that a reliance on the current and envisioned applications of digital and data could lead to a severe crisis, at least in their current manifestations, for many of the world’s most familiar and successful consumer packaged goods.

I’m relieved to report that this current challenge is not, necessarily, the end of the road for FMCG. It’s potentially the beginning of a new chapter, one that will demand, alongside a continuing focus on new technologies and ever-richer and more comprehensive forms of data, degrees of bold invention that have not been seen in brand advertising since the golden days of Madison Avenue.

A Game of Thrones

It’s easy to overlook why we have brands, and why they have been so important in both culture and commerce.

Branding was invented in the late 19^th century in the United States by manufacturers of consumer goods. They had become frustrated by the increasing dominance of the wholesalers that controlled, through an effective monopoly of railways and warehousing, the national and regional distribution channels.

The evolution of the retail chains from the middle of the last century, first in the US, then across much of the developed world, extended the field. The power that chains such as Wal-Mart, Target, Tesco and Carrefour have over everyday household brands continues, as is well-documented elsewhere, continues to both expand and to change.

Branding, therefore, has always been about power before value.

Advertising, the undisputed driver of the media landscape of the past 75 years, introduced a new combatant in this unfolding Game of Thrones. Ads are, we tend to forget, information provided to an audience to co-opt them to the cause of the brand. And in doing so, choice enters the picture. And with choice, come the first incremental, then rapid and explosive, empowerment of shopper and consumer.

The great copywriters of the mid-20^th century could never have anticipated the rise of this ruthless connected consumer.

And so we arrive, today, at a kind of pincer movement, with the retailer – on- and offline – and the shopper, equipped to push the beleaguered brand around, with powerful weapons of mass commoditization. At the heart of this brutal new system, of course, lies the data.

There’s no need to go into further detail. The state of play in our Game of Thrones finds consumer brands at a severe disadvantage. The mistake, however, is to assume without close examination that, if digital technologies plus data are the problem, then they must therefore be the entire solution.

Marketing vs. advertising

One little-discussed effect of the digital revolution has been to enmesh the previously separate disciplines of marketing and advertising. Understandable, especially when many of us have concluded, often tacitly, that if it’s all about the data, then we’re really just using different information at different points along the purchase funnel.

I think this has led to important misconceptions, and have found it useful to re-separate them using value as the distinction. We could say that marketing’s primarily about the articulation of value, and advertising’s about its communication.

The discrete roles of data come immediately into focus. Whether used for research, validation of ROI, integration into smarter product and services, prediction and so on, we can’t question that data has been and remains front and centre in intelligent modern marketing.

Furthermore, despite its frequent misfires and continuing disappointments, and while not being the driver of transformation that we once hoped, CRM’s ongoing journey remains at least valid. We should note in passing however that CRM is often partially siloed in customer service. Of which more later.

It’s data’s role in advertising that seems less sturdy.

The vocabulary of digital advertising merits inspection. In particular, the word “relevance” is a daily touchstone of value that should concern us. While a product or service must, from a marketing point of view, resonate with current or anticipated consumer need or desire, surely the task of advertising is not to simply reflect back to our audience all the data we currently hold on them (like an ecommerce recommendation: “If you bought this you might like that”).

To the contrary, advertising’s job is, by blending creative alchemy and astute planning and buying, to convert initial indifference to some level of consideration. We are, we could say, in the very business of irrelevance.

Stephen King, after close to 50 years, still says it best. “How to measure advertising and its effect is not terribly hard if you work out in advance what sort of response you are trying to get, because the basic question then is: Are we getting that response?”

If equity, at its most commercial, is a disposition to prefer our brand over others, and to pay a reasonable premium for it, we must surely concede that, with honourable exceptions, significant ground is being lost to the ubiquitous yellow discount label in the store, and in-basket substitutions and one-click price comparison services online.

While not doubting for a second that media planning and buying should and will continue to be ruthlessly informed and optimised – the programmatic explosion says it all – nevertheless, the magic data bullet that that will rescue the household brand from the Game of Thrones remains elusive.

Efficiency vs. growth

Leading marketers are waking up to a stark realisation. Having spent up to 5 years investing in large programmes of digital transformation that were envisioned as bold steps into the future, they have, instead, become mired in the past.

