The Strategy Review

The Intelligent Brand - Part Three

(The Intelligent Brand - Part Two is here.)

A revolution in intelligence

[…] an evolutionary turning point: one from a straight back-and-forth communications network to a new form of media … The Net began to resemble a complex and highly adaptive life form, with a personality composed of many different interests and motivations. With each new advance in technology and each new use that was found for the Net, the whole of the thing adapted and grew.

Andrew Zimmerman, Coopers and Lybrand Telecom and Media, 1997

A great leap forward

We’ve framed our changing environment in terms of three distinct but overlapping eras: Industrialism (up to say 1960), Late Industrialism (up to say 2000), and Informationalism (from say 2000 to today). We’re especially concerned with the period since data processing entered the picture, and after that, what changed since the emergence of the Web.

While we can usefully continue to use the term Informationalism to contrast with Industrialism, as our narrative evolves it becomes increasingly problematic to think in terms of today’s environment as The Information Age. Given that the new dynamics we need to grasp revolve far more around the dynamics of the Web, and given also that the central role of information in business predates the Web by, we could argue, well over a century, I believe it’s more accurate to think in terms of The Network Age.

An ideal commentator to help us here is the academic who has, over several decades, significantly advanced our understanding of how networks impact culture and commerce, Manuel Castells. He writes, with co-author Pekka Himanen in their 2014 book, Reconceptualizing Development in the Global Information Age, of:

... a new form of socio-techno-economic organization that became fully constituted on a global scale in the early twenty-first century. Informationalism did not replace capitalism. In fact, it powered a new form of capitalism now prevalent everywhere […] What characterizes informationalism is the widespread use of microelectronics-based digital information and communication technologies that allow the diffusion of networking forms of organization in all domains of economic and social life. It also powers information processing and digital communication, enabling the expansion of the knowledge base of the economy and of the information society. […] Networking is an essential component of informationalism. This is why the dominant social structure of our time can be characterised as a global networking society.

The role and value of information have steadily changed over centuries, accelerating sharply since the 1960s, right up to the emergence of our current Web. But we haven’t - and this in many ways is the heart of this work - yet appreciated just how very profoundly this paradigm has disrupted the rules of value creation. 

There’s been, only over the past ten to fifteen years, a discontinuous great leap forward whose radical impacts and implications - again, perhaps because most of us have lived and worked in the midst of this revolution - remain under-articulated and misunderstood. It’s no longer more and better, of more or less the same thing. It’s a new thing altogether.

Evolving intelligence

Core to coming to understand this is the way information has been captured and applied to evolve and expand intelligence for business. We can usefully think in terms of five phases, all but the last of which are more or less familiar and self-explanatory.

1. Product intelligence: how to design and build a mousetrap, then a better one;
2. Business intelligence: the accounting and logistics required when the market, and firms within it, professionalise;
3. Market intelligence: competitive insights and statistics that inform innovation, marketing and sales;
4. Customer intelligence: which came into vogue towards the tail of Late Industrialism giving rise, among other changes, to direct or database marketing;
5. Network intelligence: rising floods of information entirely redefine the new marketplace, defying Late Industrial efforts to make sense out of them.

One startling realisation here is that information, in its commercial role of enabling increasing types and amounts of intelligence for the market and the firms within it, has quietly shifted from primarily being about the business processes that create the value (i.e. in the Late Industrial model) to become about the value itself. 

We could say, more pithily, that information has moved from being previously about resources to now becoming a resource in its own right. It’s worth pausing to reflect on the significant implications of this change.

Think about the type of data processing work done by the world’s largest corporations using IBM’s revolutionary System/360. Now think of the sprawling server farms of today’s tech giants. The paradigm shifts from information being about the workings of the business, to just being the business.

In the Web age, information also, for the first time, becomes an empowering and enabling resource for customers, the implications of which we’ll explore further below. Every one of today’s smartphones exceeds the power and range of the room-sized monoliths of 50 years ago.

We had expected to be able to carry over the same concepts that emerged in the customer intelligence period - when information remained scarce, and thus both easy to manage and make sense of for competitive advantage - across to The Network Era. We can now begin to replace these misconceptions, with a model of thinking that reflects the extreme discontinuity of the Web, while combining the appealing merits of simplicity and sophistication.

Network Intelligence

A simple definition

Intelligence has many definitions, perhaps too many. For our current purposes, we’re concerned with what we can call the ‘functional intelligence’ that gets results.

While a person we might refer to as intelligent could be a scatty academic, a ruthless fraudster, or a precocious child, the aspect of intelligence that arguably matters most - not just in business but in the today’s world - is quite simply an ability to make sense of things to generate intentional outcomes that are beneficial. In this sense, intelligence and power are not far from each other.

When we speak of actionable information, we’re referring to an increase in our available intelligence: in fact, the actionability more or less entirely determines the value of information. 

We’re thinking of intelligence, therefore, in terms of the ability to find, articulate, and also to act upon, meaning.

When thus equipped, we are able - as a single person or a large corporation - to assess, to decide and to do what’s best. To further our own interests, and in some instances, those of others.

A road to clarity

Tracing the history of intelligence in business, its journey from the happy simplicity of the quest for a better mousetrap, through to the unimaginable complexity and velocity of today’s Web, offers an urgently needed sense-making lens through which we can, perhaps for the first time, fully grasp the nature and scale of the enormous shift we are experiencing. 

We’ve been hung up on the data, and looked to the data scientists to make sense of it for us. Understandable, but impractical. Our current hopes and expectations of Artificial Intelligence are underpinned - for now at least - by the same magical thinking.

We’ve turned to network theory and network scientists to help us understand the dynamics of the Web. They can tell us how and why networks grow, and how they’re made up of nodes and links. But they remain - as do we - in the foothills of articulating what makes the Web work.

The insight that matters - the one that gives leadership the picture on the box of the puzzle we’ve all been puzzling over - is how business intelligence itself has been transformed by the collision of billions of human lives and minds with a global network that now carries some 95% of all the world’s information. And in turn, how this impacts the daily experience and expectations of our customers. 

From there, the implications for how we structure business and its brands - to meet the newly empowered customer where they now live - begin to emerge. This informs the philosophy for our own transformation. We can also begin to frame what shapes and determines customer value from here on. Which helps us make more sure-footed, faster decisions about innovation.

A power shift

As we’d expect, business intelligence, in four of the five phases outlined above, has been applied exclusively to optimise outcomes for the corporation. And this happens - naturally, if not ideally - at the expense of what may be best for customers. But the rise of networked intelligence has already significantly tipped the balance the other way. 

Customers are now - in ways we may already fail to appreciate due to their ubiquity - well-equipped to work out and find what’s best for them. The new network intelligence that so informs and empowers has introduced reach, range and transparency that now directly affect all corporate concerns - from pricing right up to purpose.

The turning point we have reached is one where business can no longer just apply intelligence to get what it wants at the expense of what others - “people and planet” - want.

This line of thought points us, usefully, towards what will, as we’ll see below, prove to be the most desirable and mutually beneficial value-creating market behaviour of The Network Age - active collaboration and co-creation. Surely the most valuable of all commercial intelligence enables a brand to optimally serve a customer at the time and place - in the context - of current need.

Now that we are beginning to understand what we had failed to previously grasp, we are infinitely better equipped to step across the aisle and look at modern value through the skeptical eye of the modern customer.

How can the firm and the customer best apply network intelligence to balance and achieve what’s best for them both? As we’ll now see, there are already widespread behaviours that clearly point the way forward.

The Intelligent Brand - Part Two

(The Intelligent Brand - Part One is here.)

Think different

System/360 represents a sharp departure from concepts of the past in designing and building computers. [...] This is the beginning of a new generation - not only of computers - but of their application in business, science and government.

Thomas J. Watson, IBM, April 7th 1964

McLuhan has developed a theory that goes like this: The new technologies of the electronic age, notably television, radio, the telephone, and computers, make up a new environment. [...] They radically alter the entire way people use their five senses, the way they react to things, and therefore, their entire lives and the entire society. It doesn't matter what the content of a medium like TV is. 

Tom Wolfe, New York Herald Tribune, 1965

Signals from the 60s

In 1964, two very different events occurred that set the scene for the profound cultural and commercial changes with which we are still in the early stages of coming to terms. 

The rise of data

IBM - which had led business computing since the mid-50s - had made an enormous bet, an investment at the time of $5 billion, to develop the System/360, a revolutionary family of digital computing power, software and peripherals.

The 360 featured six mutually compatible computers and 40 peripherals that could work together. It also actively encouraged and rewarded external developers, anticipating how, in 1981, the company’s PC would kick start - while famously giving Microsoft the opportunity to supply and control DOS, the PC’s own operating system - the software industry that we now take for granted.

Rather than waiting weeks or months for information about the performance of the business, firms were, from here on, able to access increasingly sophisticated and actionable reports in closer and closer to real time, while the established silos between divisions and departments were simultaneously eroded.

The role and value of information about the business - and, over time, some information about the customer - were transformed by data processing and corporate networks during this period. So it was - and indeed still is - so easy to imagine as we plough through The Information Age, that if data is good, more data is even better, and that the global connection of the Internet would simply signal an acceleration into the same vision of the future.

The way information itself behaves and enables value for both business and customer has been fundamentally, yet very subtly, changed by the rapidly shifting context in which it lives and moves. As we’ll come to see, this subsequent networking of the world and all its data has come to demand of firms, not more of the same, but something completely different. 

Network effects

That same year, 1964, Marshall McLuhan, a Canadian former English professor, published Understanding Media, a far-reaching, often opaque, account of the impact of the new media technologies on human beings, their experience and behaviours in modernity. 

McLuhan was lionised by the corporate world, whose leadership, even over half a century ago, were already conscious that the world was running away with them. They were both excited and frightened by his lessons; just as much perhaps by his iconoclastic stance and calm refusal to be disturbed by their struggle to accept the implications of his manifesto.

While McLuhan’s thinking resonates through to today - not least his concept of the “global village” that the connected world creates - his central, most important and still bewildering contention was that “the medium is the message”. Though at the time his primary reference technologies were the television and telephone (with computing something of an aside) his meaning rewards close scrutiny today. 

To restate this argument for our current circumstances, it’s not the content of the Web that matters so much, as the impacts - some profound and obvious, others more subtle - of our very connectedness. This is an environment that carries not merely the comforting familiarity of scores of petabytes of data - it contains and reframes everything it touches. Most of all, it changes us in ways with which we have only just begun to come to terms.

In the light of our current obsession with information - the content of our networks that tends to preoccupy business - McLuhan refocuses us firmly back to the radically changing context for human life and business. We must beware of over-focusing on what flows across these new networks, and pay closer attention to what happens to our world, our lives, our work and our corporations, as a result of our being so completely networked.

To imagine that business can transformatively benefit from digitised information, while ignoring such profound shifts in the shape of our environment, is an entirely understandable yet serious error of thought, with significant inhibiting implications for leadership insight and decisioning.

We are led to re-examine the seismic disruptions that the emergence, in the 1990s, of the World Wide Web introduced. It’s crucial to our project that we pause to understand what was - and what was not - happening here, and when.

Three ages of information

When we cannot imagine what the future may bring, we cannot create markets today for unspecified goods and services in the future. Sometimes investments are made for which there is no future demand and sometimes businesses fail to invest even when there is a demand for their output in future.

Mervyn King, LSE, The End of Alchemy, 2017

Two ages of industrialism

We tend to think and speak of The Information Age as having conclusively arrived with the ubiquity of the World Wide Web. But as it turns out, this future is nothing if not very unevenly distributed. It’s useful here to think in terms of three distinct but overlapping eras. 

The Industrial Age was more or less entirely mechanical, and the overall paradigm changed little when electricity became commonly used from the late 19th century. It’s worth noting that the relationship between corporate management and business information also dates right back to that time.

Powerful innovations in that field - most famously perhaps, the punched-card tabulating machine, invented by Herman Hollerith (later to be a co-founder of IBM in 1911) for the US census of 1890 - were consistently introduced up to the middle of the last century.

In the years following World War Two, electronic computing rapidly entered the market, pioneered in its earliest days by the established powerful US office appliance firms. IBM launched its first electronic computer, the 701, in 1953, and took over the commercial computing market only a year later with the 650. In 1957 the Digital Equipment Corporation, DEC, was founded, and just two years later, IBM’s first transistorised computer, the 7000 series mainframe, was introduced.

The period from roughly 1960 to roughly 2000 spans what we can call the Late Industrial age. This was the era of data processing, where the industrial model of capitalism was extended and enhanced by computing, along with a degree of network penetration. The middle of this period was marked - and its progress dramatically accelerated - by the introduction, again by IBM, of the PC in 1981, and, in parallel, the emergence, further to the invention of ethernet, of the corporate network.

However, the core nature of value creation remained essentially the same. Systemic innovation took the form of incremental improvements. They were rarely, if ever, what we would today call truly “disruptive”.

Lagging the Web

It’s both startling to realise and hard to accept that we are today still in the surprisingly slow process of crossing the long bridge between this Late Industrial period and, heralded by the commercial arrival of the World Wide Web from 1995, the “real” Information Age.

With the arrival and ubiquity of global digital networks, the nature of life, work and trade are being reconfigured. Crucially, the nature, behaviour, role and value of information itself - not merely its massive and always-increasing volume and velocity - are profoundly altered in the Web environment. 

Most of the world’s largest corporations remain rooted, for the most part, at the tail end of the Late Industrial Age. Their digital transformation programmes have, certainly, added plenty of information- and network-enabled efficiencies to their still-industrially-based business models, but have not moved them to the other side of the bridge. 

How can we get our minds around what’s changed, and what matters about those changes?

The difference between these two worlds is hard to easily capture. However, at this early stage, we might ask ourselves why Amazon’s recommendations - with all the information the company holds on us, and despite its immense investments in data and data science - remain so stubbornly dumb, while Uber’s driver map - showing us the location and ETA of our ride - should feel so very smart? 

Is Amazon the mighty digital pioneer, in fact, an Industrial leviathan? And why are Uber’s apparently simple service add-ons still so riveting?

New context, new content

Not another channel

It may seem unnecessary to go back and reexamine the nature of the World Wide Web. In fact, we’re already so accustomed to living, working and trading online, that we miss what’s actually happening, like goldfish asked to explain the water and the bowl we live in.

The Web is a radically different kind of network. To think of it - as we started to in the late 90s - as ‘another channel’, created a mistaken mental model that still haunts us today.

Industrial era networks were linear and content-dependent. Simply put, when you launched a new product, you shipped it to retailers over road and rail channels, and you promoted it over media channels - primarily print and broadcast. 

These channels only went one way at a time: they were the opposite of interactive. They were also passive, we could say “intrinsically empty”, in the sense that, in the absence of trains, planes, automobiles, newspaper articles and advertisements, TV programmes and commercials … there was nothing happening.

However much traffic we sent hurtling down them, the overall dynamic was the same. They each carried a single type of traffic. And the content entirely defined them. Think of a road with no cars, a newspaper with no copy, a TV with nothing on.

To see today’s and tomorrow’s Web as merely a continuous increase - more channels for carrying more stuff - is a profound and critical category error.

Can we usefully think of, for example, YouTube - where so much of the world’s attention and media spend now reside - as just “a lot more channels and a lot more content”, much of which is user-generated? Of course we can’t. And that’s before we recall that it also happens to be the world’s second most-used search engine.

The Web is called “a web” for good reason. Online, when something happens anywhere, it happens everywhere. Just like a spider’s web, every single event creates a signal, a change, a shift. No matter how small or large, it’s this “active and alive” quality of the Web that differentiates it. 

And while the channels of the industrial era were populated and propelled almost entirely by commercial activity, the Web - whether we’re at any point in time providing goods and services and promoting them or not - contains the lives, behaviours and communications of billions of human beings. It’s busy out there! It never stops and it never stops growing. And this vibrant change is happening more, and faster, every day.

This is an entirely discontinuous shift into a radically new market model. We are tasked with understanding, creating and communicating correspondingly new forms of value, for customers whose shifting experiences and expectations are every bit as fluid and fast-moving as the Web itself. Without a shift in vision, we are trapped: transforming and innovating for a Late Industrial marketplace and customer, both of which are slipping rapidly into the past.

Not the new oil

McLuhan urged his bewildered audience of 1960s business leaders to appreciate that the impact of the changing content of media cannot be confused with the changing context. 

Now we understand just how very different this new context of the Web is from the industrial channels that preceded it, we can turn our attention to its content: the surging tide of infinite varieties of information that it carries.

Just as we had framed the impact of broadcast television as being based purely on its programming and the commercials that funded it, we have tended, as we balance uncomfortably between Late Industrialism and the true Information Age, to assume that for business, the Web is all about the data.