These initiatives are not, in the main, transformations or innovations. They are programmes of incremental improvement. Efficiency projects. We become, well, smarter, faster and cheaper at doing the things we needed to be better at doing five years ago.

Notoriously, efficiency projects in themselves deliver no business value beyond cost savings. Putting aside the common estimate that 70% of corporate change projects fail, in sharp contrast to even 5 years ago, the sheer accelerations that life and business on the network have conferred on the market mean that we no longer have the luxury of “semi-optional” change gambles.

Life does not go on outside. It rushes past us.

Here, perhaps, a throwaway (and typically cryptic) line from McLuhan’s 1964 masterpiece Understanding Media comes back to haunt us. “The paradox of mechanization is that although it is itself the cause of maximal growth and change, the principle of mechanization excludes the very possibility of growth or the understanding of change.”

Our transformation programmes must not be mistaken for a result. Being digital is simply to arrive, often a little late, at Basecamp One. The mountain of tough competition remains entirely unclimbed.

Having focused, arguably to our detriment, exclusively on the science, we now need to swing back rapidly to the art. It’s creative growth, departing from our platforms of digital efficiency, that demands urgent focus.

Product vs. service

A friend and colleague, one of the country’s foremost engineers, when we were discussing the impact of automated services on consumer products recently, made an observation that must be noted. “But won’t these brands soon enough be selling themselves not to consumers, but to the machines that serve them?”

Indeed. What happens to the intangible and perceived value created by huge investment, over multiple decades, in advertising – with or without the data – when the shopper is, in any sense that we’d recognise, no longer the shopper at all? This is far from a dystopian vision. One way or another, home automation is a reality.

And yes, the data we currently collect and look to for advantage will go on to play a central role in this new episode in our Game of Thrones.

But this will be about services. Amazon, in fact, is best viewed no longer as a retailer, but as an increasingly must-have service provider: this is the logic behind the – for now still reassuringly feature-light – Dash and Echo programmes. The former offers replenishment services for participating brands via either its recently launched one-tap stick-on sensors, or its rather magical Wand.

The latter doubles as a speaker for various audio channels and – far more compelling – a voice-activated home control tool. “Alexa? I’m nearly out of mayonnaise. Get me anything on special offer – over 50% discount – to arrive … oh … Thursday evening. The same size as before.”

We get the picture. The unmediated interaction that consumers and product brands have maintained for so long, is interrupted by a layer that anonymises both sides of the transaction and the relationship.

The fundamental logic here is that quality of service, in the end, always trumps quality of product. We’ve seen this repeatedly in marketing, and of course the digital revolution has accelerated the timelines between comfortable, bankable brand equity and also-ran commodity.

The stark realisation that follows, if we accept this logic and the trajectory we’re seeing so far, is that no matter how we may juggle and refine our marketing communications on behalf of the product brand, we can’t defend against the service players.

A way forward

We are close to marketing heresy here, of course. But looking around at the wholesale disruption we face across all sectors that are exposed to the destructive power of unfettered information, it’s hard, when we’re honest, to imagine that our product brands are somehow immune. To imagine that a data-led communications strategy will provide a sustainable defensive halo, is to ignore what’s right in front of us.

Will data kill the consumer brand? Well, not exactly, despite the clear and present dangers outlined here. It’s branded products that are under immediate threat.

Branded services – initially built around existing products, naturally, but rapidly evolving to create radical, ownable new forms of consumer value – are where logic demands we seek opportunity.

The question that remains is whether brand owners are realistically equipped to take this on at all, in terms of the longer game. Point services, based around a single product or category, will soon enough be subsumed, for the same reason that most branded smartphone apps fail.

Nevertheless, with improved focus and urgency in our various Connected Home programmes, we will uncover innovative, perhaps transformative service models of our own. Multi-category FMCG brand owners hold a particular advantage here, as to stand a chance of remaining, well, relevant in this bleak future context will require offerings that are integrated right across the home, indeed reaching beyond it.

This is not simply a challenge of technology, not indeed of marketing or advertising. I believe it represents, the single most urgent form of transformation that consumer brands should undertake, in order to sustain a useful and valued role in both culture and commerce.

What does Amazon's home invasion mean for brands?