While the television programmes, advertisements, trucks and trailers of Industrialism certainly all carry their own intrinsic kinds of value, the popular metaphor of data as “the new oil” is a second category error, one that compromises our thinking and our priorities as we face up to the complexities of digital transformation and innovation.

In a sense, we know we’re in trouble as soon as we recall the Industrial origins of this idea. And yet, while oil - assuming of course that we wish, for now, to use hydrocarbons as a source for energy - arrives with intrinsic value built in, the same is categorically not true of data. 

When we compare data to oil, we’re tacitly promoting and reinforcing the idea that it behaves like the traditional natural and human resources that Industrial corporations captured and acted on to create products. We are also implicitly sustaining the notion that data must surely have some kind of intrinsic scarcity value: that we should therefore be mining it, hoarding it. And that it might somehow run out at some point.

The problematic conclusion, from there, is that the process of creating fresh customer value in this new Web environment derives primarily - as of course it does in Industrialism - from exclusive ownership and exploitation of this precious resource. 

We’ll come to understand that the resulting belief that, somehow, the process of innovative value creation starts with the information and proceeds from there outwards into the market - as it would if we were mining, refining and exploiting natural resources - no longer applies when we move into the Web model.

(The Intelligent Brand - Part Three is here.)

The Intelligent Brand - Part One

Why this? Why now?

“A picture held us captive. And we could not get outside it, for it lay in our language and language seemed to repeat it to us inexorably.”

Ludwig Wittgenstein

A disturbing fracture

More than a few leading marketers of my acquaintance, from both the client and agency sides, have, in very recent conversations, expressed their increasing hesitation to use the term “brand” in anything except the most private conversations. 

Marketing appears to be beginning to believe, or at least to worry, that brands and branding may no longer be important. On both sides, remarkably, one can sense an underlying but genuine fear that “it’s more than my job’s worth” to go there.

Most consumers however - if we framed the question appropriately, if they had the time to think about it, and if they frequented the same concepts and vocabularies as marketers, which they notoriously hardly ever do - would surely beg to differ. 

Were you and I to pull our marketing hats off, and step across the aisle and into the marketplace, we would immediately and without hesitation feel the same way. 

So, what’s happened. And what’s happening?

This paper concerns itself with beginning to resolve what is clearly the most urgent of marketing conundrums, more urgent even than the ubiquitous obsession with digital transformation. 

What do brands today mean to consumers? And what, therefore, should they mean to marketers?

“Meaning” is central here, because, as we’ll be exploring further below, a key job (my own belief is that it’s in fact THE key job) of brands has always been to create meaning. But the context for and the rules of this meaning creation have evidently changed. Changed profoundly, and in ways we don’t sufficiently understand. And it’s almost certainly here that the disconnect is rooted.

Defining the problem

A central tenet of this argument is a direct and deliberate challenge to the illusory and destructive idea that brands have somehow diminished in their relevance and their contribution to building customer value and to driving the growth of the businesses that invest in them.

To the contrary - and with a nod to Ludwig Wittgenstein’s deliciously terse quote above - brands are very much alive and well, albeit feeling understandably uncertain, unloved and undernourished. They sorely lack, we could say, the confidence, the clarity and the rigour of a contemporary branding philosophy and discipline that are fit for purpose.

Motivated by our own uncertainty and insecurity as twenty-first century marketers, we have attempted to fit a mean and pinched picture frame across the explosive, expansive and deeply complex contexts in which brands and customers continue to connect, to make meaning, and to co-create value.

This hidden picture is huge, it’s growing and it’s full of opportunity and, yes, uncertainty and risk. The problem does not lie with brands, their underperformance or ongoing relevance to business growth. We need - with both urgency and boldness - to discover and develop a radically new, far more sophisticated frame.

A little history

“I wonder whether all top managements are involved deeply enough in the nature of their brands. Do they realize fully enough that is from the success of brands rather than as products that the profits will come? Do they fully understand the nature of brands? Do they set company objectives in terms of brand positioning or simply in financial terms?”

    Stephen King, What Is A Brand?

The lessons unlearned

It’s both astonishing and concerning that since Stephen King of JWT, an acknowledged godfather of brand planning, wrote the seminal paper quoted above half a century ago in 1971, hardly any useful or applicable guidelines have been published to help marketers build, manage and grow brands.

One honourable exception is perhaps How Brands Grow (Oxford 2010) by the perceptive and astringent New Zealand academic Byron Sharp. This work admirably, and without sentimentality, slashes many of the Gordian knots marketers face. It focuses however - as can also be said, and indeed immediately forgiven, given the era of its publication, for Stephen King’s argument - almost entirely on how marketers need to understand the role and value of advertising. 

One would have hoped, given that by the time of publication the Web and its digital implications for marketing and brands had already been a major preoccupation for well over a decade, to see addressed the critical underlying challenge of how to think about brands and branding. In fact, How Brands Grow - some of its broader insights notwithstanding - is written more or less exclusively from the perspective of the pre-digital FMCG marketer. For this reason, it ignores the important concerns of - and lessons from - central modern marketing issues such service and B2B marketing.

Consider, in sharp contrast, the critical (and criminally underread) work of US academics Robert Lusch and Stephen Vargo, Service Dominant Logic. While only indirectly addressing brands and branding, they nevertheless admirably challenge and reframe our understanding of the cultural and commercial contexts within which brands operate. 

This exemplifies an observation that we will return to, that the most urgently needed and persuasive insights on twenty-first century brand and branding rarely originate from within mainstream marketing’s commonly ponderous and repetitive deliberations about itself.

Brands, we must remember, live in the increasingly turbulent overlap between culture and commerce. This is where, and how, they perform their role of connecting a business with its audience. 

So to understand what, and even more importantly how, we need to think about the future construction, management and growth of the modern brand, we need to turn outwards, to front up to and to understand the profoundly changed, and now ever-changing and accelerating, cultural and commercial dynamics that define the environment.

The disruptions of digital

From talking to doing

It’s been a quarter of a century since the World Wide Web turned everything upside down. Countless brands - large and small - have come and gone. Trends such as disruption, disintermediation - alongside another d-word that we just can’t seem to shake - digital - have become normality.

The digital revolution has certainly stamped its mark on business and marketing in a number of irresistible ways. Perhaps most radical is the still-ongoing shift from product value to service value. A great service beats a great product more or less every time. 

This links closely with a now well-established trend away from ownership and towards access. The “Spotify effect” is spilling out everywhere, into sectors as diverse as automobiles and nutrition.

We begin to see a corresponding and fundamental shift in the nature and role of brands, from being more or less passive signposts for value, to becoming active participants in the very creation and delivery of value itself.

We could think of this change as moving from simply “standing for” something to “standing up” for it. Or more prosaically, from just “saying something” to “doing something”. Either way, we need to move our thinking on from the simplistic paradigm of brand as messenger, to consider the impact and implications of “brand behaviour”.

Today’s brands have agency. Broadly, we respond today very positively to those that behave intelligently, and dismiss the ones we experience as unintelligent. The attributes and parameters of this brand intelligence are the endgame for this paper.

Ambassador and concierge

While the promises of precision and prediction offered by our increasing obsession with data and analytics are as enticing as ever, as we’ll see, these make up only one contributing piece of the complex puzzle of the intelligent brand.

Two very different examples point up an interesting paradox in brand intelligence. The “Pet Rock” - yes, a stone in a box - was a must-have accessory for millions of children (and I’m sure more than a few adults …) some fifty years ago. Much mockery and bewilderment all round, of course. And yet, actually … how unintelligent was this brand?

Microsoft - certainly during the reigns of both Bill Gates and Steve Ballmer, less so in recent years - was a goliath of the software business, packed with many of the most intelligent professionals in the world. But during these explosive years, how intelligent was this brand?

One principle that hasn’t changed - while it could certainly do with dusting down and reconsideration - is that brands exist to serve two primary masters. At the most simple level, they create value for the firms that invest in them, by creating value for customers. 

A useful metaphor defines and distinguishes these two distinct roles. The modern brand must be a world-class ambassador for the firm, consistently, credibly and confidently representing its interests in a marketplace where linear change has been supplanted by what we might call “chronic turbulence”. And it must recognise and respond to the ever-shifting circumstances and needs of the modern customer, with the same timely, almost magical understanding and service that we experience from a favourite concierge.

The value and the digital

The changed and changing nature of customer value itself now clearly demands our close attention. Obscured behind the woefully inadequate frame we have forced over brand marketing is the rich and complex context - at the overlap between culture and commerce - in which brands and customers perform their dizzying dance.