I'm surprised that, apart from the usual sporadic social fizz, Amazon's Dash (+ Wand) and more recent Echo services are not causing household brand directors to roll around on the floor foaming at the mouth. And not in a good way.

Do you see what I see?

The old Game of Thrones between brand, retailer and more recently consumer has played out over more or less a century. And as connectedness and data have arrived front and centre of this benign, bloody war.

Household brands are caught in a nasty pincer movement.

Ruthless retailer on one side, squeezing ever-harder on name brand equity with unavoidable in-store promotion, own-brand competition and - let's face it - a control of key shopper data that is more or less comprehensive.

And connected consumer, only ever a swipe away from the best price. Not to mention the new basket aggregators like MySupermarket.com, stripping away value from everyone, except of course, the shopper.

It's well-established that the traditional split between shopper - going to the shops, in one way or another, and consumer - connecting with the brand in the context of use, typically the home - is disappearing. Douglas Rushkoff has written most coherently about the underlying drivers of this shift in his recent book Present Shock.

As we know, name brands have been trying to push back into the retail space to regain a sliver of power behind the battle lines.

And till recently, the home has been a sort of sanctuary for the beleaguered household brand. Until, at least, the time comes for replenishment. And isn't it replenishment that FMCG marketing is all about? Who'd build a brand that was bought once on a promotion, then only bought again when the dreaded yellow label - the new uber-brand that all value-conscious shoppers - catches the eye to offer 50% off, 2 for 1, or whatever.

Well, that's pretty much where we find ourselves today. And while Amazon's home invasion, with opening salvos like Dash and Echo, may not seem like game over, there's a lot more where that came from.

My friend and colleague Professor William Webb, of Weightless SIG and the IET, made a startling observation recently that stays with me. William is a leading engineer, and as far from being a marketer as you could possibly get.

But when he and I were earlier this year discussing the potential impact of the IoT (Weightless is a leading open standard for object communication, by the way) on the home and in particular on the household brand, he innocently dropped something of a brand grenade on me.

And it merits serious reflection.

"I don't know much about marketing as you know, but surely we're looking at a time not too far away, when most of these brands will be trying to sell themselves directly to intelligent home devices?"

Only an engineer would dare to think, let alone say, such a thing. When irresistible and affordable consumer services become the buyers of commodity household goods - buying them surely on the basis os anything BUT brand - we envision an extraordinary return to a world where brand, advertising, and anything more than the most functional and rudimentary marketing, had no role to play.

A time, in fact, before the Game of Thrones that is household brand marketing and retailing had even begun.

Those of us who care about and value brands need to pay much closer attention. Most consumers are not as sentimental as we may be ... and the machines are getting smarter - and talking among themselves more - every day.

I'm afraid that, while advertising still has a key role to play here, so-called "digital transformation" will not answer this challenge. Retailer and consumers have already reached an unassailable point of power in terms of taking and holding advantage from data. And digital marketing, while the science continues to evolve apace, still lacks the sheer creativity - the art - to win a war where persuasion is no longer in play.

Until we can find alternative angles, it seems to me that these vulnerable brand giants urgently need to accelerate their service innovation programmes. The current Connected Homes projects are generally insufficient in both speed and scope to either outthink or outrun broader, deeper, smarter and above all, more integrated home automation technologies.

Service beats product, more or less every time.

Without an abrupt change in gear, we may soon enough see a dramatic drop, outside emerging markets, at least temporarily, in the potency and presence of many of the world's largest brands.

Food, we could say, for thought.

Revising the language of experience marketing

WHERE'S THE BEEF?

It's now a brand marketing truism that customer experience is key.

But is experience marketing in fact, when we look closer, a tautology, a self-evident truth that tells us about nothing more than itself?

Beyond the obvious imperative of actively avoiding poor brand encounters, and appreciating that service expectations are being driven up every day, what are the meaningful brand benefits of prioritising investment in better customer experience?

How often - or rather how very rarely - do we in fact succeed in making the great leap from "Meh ..." to "Wow!"?

And if it's so self-evident that experience is "a good thing", why do we continue to struggle to put a satisfactory value on it?

Let's dig a little into these questions and see where we end up.

RELEVANCE?

A brand's CX journey typically begins with enabling and delivering customised and / or personalised content, manifesting on website, emails, apps, ecommerce purchases, and let's not forget direct mail.

We evolve from this point, over time and naturally, to focus on context. This moves us to incorporate information about, for example, adjacent media, time and place, a user's social media actions, and so on.

One of the most commonly declared goals here is relevance. And this nebulous concept continues to be held up as a primary KPI, even if, of course, its evaluation and measurement remain elusive.

Who wouldn't choose to be less irrelevant? Again, it's more or less tautological that relevance is an essential quality of any brand encounter. Or is it?

I'm not sure I buy this, at least not without a struggle.

If we focus on outbound brand communications, relevance feels like where you get to when you take media planning to its logical, and in fact not all that exciting conclusion. Do we end up at a point where every piece of communications see is, more or less, about me?

It seems that what we're really talking about here is not so much about delivered value, more about "minimal waste" ... waste of both brand media budget and, that most precious of current commodities, consumer attention.

My challenge, at its root, is this. While relevance is, it seems, central to information-enabled service, the notion of a marketing message or any other kind of brand-driven customer encounter being proportionately more valuable by being "more relevant" to the recipient, i.e. in some way more granular in its focus, is far from convincing.

To place too much emphasis on relevance as a driver of brand communications is to claim that you need hot water to make good coffee. True, but not a useful addition to the argument.

ENGAGEMENT?

Let's turn our attention to engagement.

It's a little like art, in that we can't seem to define it (or still, annoyingly, put a commercial value on it), but we sure know it when we see it.

If a respectable definition is best derived from the current usage of a word, there are in fact two forms of engagement, one for media and one for brands.

Engagement for media is, at its most basic, a flip from quantity of impression to quality of encounter. It's a "retro-metric", which typically describes a combination of consumer time spent vs depth of attention allocated. This is about an encounter that happened in the past.

Where attention, as so often now, is splintered ­- TV on in the corner, kids supposedly on a laptop doing their homework but in fact updating their Facebook page, while texting friends about something that relates to none of the above ­- this is quite useful. Did we get (will we get) the attention we thought we'd get from a campaign or tactic therein?

But when a brand briefs its agency for engagement, it's asking for more than just consumer attention, or even depth thereof. Engagement for a brand usually implies a "two-way" connection with the consumer, also one that extends beyond the actual communication.

Engagement for brands is best viewed as a future-­focused measure of consumer predisposition to participate in contact and communication with brands. When I'm truly engaged with a brand - and let's face it, that's rare today - I'm receptive to further communications, further encounters.

Looked at this way, degrees of brand engagement are, in fact, degrees of intimacy. 

INTIMACY?

Intimacy speaks of a relative warmth of attitude, an attitude of trust, a shared or partially­-shared set of cultural references, and above all, in terms of this discussion, a willingness to, at some future time, prioritise attention paid to the person, object or idea (or brand) in question, above the myriad demands of others. 

Intimacy, in other words, is about a quality of brand><consumer connection that has some continuity to it. This is not, I believe, impacted by relevance, or perhaps only in a negative sense, so far as utter irrelevance - frequently achieved in spades, paradoxically, by some of the most efficiently targeting messaging - is bound to fragment any kind of intimacy.

Relevance, in any kind of direct brand communication with a customer, is table stakes. Engagement is an outcome that is best viewed in terms of a future predisposition of that customer to accept future encounters with the brand. This, in turn, is expressed and ultimately measured I hope, in relative degrees of intimacy.

RECOGNITION?

There's one more step we need to take in correcting the terms of experience marketing, and hopefully equipping us to build more confidently and intelligently going forwards.

What we really appreciate, and continue to value highly in communications from any brand in any medium, is recognition. This manifests as a relatively powerful shared, and above all, meaningfully personal encounter between brand and customer.

It's a two-way phenomenon. The brand sees me, and I see myself in the brand.

SO THIS MEANS?

Many of our most skilled experience strategists and designers emerged from ecommerce, where their impact - on both basket value and, to perhaps a lesser degree these days, brand equity - has been undeniable.

However, these skills, while in themselves critical to the hygiene elements of online experience, rarely provide the value that transforms the way we perceive a brand.