But before we can grasp the value, we must come to understand the digital. 

As it turns out, our interpretation of the profound shifts introduced only a couple of decades ago by the rise of the Internet and the emergence of the Web, conceals many of the misconceptions that have led to our faulty framing of modern brands and branding, along with the role and value of marketing itself.

(The Intelligent Brand - Part Two is here.)

Narrative Dynamics - The Hidden Key to Customer Value

Why narrative? And why now?

In my two recent posts on The Value Proposition - here and here - I introduced the notion of the inner dialogue which comes into play when we consider an offer from a brand: indeed, when any value judgement is required.

This dialogue, I suggest, is created by the interplay of various "comparative narratives" within the mind of the customer. The narrative model of customer decisioning, I hope, moves us beyond the long-standing and unhelpful value debate between the traditional neoclassical (rational, conscious, maximising utility) and the behavioural (emotional, semi- or unconscious) models, enabling a quite radical yet common sense understanding of the dynamics of the customer's entirely central role in the realisation of value.

This, in turn, should inform how we can more productively think about innovation, the value proposition, the positioning of brands, and the messaging approaches so important in our go-to-market.

I should mention, before we move on, that (as noted below) I'm keen to distinguish narrative from story-telling. This imperative has been helped by recent and very well-received work on the the commercial role and value of narrative thinking by three leading economists: Mervyn King and John Kay in their excellent manifesto Radical Uncertainty, and Robert J. Schiller in his book Narrative Economics.

Narrative vs story

Although there is a natural connection between narrative and story, the two are far from synonymous. And while much has been written about the power of story, narrative’s role, impact and importance have remained comparatively unexplored and, therefore, unexplained.

Stories we can usefully think of here as “narratives loaded with emotion”. In fact, a typical role of any story in human communication is to use emotion to activate pre-existing - or to introduce new - underlying narratives that inform and direct evaluation, decision and commitment. 

In order to be understood at all, of course, stories need to reference familiar narratives, whether these are cultural or national in nature, or just old family jokes. A story without references is likely to be nonsensical to the recipient.

It’s these narratives - and perhaps more so, in order to extract broader learnings from the process, the connections that link them and the dynamics that dictate their shifts - that reward close scrutiny.

Narratives as scripts

I first came to understand the importance of narrative in the work of the leading psychologist and proponent of Transactional Analysis, Eric Berne. Readers who are not directly familiar with his work or the discipline of TA, may be familiar with its trademark framing of relational dynamics: for example, “I’m OK. You're OK. He’s Not OK”.

A central pillar of this therapeutic approach is an exploration of the powerful, hidden narratives that a patient may have internalised as a child. Prior to their being surfaced, these remain out of the reach of the conscious mind, yet can continue to dictate feelings, decisions and behaviours that are either positive and nurturing, or compromising and destructive to well-being. 

Berne, in order to bring his philosophy to life, refers to the more common among these narratives in terms of fairy tales: to pick one example, Cinderella and her hoped-for rescue by the perfect Prince. When unpacked, however, these stories come to be understood as unconscious scripts which, when triggered, are enacted by the patient without full awareness.

This concept of narrative as script is core to our project. Narratives are understood as sense-making machines, bundles of ‘soft code’ through which we decipher and navigate a complex and often intimidating world.

We can usefully imagine these narratives as ‘speech bubbles’ that drift in and out of, around and underneath or behind our conscious mind. However, as mentioned above, until they’re surfaced and acknowledged, they will tend to remain unexpressed and non-verbal. 

“My value as a human being is dependent on Facebook likes” … “Some of the most interesting people smoke cigarettes” … “You can’t trust anyone” … “I deserve a treat when I get to payday” … “Real men always look like they know where they’re going” … “Anyone would be drinking a lot if they had my problems” … “My body is acceptable (or not)” …

If we have doubts about this, we can recall what happens when an individual is asked - perhaps as part of a research programme - to articulate their values. Typically, we can point to our values and the beliefs that underpin them, we can usually apply them in a hypothetical situation (“What would you think if … or how would you respond when …?”), and yet we are unable to list them.

It’s worth mentioning, in passing, that the processes of many, if not most, of today’s well-known lifestyle gurus (The American Tony Robbins is perhaps the most famous of these) who offer personal transformation are, whatever method they use, typically seeking to challenge and ‘rescript’ the inhibiting personal narratives of their customers. One of the most common narratives that they aim to uproot and replace is the ‘self-limiting’ belief of not deserving financial success, often referred to in such circles as ‘the poverty mindset’. 

The origins - in the individual or across an entire culture or society - of such narratives will vary widely. What is clear is that - no matter how restrictive or compromising they may be for the individual - such beliefs are hard to change. Which accounts partly for the cultish overtones and religious fervour common to such programmes.

Narratives, along with the often-opaque values and beliefs and the causative experiences that underpin them, are not merely ideas that can be easily swapped out. Even in cases where they are consciously identified, articulated and separated out from each other, and proven to be problematic, we as humans tend to strongly resist letting go of them. They are, we could say, wired into our psyche.

Narratives as navigation

Recently, in their important book Radical Uncertainty, the prominent economists John Kay and Mervyn King make extensive use of their own concept of the “reference narrative”, which they clarify as “a story which is an expression of our realistic expectations”. 

The authors are, as we can see, less stringent than us in distinguishing narrative from story. Nevertheless, they are consistent and persuasive in arguing that such narratives are both intrinsic to being human, and uniquely powerful tools for dealing with life.

We cope with the future by organising our lives around reference narratives. These reference narratives are not necessarily worked out in specific detail, but they provide a basis for planning and the framework for day-to-day choices. We change the reference narrative in response to disconfirming events, but infrequently, and discontinuously. And we do not construct these narratives in isolation. We discuss them with family and friends. We take advice from professionals. We benefit from the collective intelligence accumulated and readily available in the various communities in which we live. We are not defective versions of computers, trained to optimise in small world problems. But human beings with individual and collective intelligence evolved over millennia.

John Kay and Mervyn King, Radical Uncertainty, 2020

The authors take pains to emphasise the empowerment and decisiveness conferred by humans’ constant reference to narratives. And a significant pillar of Radical Uncertainty’s argument aims to directly challenge the contemporary rush to certainty, that has led to a corporate and financial over-dependence on what they call the “small world”, data-fed, predictive models of economic behaviour that contributed, for example, to the global financial crisis of 2008.

Narrative is not simply a synonym for verbal communication. Nor is verbal communication less ‘scientific’ than algebraic or other symbolic communication. To cope with radical uncertainty we try to form a coherent and credible answer to the question ‘What is going on here?’ This effective use of narrative is in sharp contrast to the idea that narratives are a recourse of ill-informed and ‘biased’ agents who prefer storytelling to computation …

… Narrative reasoning is the most powerful mechanism available for organising our imperfect knowledge. Understanding the complex world is a matter of constructing the best explanation - a narrative account - from a myriad of little details and the knowledge of context derived from personal experience and the experience of others.

John Kay and Mervyn King, Radical Uncertainty, 2020

Key to grasping both the human empowerment and human frailty conferred by narratives is that they are neither framed by, nor expressed as, patterns of rational thought. Their efficacy is determined by their operating independently of, and much faster than, a consciously constructed rationale. 

This otherwise advantageous quality, we should note here, also opens a dark side to the power and prevalence of narratives in human beliefs, behaviours and decisions. In bypassing the critical mind, they can be accessed, even rewired, for the benefit of commercial and political actors who have learned to leverage the tools of digital - and in particular social - media.

Paradoxically, while we each own and apply our own unique combinations of narratives, their attributes of being at once rational and emotional, conscious and unconscious leave us susceptible to influences that may be highly positive or profoundly toxic. We are both empowered by our value narratives, and made vulnerable by their nature.

This is why, for example, we may find ourselves both intrigued and appalled by so-called “nudge” theory and application. We suspect that, while on the one hand such interventions are often benign in their intent for us, on the other, our own “soft code” is being hacked.

Putting this very current and growing concern to one side for now, and to sum up, human beings - our customers - have always carried sets of narratives with them throughout their lives. 

We instinctively refer to these narratives - or combinations of them - when faced with a decision. This inner dialogue is rational and emotional, conscious and unconscious.

The interplay of narratives expresses and, when triggered, activates our personal values. They are the building blocks of how we assess and make value choices. 

Understanding how human narratives work is thus a critical source of insight and competitive edge when we are looking to the market for clear, actionable road signs to future value creation and growth.