Recognition, in these demanding times, constitutes far more than a "Welcome back, Michael" from a database, a slick journey to execute my purpose, with a cluster of relevant offers cheering, or at least whispering, from the sidelines.

The paradox of brand experience is that it never, in fact, belongs to an individual brand.

It's a very slim sliver of the much larger pizza that is the connected, powerful and rather cranky consumer's experience of everything they touch.

Including, most importantly, their experience of being themselves.

 

 

 

 

Out Of Home advertising is ready for primetime ... if it steers the right course

MUSIC LESSONS

That unique, powerful cultural layer called music was sideswiped some 20 years ago by the ruthless velocity of the network, and - no matter whose fault it was in the end - its commercial value was crushed, and the business was slammed down to a fraction of its previous majesty and swagger.

While the cultural reach and depth of music itself remains, well, robust, the industry is unlikely ever to recover. I know this from up-close personal experience: my own career began in music, and I'll never forget the feeling of it.

The record shops I started out working in as a clerk, and eventually a buyer - now rarely seen at all - were temples of culture and of cool. Vinyl - the touch and smell of it; the size and physical presence of an album; the sense of profound personal discovery upon dropping the needle onto a record; the way a perfect pop song would weave its way into an entire summer.

This was Meaning of the highest order. And while the ghosts of that period still lurk around us, and once in a while step forward to remind us of exactly why, and just how much, music matters to us in a way that nothing else can touch, the wonder of music itself, along with its industry, will never be the same.

We recapture the magic, most obviously, in a live performance. There's a reason why concerts and festivals resurged so visibly over the past 10 years: we're now spoiled for choice.

But what happened to recorded music? If I could, I'd write a book about it. Because that's what it needs and deserves. Maybe later.

For now, and for the purposes of this argument, I think all we need to understand is that when the network hit music, it became ... Content. It became, as the word itself suggests, "contained", boxed in and commoditised, in a way than records and CD's, with all their perfect packaging, never did.

Music became a file, an MP3 or whatever. Online music distributors - and let's not make the mistake of claiming that they don't create entirely new, significant forms of value - are today a kind of Ikea experience. If you want to know where the new temples of culture and cool are ... just pop into an Apple Store.

As OOH goes digital, with an eye-watering investment in new infrastructure, and as its owners seek to realise the revenues and profits that this bold step forward demands, there are important lessons about culture, about meaning, and above all, about value, that can be learned from the recent history of the music industry, as it has battled to get off the back foot onto which digital has so abruptly shoved it.

THE MAGIC OF OUT OF HOME

I believe that OOH, done right, is advertising at its most pure and punchy. At its courageous, unashamedly interruptive, impactful best.

We have, for a moment or two, sometimes a few minutes, access to the richest and most exclusive attention of our audience. We have an expansive canvas on which to paint fresh, simple stories that refresh and reframe not just the way our audience perceives a product, but the way they experience a space, a period of time, a journey or a delay.

Stories have to be told, until very recently without recourse to either video or audio, using a few words and a single picture. The work needs to sell with either a momentary glance, or with a minute of two of fixed attention. The response is binary, a mental "yes" or "no" ... I get it. Or I don't.

The value exchange between advertisement and audience in OOH is unique. Think - or if you have time, please read - about the history of Jean-Claude Decaux's vision, and the innovative passion that still drives the JCD business.

I had the good fortune to dine with one of the founder's sons, Jean-Francois, now the Co-CEO of JCD, at the FEPE Congress in Budapest recently. This is, it seems to me, a media business built on relentlessly balancing and delivering value for not just brand and media owner, but equally for citizen and consumer. Utility of quality street furniture is combined with slick, attractive and entertaining creative.

This is advertising with an active, meaningful role to play: not merely in commerce, but also in culture and society.

In other words, JC Decaux, surely the most recognised brand in OOH in Europe, is an enterprise with a clear and unusual degree of purpose. And they're far from the only ones.

THE FORK IN THE ROAD TO GROWTH

The overall OOH share of brand advertising is growing. I'm not sure of the exact figures, but while OOH has languished at round 4-5% of global spend till recently, it's pushing steadily towards double figures. I believe the industry's target of 10% share can realistically be achieved by around 2020.

Naturally, the impact of digital on OOH's ambitions and fortunes is strategically significant and fundamental. From the point of view of both efficiency and creativity, we can all see the effects everywhere we look.

Clients - brands and their agencies - are clearly reassured by the new capabilities DOOH affords. Superior campaign scale and integration, the unquestionable impacts of quality video and audio, unprecedented volume and sophistication of data for planning and buying. We'll see the degree to which an integration with the programmatic which now drives so much online advertising is achievable - it's not as simple as we'd imagine.

And of course ... ROI. Like everyone else in advertising, OOH is struggling to push out from under the heel of evidence of provable campaign value. On the brand side, procurement rules the roost. 

And here's where I have a genuine concern.

In focusing all of its investment and its discourse on the value of digital, I suspect that OOH could fall into a trap that catches so many of the industries that are exposed to the often-destructive power of the data.

Measurement is not to be mistaken for value. Just as the number of downloads of an MP3 (legal or otherwise) tells only a fraction of the story of the power of a song, so in OOH to double down on digital and expect it to drive long term growth is to miss the brutal reality of business on the network.

I'm not sure how OOH impressions are typically evaluated. But I'm pretty sure that, the magic I talked about earlier notwithstanding, even the most astonishing OOH work punches well below its weight. The definition of an accountant as someone who knows the price of everything and the value of nothing comes to mind here.

The data is only a part of the solution. The unmatched creative canvas that OOH affords its clients is in danger of being obscured, even sidelined by an entirely appropriate rush to digital.

THE WAY FORWARD

While the boot heel of aggressive measurement will remain a central problem for advertising for the foreseeable future, I know from direct professional experience that the global brands with whom I've worked for over 10 years on strategic programmes of digital marketing transformation, are already realising that the efficiency that digital offers can become an internally focused block to creativity, and thus to growth.

No one else is going to confer on Out Of Home advertising the value it deserves, and must demand from brands and the agencies that represent them, if the promise of sustainable industry growth is to be delivered. While digital transformation has the potential to get an practitioner, whatever the sector, off the back foot, it's the unique cultural and commercial impact of OOH that needs attention.

Digital is critical. Now and for the immediate future. But it's not the destination. It's the new departure point. The new journey of OOH, I believe, runs through Digitally-Driven Efficiency ... to Creatively-Driven Growth.

 

 

 

 

 

What Does Digital Transformation Really Mean?

DIGITAL IS ... AN ADJECTIVE

… which is why the question "What Is Digital" so often leads nowhere. We need to get some nouns into the discourse! 

Here we focus on understanding digital transformation through the complementary lenses of digital culture and digital business. 

Having set the scene, we move on to the overall strategic imperatives of every enterprise transformation. We then map the three sequential stages of transformation that summarise the enterprise journey.

Simply put, the question we’re asking here is “What problem are we solving for the enterprise?”

REFRAMING THE CHALLENGE

Digital Culture

Digital culture is not, at its roots, about networks and smartphones. It’s a societal condition, now effectively global, that is driven by the systemic and technologically-enabled shift of power from institutions and corporations to individuals and groups.

It began, and continues to evolve, along the narrative of the ongoing Consumerisation of Technology, a quite recent phenomenon that was born in the 1980’s, at the intersection of the PC revolution and early forms of interactive entertainment technology such as the karaoke machine and the (analogue) video game.

The key dynamic here is that of the increasing agency of the individual: there’s a direct line between these origins in so-called “multimedia”, and today’s empowered, connected consumer.

Digital Business

Digital business is not best understood merely in terms of software, networks and devices: these are of course key enabling components.

It’s the impacts of these ever-changing technologies that matter: this is above all about meeting the challenge of the consistent acceleration of market clock speed, which has been set in motion (in digital culture) by the migration of billions of end consumers onto global networks.

It’s this radical shift in the locus of value onto networks that has seeded and enabled the unprecedented growth of the most powerful and disruptive brands in history.

When we talk about “the Uber effect” (whether as threat, opportunity or both) we are, consciously or otherwise, referring to explosions of disruptive market power through network value innovation.

This is driven, above all, by Network Velocity.

Digital Transformation

Digital culture and business combine to frame the essential strategic context for transformation. This is about a programme of change to reconnect the enterprise with the market, and align its functions around the end customer.