The Value Proposition - The Heart of Innovation and Growth - Part Two

(Part One of The Value Proposition is here.)

The critical role of the value proposition

10 good reasons why

The Customer Value Proposition deserves a lot more care and attention than it commonly receives. 

When thought through and well articulated, the CVP becomes a powerful lens, through which can be clarified and agreed, for example:

1. The commercial viability of an innovation (prior to the CVP work, most innovations are in fact latent, “inventions awaiting value”);
2. The internal business case required for investment;
3. Identification and prioritisation of key benefits ...
4. … and the required product or service features that deliver them;
5. The choice and segmentation of a market, and positioning within that market;
6. A true - rather than imagined - competitor set …
7. … along with insight into the innovation’s strengths and weaknesses relative to those competitors;
8. Guidance on pricing, linking back to the costs required for the business case;
9. Briefing inputs for brand development and realisation;
10. Guidelines for Go To Market, brand communications and messaging strategies.

So the CVP has, or should have, enormous impact for a wide range of stakeholders and beneficiaries. It’s a low cost, high impact tool … a strategic gift that keeps on giving.

And yet it’s remarkable how infrequently - and, even if it is done, how inadequately - a value proposition is properly bottomed out.

Why is this?

Rethinking innovation

From invention to innovation ...

In my own experience of this type of work, often with new digital product and service development, the biggest blocks tend to be cultural. Engineers, for example, looking through profoundly different eyes to investors or marketers, tend to see an “invention” as the innovation itself. They also, it must also be said, typically struggle to step through the looking glass to view their brainchild as a customer might see it.

There is still, after far too many decades, a stubborn antipathy in the engineering community to anything that looks like marketing or sales. I’ve also observed myself - and joked about it - that engineers remain “in love with the problem”, while everyone else wants to know about the solution.

But the value of the invention can’t be confused with the value of the innovation. 

The former is typically based around an original solution to a functional problem. The latter, we could say, moves the invention forward, to become a marketable solution to a customer problem. The invention - in terms of value proposition development and all that follows - is important only insofar as it supports the anticipated delivery of product or service value to the customer. We could say that it’s the “how”, not the “why” or the “what”, the “where” or the “when”.

… and from innovation to exploitation

What we commonly refer to, under a blanket, catch-all term, as “innovation” in fact unpacks into several distinct and necessary phases. It may be useful to differentiate “Innovation as a process” (“Big I”) from innovation as one stage in this larger process (“little i”).

With this in mind, and having untangled “little i” innovation and invention, we can also add a third dynamic to the larger process of “Big I” Innovation. This is exploitation, used here in a non-pejorative commercial sense, as in combining impactful go to market and sustained realisation of commercial value. 

All three of these dynamics - invention, innovation and exploitation - are required to be present, balanced and well-executed, in order for a programme of new product or service development to predictably deliver real returns to the firm. 

“Little i” innovation, if we accept the approach, becomes the crucial bridge that links the functional solution of the invention to the marketing and income generation achieved in successful exploitation. And it’s precisely on this bridge - where a promising invention meets a potentially lucrative customer problem - that the majority of the CVP work is focused.

We can see now why the deliberate and careful application of value proposition work is crucial to the process of turning fresh invention into customer value, and customer value into profit for the firm. The model can also, by the way, be reversed. A market opportunity (exploitation) can be mapped back, via the innovation stage, to explore existing or potential inventions that could fit the bill.

While it may sound hubristic, it’s not ridiculous to suggest that the customer value proposition is, itself, the beating heart of successful commercial innovation.

Too little, too soon

While all this may form a powerful argument in its support, there remain deeper attitudes underlying the prevalent corporate resistance to formal, disciplined value proposition work. 

Foremost among these are a widespread pressure to take new products and services to market as rapidly as possible, and, despite declared commitments to so-called “customer centricity”, a pervasive low level of interest in directly engaging with customer value.

Underlying the latter issue is an old school, industrially-based belief - one that demands a robust challenge - that the job of a firm is to sell stuff to people, and the job of marketing and sales is to do things to people to make them buy our stuff. 

This mindset is also a cause of what we might call fake customer centricity, playing out, for example, in the form of highly targeted, frequently intrusive digital advertising. CRM, and its related philosophy, LCV (Lifetime Customer Value) often fall into a similar trap. 

Value is thought of as something that we do to customers.

Ultimately, these beliefs cause firms to take to market suboptimal innovations, too quickly, with key benefits and features omitted, wrongly prioritised or poorly articulated, or all of the above. In turn, brand positioning and communications are, as a result, imprecise and uncompelling, requiring a disproportionate spend on sales and advertising to compensate for these weaknesses.

In other words - sin of all commercial sins - an awful lot of money gets left on the table. So the job of the CVP is to ensure that, as far as is realistically possible, such common failures are minimised from the start.

We need to realise maximum possible value for the firm, by articulating, communicating and delivering maximum possible value for the customer.

Managing the meaning of value

Where value as a benefit for a firm is, by comparison, almost childishly simple, customer value is a particular type of benefit that is not only utterly subjective, but entirely contingent upon context and usage that, if not practically then certainly theoretically, change every second for every potential customer. Consciously or otherwise, each customer brings their own personal and circumstantial criteria to meet the firm’s proposition.

Value resides in the customer’s own mind, and refers to a range of diverse and variable factors. Now, our engineer may imagine that referring here means that a customer will, for example, be comparing one product to another based entirely on functional differences.

But for a product or service proposition to do its job, it needs to do two things: 

1. Reach into and across the customer’s entire context of use to embrace a wide range of potential, external references;
2. While at the same time limiting them, by excluding some from the dialogue altogether and prioritising some over others, in order that the customer doesn’t have to work hard to grasp the elements of the offer.

The value proposition work is central here, in that, done well, it enables the firm to:

• Both limit and define the potentially infinite range of comparative references that the customer could go to, when offered a new product or service;
• At the same time, reducing the implied competition;
• While emphasising - versus this particular competitive set - the particular appeals of the firm’s offering to the customer.

In other words, by helping the customer to meaningfully frame - and thus also to simplify - the till-now-unarticulated question that they bring to our proposition, we are enabling them to make sense of and prioritise the unique elements of the offering, while differentiating it in their minds from our primary competition.

Of This and That

The simplest and most powerful approach to framing a customer value proposition is, “You know THIS? Well … THAT!”

THIS, in context, refers to a thoroughly explored and understood problem that we believe a viable customer segment needs resolved (or, of course, an opportunity they’d like to unlock).

THAT is a precise and corresponding account of our proposed solution.

We should immediately take note of three important principles that emerge here:

1. The value proposition is framed entirely in the context, and in the terms, of the customer’s requirement;
2. The value that we are proposing is therefore in direct proportion to the value of their problem: simply put, the larger the customer problem, as we have framed it, the correspondingly larger and more potentially remunerative our proposed solution.
3. With a glance back at the cultural blocks above, we can appreciate the difference between the engineering problem - which is the basis of the invention - and the customer problem, which is the basis for the innovation.

We do need, it must be emphasised again, to resist the siren call of simply comparing our offering with the feature sets and pricing of our real or imagined competition. A key CVP rule is to look for competition after, not before, the contextual customer narrative and our response to it are both formed.

Our competitors are not the people who “do what we do”. They are the firms that occupy the same or similar space in the mind of our customer. Again, this is about context, not content.

A well-formed Customer Value Proposition is best approached as a clearly articulated solution, to a clearly articulated customer need. We can add, if only for a bit of colour, that it can also be seen as a compelling answer to an important customer question.

Framing and claiming value

The THIS that the well-formed CVP lays out is a distillation and definition of the primary contexts within which an offering would represent maximum value for the customer, and the corresponding usages of the product or service that we want the customer to understand. It’s a kind of staging, where the product or service and the customer are cast together in a little drama which shows the way to value. 

Of course, great advertising - in particular long form print ads, such as the popular Jack Daniels poster campaign on the London Underground, and (the audio-visual equivalent) the extended TV ads that play in the cinema - are almost always emotionally evocative dramatisations of these idealised encounters between customer and brand.

So the job of the CVP is very much to “frame and claim” value, and the framing (the THIS) is entirely critical to the impact of the claiming (the THAT). 

The outputs of this work form the basis on which benefit - which otherwise would remain generic and vague - becomes clearly relevant and meaningful to a customer. 

The Value Proposition - The Heart of Innovation and Growth - Part One

What we mean by customer value

Beyond economic theory

Ever since Adam Smith’s The Wealth of Nations in 1776, the economic value that the state needs to produce in order to maximise its prosperity - which was, as the title indicates, the precise focus of that work - has been confused with the commercial value that corporations need to realise for their own profitability and growth. 