For the C-suite, there are three “prime” transformation imperatives:

• Acceleration – the paramount challenge is a managed shift from corporate, then to customer, then to network speed;
• Adaptation – the ability of the entire enterprise to flex and react quickly (at micro and macro levels) to opportunity and threat;
• Automation – the systematic and focused encoding into software of any and all functions that are susceptible, increasing speed and quality, while reducing cost.

These three prime activities combine to define the boundaries of any truly strategic digital transformation programme.

GETTING TRANSFORMATION WRONG

Two common misconceptions tend to block the enterprise from genuinely strategic transformation programmes, delay the instigation of productive work, and suck up important budgets.

It’s correct, to a degree, to focus on customer experience: this is not itself transformative, it’s at best incremental.

While UX/CX work is important, if made the core of a strategic programme, it diverts attention and spend from the deeper interventions while over-emphasising touch points and interfaces;

Equally common is a focus on data over value, linked to an assumption that information is the key to faster, more accurate end customer insights, and a deeper and more sustainable relationship.

Of course, this is an important consideration, but as with the interface problem does not in itself support a differentiated, meaningful brand><customer relationship.

THE TRUE JOURNEY OF TRANSFORMATION

It’s recommended for initial analysis and planning purposes to view digital transformation as travelling across three distinct and logical stages:

1. Efficiency – streamlining and cost-cutting in business processes, where most enterprises have focused to date, and many get stuck;
2. Integration – the reorganisation of enterprise products, people and processes (overall, its philosophy and culture) around the end customer (meaning the external market environment);
3. Migration – most challenging and disruptive, the shift in the enterprise’s model of value creation and distribution onto the network.

We immediately recognise that the most admired and highly-valued innovators – from Google, Facebook and Amazon, through to the ubiquitous Uber and AirBnB – have already jumped straight to the third stage: their models fully leverage network speed and scale.

They dominate in an entirely new, albeit recognisable, form of cultural and commercial power.

This is Network Agency. Network Agency is, above all, the prize towards which all enterprise programmes of digital transformation must, in the end, aspire.

 

Amazon Dash

The floodgates of NOCOMMERCE are opened by Amazon Dash ... this is important and highly disruptive. 

A look back at a book that still has a little bite to it ...

 

With thanks to the good folks at Salt Digital, here's the first of 3 short videos looking back at my work in digital strategy ... this one focuses on Promiscuous Customers: Invisible Brands, written in 2001 with dear friend and co-conspirator David Stoughton.

5 Unasked Questions About Digital Brand Marketing

Courtesy of my good friends at Digital Doughnut, a 30 minute talk from a recent Digital Leaders event challenging what I see as our most troublesome assumptions that currently inhibit intelligent progress for brand marketers.

We'll put the IoT into IDIoT (if we're not careful)

Who's NOT talking about the Internet of Things?

Who's NOT wondered how to get a piece of the sqillions of bucks that IoT will - and we know that one way or another it's true - generate.

And yet, as with so many techno-cultural shifts (this one's truly tectonic), few of us have a sense of, beyond the undoubtedly enormous IT and telco RFP's that are already starting to fly about, where the value will lie for a) businesses and b) their customers.

This is THE hot spot for IoT. We have to get beyond the bewildered - albeit polite - shrug of the CMO, and the unconvinced shrug of the connected consumer.

We have to know how making dumb objects smart will create fresh, sustainable customer value, and, in the end far more critically, how it will build brands.

I have to say that I wrote about this in great depth (and disccomfort: this was 14 years ago now) with my then-collaborator and long-time friend David Stoughton, in our still-robust manifesto for digital value, Promiscuous Customers: Invisible Brands; we called it "information-based service value" in the book.

The information's now a given of course. But the hunt is now on the elusive  value that configure-once, love-forever customer services will enable and sustain.

Some of us are (once again) thinking about this challenge in great detail. I'll be writing about it in the coming months.

A good - and far too long overdue - reboot to this old blog of mine. Labouring in the mines of agencyland had, as so often happened, dulled the edge of the remains of the brain.

No longer. Let's crack the IoT. It's where digital value REALLY takes off. And this is not, believe me, your mother's marketing.