The approach to value here will be both pragmatic and primarily commercial. We won’t enter into the centuries-old back and forth about the nature of economic value. We will, however, where useful, draw here and there on concepts and terms that derive from economic analysis. 

We are primarily focused, for the purposes of this paper, on value only insofar as it impacts on how firms can better realise it for themselves, by creating it for their customers. 

When a term is intrinsically problematic - and value certainly is that - it’s wise to reduce the scope of any attempt at definition to how it’s most commonly used. When we use the word in the context of day-to-day business, what exactly are we saying?

In the past, it’s been assumed, for example, that anything that makes money has value, and, in turn, that those products and services that make more money are therefore more valuable. But price as a prime determinant of value - linked to the economists’ hypothesis of value-in-exchange - has had a patchy record, not least among economists themselves.

Does this help a firm in the early stages of developing a new product or service? If every sector were like, for example, real estate, then very likely yes: because real estate valuations are nothing if not guided by “comps” - properties that are seen as comparable across a range of accepted criteria.

Meaningful customer benefit

However, in most other sectors, whether goods or services are the root of the proposition, while pricing is naturally an important element of the calculation of value, it’s unhelpful as the primary determinant. While price itself varies contingent on many factors, it’s those factors themselves that demand our attention. We could say, therefore, that price is one symptom of value, rather than a cause.

I propose we plunge in and start with the hypothesis that the most common and accessible definition of customer value is around some kind of “meaningful benefit”. But while “benefit” passes the common sense test, why do we need “meaningful” in there? 

First of all, while earlier, typically agricultural or industrial notions of value assumed that value was built into the commodity, product or service, and thus determined by the provider, this view has not survived either in economic theory or, more important for us, business practice.

Commercial value today is, as is pretty much accepted, experienced both “in-context” and “in-use”, and thus ultimately determined by the customer. But it’s what makes a benefit meaningful that needs our attention. 

Why meaningful? To whom? When, where, how and why? And perhaps above all, Compared To What?

How we decide what is valuable

Rational? Emotional? Or both?

Ideas about how consumers make decisions - where they choose to spend money and on what, why they choose Brand X over Brand Y, the determinants of acceptable price points, the drivers of brand loyalty and so on - have understandably dominated economic debate, corporate planning, and marketing strategy and execution for generations.

At one extreme, we have the neoclassical model of the rational, utility-maximising consumer. At the other, we have the behavioural scientist’s view of the consumer as far less rational: logic gives way to emotion. 

I’d like to sidestep, or perhaps subsume, this long-standing and unhelpful tension between the rational and the emotional, to get to a common sense, pragmatic and usable way of thinking about customer value.

We don’t need to wait for a conclusive, holistic theory of human behaviour - after many decades, we’re still awaiting and vigorously debating that today - to get to a way of looking at how people identify, assess and commit to what they see as valuable.

Trading off narratives

There is a continuous flow of inner dialogue that we, as customers, carry within ourselves. For the immediate and pragmatic purposes of this enquiry, we don’t need to qualify that conversation as conscious or unconscious, rational or emotional, instinctive or learned … In fact, it’s likely to combine elements of all of these.

At the heart of customer choice we will always find one question: “Compared To What?” And the “What” is most usefully considered in terms of narratives.

When we, as consumers, arrive at a comfortable purchasing choice, we are of course trading off the cost of the item - the money we need to part with - for the perceived benefits that the item offers us. But the financial exchange is only a final trade off, before and behind which has occurred a series of narrative exchanges. Through these, we arrive at a conclusion that represents - to you or I, as unique individuals, in these particular circumstances, in this ever-shifting context - meaningful benefit. 

This is not a process exclusively determined either, on one hand, by cold calculation or, on the other, by hot emotional impulses. The narratives that we refer to, in this “Compared To What?” sequence that we cycle through, feature and blend both rational considerations and feelings, both of which may be conscious, semi-conscious or unconscious.

While degrees of mathematical probability can, and will continue to be, applied in the hunt for more accurate predictions, no firm - however AI, ML and Big Data may evolve - can hope to entirely lock this process down. 

Neoclassical (rational) and behavioural (less so) economic behaviours are both represented in this process of narrative trade-offs. Utility should, in fact, include emotional as well as rational benefit, and behind what may seem like impulsive, knee-jerk decisions may well lie perfectly reasonable estimates.

We can begin to see more clearly how, far from being something that is “done to” consumers by firms, value is established and committed to through a dynamic process. 

And the ability of the firm to, first of all, get onto the customer’s dance card, and then to perform the dance - the sequence of narrative trade-offs - successfully - originates, of course, in the well-formed value proposition.

Narratives in marketing

Insights are narratives

Brands in classical marketing practice are defined, built, communicated and grown out of a revered concept: the customer insight. The insight, in order to support the successful positioning of a new brand (or of course, the repositioning of an existing one) needs to be fresh and differentiated - in terms of what’s in the market already - and credibly ownable by the brand.

The world’s most successful brands have refined and mastered this process. And the outcomes of that work - brand positionings and communications - form ideas that have become long-standing, highly influential, global cultural touchstones.

“Just Do It” … “Because I’m Worth It” … “Dirt Is Good” … 

The precious thing that a brand comes to understand when it identifies, assesses and selects a desirable customer insight is, as it turns out, both invariably and usefully reducible to the language and dynamics of narrative.

How dirt got to be good

The international FMCG firm Unilever has produced many of the world’s most successful and familiar products, brands and campaigns. Its ability to identify, develop and to speak powerfully to unique consumer insights is legendary in marketing. Who is not familiar, for example, with Dove’s iconic and durable ‘Campaign for Real Beauty’?

A useful illustration of applied narrative dynamics emerges from their global detergent positioning (applied worldwide to a number of local brands, most notably Persil) and the many powerful advertising campaigns it has guided: ‘Dirt Is Good’.

Where two or more narratives conflict, there is uncomfortable dissonance for the individual. Unilever - as we saw with Dove - is particularly skilled at pinpointing an established or emerging conflict in consumer values, to then position the brand and its products as solutions that relax or resolve the tension. 

Mothers (among which I include, here, modern fathers …) want their kids to have clean clothes. But many parents also understand that kids need to play, and that proper play means mess. They also appreciate that if kids don’t get out in the world to be exposed to germs, they are unable to develop a healthy immune system. While such tensions are far from earth-shaking, they are meaningful, and the conflict they produce is not insignificant.

Enter Persil. You can, and should, let your kids get as muddy and snotty as you like - it’s good for them, after all - knowing that all that gunk will come out in the wash, and tomorrow you’ll send them out as clean and fragrant as you could wish. The brand is thus woven deeply into the fabric of responsible parenting.

What’s more, when one or more resonant consumer narratives are accessed, the resulting storytelling opportunities are many and highly fertile. 

In one engaging and witty Dirt Is Good campaign, ‘Free The Kids’, long-term inmates of a US prison are interviewed about their allocated daily outdoor exercise time, and how they would feel if it were cut from two hours to one. The punchline arrives when the prisoners are told - and visibly shocked - that kids’ average daily outdoor playtime is half of what they are allowed … one hour.

We should note, before moving on, that the customer problem which - in the category of laundry detergent - is being resolved by the brand is far more than merely the functional need to provide fresh and hygienic clothing for a family. ‘Dirt Is Good’ touches and activates multiple powerful human narratives, about childhood, about parenting, about health, well-being and learning, and - admittedly a bit of a stretch - also about freedom and human rights.

The consumer wins by balancing what would otherwise have been dissonant personal and familial narratives. And, to cut to the commercial bottom line, when you’re hovering in the supermarket aisle considering  - or online with your mouse poised over - a variety of detergent brands - this makes all the difference.

Explosions of narrative

Perhaps the biggest challenge facing marketers, in the time of digital, is the biblical flood of changing narratives - often referred to as ‘memes’ - that flow across networks. Contrast the ever-increasing velocity and volume of this shifting cultural and commercial environment with, for example, the relative homogeneity of American culture in the post-war boom years from the early 1950s. 

There were - with, of course, pockets of counter-cultural resistance, mainly on the urban East and West Coasts - only a handful of widely-shared popular narratives for brands and advertising to get to grips with. Many millions of households shared very similar values, watched the same shows, and, of course, bought the same brands. This fact, along with the explosion of national prosperity that followed the war, and the ubiquity of the television, enabled a Golden Age of media and marketing. 

Whether they chose to align with these distinct and widely-shared narratives, or perhaps occasionally to challenge them, these lucky brands and their advertising campaigns enjoyed the luxury of addressing a very limited and clearly defined range of cultural and personal reference points. The Mad Men of the period - in sharp contrast to today’s beleaguered marketers - could reasonably claim to have directly built both brands and the businesses that owned them.

While the disruption and fragmentation of today’s media landscape is well-recognised, the overwhelming explosion of new and different narratives to which we are now constantly exposed suggests an equally important and challenging disruption. If our individual narratives make up the toolkit by which we receive and assign meaning to daily events and communications, then to the familiar challenge of achieving effective brand communications is added the very human problem of making sense of a world that has been described as “post-truth”.

“Compared To What” becomes an ever more pressing and bewildering question, when the context within which value is experienced and purchased is in churning, chronic turbulence.

At the time of writing, the double impact of the COVID-19 virus, alongside the global outrage and growth in the Black Lives Matter cause, which erupted after the killing by police in the US of George Floyd, has thrown many of the world’s cultural and commercial assumptions into chaos. We should be under no illusion, however, that even enormous disruptions such as these are no longer to be seen as rare, ‘once in a generation’ exceptions.

From here on, the narratives of meaning which our customers refer to every day are in constant, rapid flux.

This means that, as a direct result, customer value is in the same state of flux. So before we move on to consider the role and impact of the Customer Value Proposition, it’s worth summarising four attributes of value that make the proposition work both more complex and more critical to success.

The essentials of customer value

It’s long been a truism to point out that customers are ‘in control’, with significant power over brands. What we have not fully considered, until now, is the particular impacts of the Web on how value itself is received, experienced and judged.

There are four attributes of customer value that, while they have been evident for decades, have been sharply accentuated by an environment that consistently raises experience and expectation in parallel.

Subjective and referential

Value - irrespective of the role and power of its provider - always belongs to each customer and is decided on their terms. They may, indeed, pay the asking price, but that shouldn’t be taken as meaning that what they are receiving is the same as what the firm thinks it’s delivering.

Furthermore, the uniquely personal nature of value is both informed and enhanced by the equally unique range and number of reference points to which every customer - no matter how opaquely and unpredictably - turns in order to make a value choice.

Variable and contextual

However a firm may wish to manage and fix the value of a product or service, for the customer it’s infinitely variable, and that variation is itself determined by an indefinite range of factors. We’ve seen an explosive revolution in valuable, often free, online and mobile services, and services, by definition, are valued more or less entirely in the context of use. 

We judge service quality today in terms of intelligence. Brands that apply technology and information to make their service offerings contextually relevant - the right offer at the right time and place - immediately set the bar for customer value. This ability to match the intrinsic variability of customers’ experience and expectation of value ‘in context and in use’ is fundamental to the competitiveness of their service.

(Part Two of The Value Proposition is here.)

It’s the services, stupid

Behind the accelerating crisis in advertising lie challenging new rules for building, growing and sustaining brands

While the rosé flowed freely at this year’s Cannes Lions, dark and heavy clouds, that have been threatening on the far horizon, suddenly appeared overhead.

It looks, this time, like a perfect storm.

The Information Commissioner’s Office has, finally, landed a direct hit on adtech in the UK, ruling that it’s operating illegally, on the basis of the abuse of consumers’ data protection rights. While the US remains, for now, relatively adtech-friendly, we’ve seen comparable regulatory instances elsewhere in Europe.

P&G has announced the move of its already diminishing ad budget – last year’s spend was $7.1bn, and the plan is to have shrunk it by a further $2bn within 2 years – away from the large agency networks and towards new, small agencies.

This is, as we know, far from an isolated instance. To the contrary, when the world’s biggest advertisers – conservative spenders every one, whose survival and growth depend entirely on the equity of their huge global brands – cast off from the comfort of such decades-old relationships with their equally sprawling global agency partners, something big is happening.

Or, perhaps, something big has already happened.

Underneath these headlines, the rumbles of discontent about, on one side, consumer dissatisfaction with digital advertising and its associated defensive move, adblocking, and on the other, bot fraud and similar models of large-scale skullduggery, roll on.

Fueled in part by the ease and economies afforded by programmatic technologies, the in-house brand agency continues to win friends and gobble up budget from both media and creative agencies.

We have, of course, seen a fair bit of this kind of threat over the past 10 years, since Google and Facebook – no coincidence here – have taken up residence on the front page of almost every brand brief.

And during that time, the debate has flip-flopped – in a post-Internet update of that age-old battle for love, between planning and creative – from the merits of targeting, hypertargeting and retargeting of ads (the “data knows best” argument) to the brand benefits of great creative work. And back again

For those marketers for whom the digital Kool-aid has worn off, who are able to take a long, strategic step back from these cyclical skirmishes, this is no longer a useful fight.

Clearly, the digital revolution, as it has already done so much and so often, is now overturning the role and the rules of brand building, and at a far deeper lever than we have been comfortable admitting.

The context within which advertising has worked so well, one where value between all the key stakeholders – brands, content providers, channels and audiences – has been nicely balanced, has shifted. The idea that advertising has some form of “benevolent utility” for its audience – if only in funding, historically, the shows we love to watch – has lost much of its currency.

And yet the fundamental beliefs and philosophies of old-school, pre-Internet advertising remain stubbornly tough to shift.

On the industry side, a number of almost tautological notions have, until now, staunchly and quite effectively defended the ongoing role and value of advertising. Underpinning them all is the long-held ad metric of the impression, the unit of audience attention that tells us that – if only peripherally – a brand message is received.

Surely billions have by now been invested, not without good reason, in the measurement, the weighing up of impressions achieved, and the plotting of future ones. If creative advertising is an art, this has been the science that has underwritten it.

The arrival of interactive – soon to become digital – media, close to 30 years ago, began to put pressure on the supremacy of the impression.

The global consumerisation of the personal computer, and now the smartphone, alongside an unstoppable flood of enabling software, have moved our audience sharply forward, from being passive passengers in the back of the media plane, to the pilot’s seat in the cockpit. We are – for much of our digital day – actively engaged in managing our experience as highly connected human beings.

Sticking with the flight motif, advertising impressions have had an increasing battle against a headwind of audience attention that is not only quantitatively fragmented across a plethora of channels, but also – and this is important to fully grasp – qualitatively thinned by consumer empowerment. Simply put, consumer media behaviour and expected value have moved significantly away from passive consumption to what we might call “active co-option”.

We no longer just watch stuff. We do stuff.

The answer to advertising’s conundrum is, as it turns out, right in front of our eyes. Looking at the home screens of our smartphones, the apps that we come back to repeatedly are, almost without exception, not those that offer passive watching experiences. They are enabling services. Often basic, labour-saving utilities.

Indeed, Mark Zuckerberg – ingenuously, since it has helped Facebook to sidestep the moral responsibilities and legal liabilities of being a publisher – continues to speak of the company as a utility.

It’s services that consumers from here on use and value. On or offline, a great service now trumps a great product. Every single time.

While the language of advertising value has certainly evolved over the past 10 years, the industry has – and as an advisor, I’ve been along for the whole of this ride – stuck stubbornly to the increasingly flimsy guns of its impressions.

Accepting the new power of the connected consumer, we have sought “engagement” and “experience”. In media terms, though, the measurement of these elusive imperatives – we have yet to successfully get behind the consumer eyeball and into their mind – invariably involves some sort of reduction back to the trusty impression: “one engagement = ten impressions”. Really?

The most pernicious and resilient of all current marketing watchwords, however, is “relevance”, the touchstone of adtech. It’s rarely, if ever, challenged, but this single good intention paves much of the road to the hell of low-impact advertising.

Not that our brand communications should ever be irrelevant. But look closer. Isn’t it in fact the #1 job of advertising to be “irrelevant”? To apply powerful insight and creativity to gently challenge and nudge the disinterested consumer? Persuasion, almost by definition, begins with an assumption that minds need to be changed.

There is an obsession with – at any cost at all – sucking as much data as we can from the environment, to convert it into brand messaging that, in the end, tells these newly powerful consumers that we know who they are … what they’re doing … where they live. Again … Really?

Brand messaging, of course, is certain to retain a central role in effective advertising. But the honest, mutually beneficial value exchange that has, for well over a century, made advertising the staple food of brand building, has been broken.

There’s a stinging paradox here. The digital giants that have so enthusiastically smashed the shop window – the Googles, the Amazons, the Facebooks – have not only taken more or less compete ownership of a brand advertiser’s most precious commodity, quality consumer attention. They have gone on to create the largest and most profitable businesses on the planet. How? By selling that attention back to us, as entirely dominant adtech and ecommerce systems.

How on earth have they done this?

It’s simple. They’ve done it by providing empowering, must-have, day-to-day – even hour-to-hour – services, that billions of consumers just can’t live without.

They’ve created – and continue to create, at pace and scale – entirely new forms of consumer value, digitally-enabled service value.

There’s another, deeper sting in this tale. Those pumped-up, data-nourished, super-relevant impressions – yes, they’re still alive and, sort of, well – that adtech sells back to brands are, given the dispersion and dilution of consumer attention, combined with their irrepressible delight in smart, enabling services – in fact of far less value to brands than their apparently dumb, analogue predecessors.

The cost of their CPM’s is built on a cultural fiction. And we know this, really, from our own experience. Don’t we?

Those perfectly targeted ads, that interrupt our reading of an article on our smartphone, result in a kind of automatic mental blinkering. With a quiet mental “Doh!” we glide over them to the next piece of text … the stuff that we actually wanted to read. Have you ever exclaimed, en passant, “Wow! That advertisement was particularly relevant to me!”? Me neither.

It sounds absurd, but this is not far off what the purveyors of adtech are selling to their brand clients. The idea that a consumer is somehow delighted – at least somewhat flattered – that an ad vaguely corresponds to their previous purchase history or recent web searches. Once again … Really?

Cut to another scene. Before the movie begins in our new, ever-more-luxurious cinemas, we sink into those largely irrelevant, luscious widescreen commercials like a warm bath. Yes. Really.

Enough said.

So. How does advertising begin to repair this damaged value exchange, to rebuild those precious permissions. To become trustworthy again?

It’s not the messages, stupid. It’s the services.

First, marketers must put down their infatuation with consumer attention. Many – surely most – of the digitally-enabled services we treasure are intelligent utilities, ones that remove work and risk for the user. Hard and expensive to build. Very easy and very satisfying to use.

In the hunt for post-digital impressions, in the name of engagement, experience and relevance, most brand advertisers have been playing King Cnut, throwing trillions of unwanted – and yes, often “relevant” – messages against the heaving waves of shrugging consumer indifference and irritation.

Paradoxically, in many sectors it will be the brands that demand the minimum possible amount of our screen time, of our media attention, while removing painful, boring legwork and freeing us from drudgery, that will command the value, the loyalty, even the advocacy of their customers.

The messaging platforms we have built, the data we continue to hoard and sieve through, perhaps – with a little thought – the apps we’ve offered … all of these can, I believe, be retooled in the name of must-have, smart, valuable consumer services. And I can’t think of any industry sectors – and within those, many huge marketing and advertising budgets – that won’t benefit significantly from what I’d argue is an irresistible Copernican shift.

But the precious commodity now – arguably this is the essential must-grasp insight in our debate – is no longer the content that advertisers have, one way or another, sponsored for well over a century. It’s the attention of our cranky, demanding, powerful connected consumer.

Return On (brand) Investment has continued – with all the precision and certainty that digital promised and has never delivered – to be a vexing problem for advertising. A new metric will, I’d argue, prove invaluable as we navigate the new territory of building our brands with services: Return On (consumer) Attention.

As in any court, those courtiers who fail to find ways of usefully serving the queen, will soon enough find themselves headless. To hang onto our heads, we now need to very carefully read the writing that’s now on every screen in the world. And act accordingly.

Advertising As A Service may offer a less than appealing acronym – AaaS, anyone? But when we are finally able to wean ourselves off the tired teat of impression-based brand messaging, and come to accept the more nutritious, brand-building vittles of value-added services, we will be able to say that advertising has, finally, got digital.

"The Anatomy of a Breakthrough" ... Problem Solving at the Speed of Business

An overdue enquiry

Looking back through a longish, and, thankfully, ongoing career of advising business and brand leaders on typically large strategic decisions (most recently focusing on business and marketing transformation for future growth) I've found that the headline moments - the most impactful, valuable and indeed enjoyable working experiences - have, without exception, involved one or more "Big Breakthroughs".

It startles me to realise - not least because such results really form the basis of my recent and current offerings as a consultant and mentor to my clients - that I've never, until now, taken the time to explore in any depth the intrinsic nature and importance of the strategic breakthrough.

Who, actually, needs breakthroughs?

Why do we need breakthroughs, and why now more than ever?

When do we know that need a breakthrough?

Where do breakthroughs come from?

How do we know when we've achieved a breakthrough?

And, with a nervous glance at the all-too-familiar "1% inspiration, 99% perspiration" rule of success (the stark proportions of which I do, by the way, admittedly from the bias of one whose children are fed and sheltered mostly through the fruits of whatever inspiration I can find, dispute), what exactly does a breakthrough enable in terms of generating beneficial change?

Think different

Before we dive into considering these questions, it seems right to make a rather broader declaration of intent. I've come to understand that, while most strategic development processes are about establishing and agreeing "what to think", the deeper underlying assumptions - for example, that the environment in which we live and work - the world, our customers and our various competitors - will politely stand still, while we ponderously deliberate a typically self-centric and limited range of possible futures - urgently need challenging. It is, in fact, "how to think" that represents the more urgent challenge to business leadership.

Interestingly - alarmingly - amidst the universal debate about disruption, innovation, transformation and so on, and with the now-tedious, tending-to-useless mantra that "The World Has Changed" droning on in the background, we still think about business strategy in more or less the same way that we did in the 1980's. I began to address this concern in my recent book, The Liquid Enterprise, which was intended - and in some instances seems to have succeeded - as a wake up call to enterprise leadership and its advisors, above all arguing that entirely different ways of "doing strategy" are urgently needed, especially given that so much of the role of strategy lies in observing, understanding and reacting to context. 

Who needs breakthroughs? And why?

The context within which we live and work - the environment within and around which we aim to create and exploit new forms of value - now bears little dynamic resemblance to the world which made the essential work of, for example, Michael Porter, such a powerful touchstone into the early years of this century. The challenge of simply "managing (more or less linear) change" is yesterday's luxury. We now trade in a time of what I have called "chronic turbulence". And this space will only become faster, more chaotic, and more unstable, over time.

While most of the world's incumbent enterprises work towards becoming - and this means different things everywhere you look - more agile, our thinking remains mired in laborious, risk-averse, narrowly focused corridors that lead to slow reaction, missed opportunity and naive approaches and responses to threat.

Perhaps this sets the scene usefully, to point up the demand for less navel gazing, and far more, rather than less, inspiration. In order to do business as differently - indeed, as courageously - as we now need to to, we need to think differently.

A consultant and personal friend pointed out to me some years ago that "you're either offering process, or you're offering genius". While I make no claims whatsoever to the latter, it's surely clear that we have no time for long-winded methodologies of thought. And in any case, the historical models of the world that we naturally enough bring to our thought challenges merely lock us into ways of thinking that, from here on, are redundant even as they roll off the press.

We need to think in ways that, consistently, rapidly and repeatably, enable Big Breakthroughs.

When do we need a breakthrough?

At the most basic level, in my own experience a breakthrough is demanded when either we're not sure where to go next, or we know where we want to go, but feel hampered or blocked by an obstacle. That obstacle may, by the way, be temporarily invisible to us, and a key part of the early endeavour can be working out exactly what it is that stands in the way.

This is precisely where "how we think" becomes critical to forward movement. But the pressure on leadership teams to a) be seen to know exactly what to do at all times and b) from there to be seen know exactly how to implement whatever change is evidently needed, typically makes productive, creative thinking emotionally impossible.

A lot of the time - and this will surely only increase, effectively to infinity (the speed of business will continue to accelerate into the future, foreseeable or not) - we're not at all sure what to do. And this starts with not knowing what to think. And knowing what to think depends, entirely, on knowing how to think.

Breakthrough thinking (and let me just flag in passing something that has become clear - that some of the most powerful breakthroughs in fact come from not thinking at all ...) is utterly different from business as usual thinking. Some of my own most penetrating and valid work has occurred when, for example, putting down the problem in hand and listening to music ... certain punk bands, by the way, seem to provide the kind of mental floss that does the trick.

But here's the key. We rarely today have the luxury of a leisurely series of workshops - spread over weeks or even months. And while engaging one of more of the big name consultancies or agencies provides a certain amount of valuable reassurance, their typical (although not universal) dependency on hard wired methodologies tends to make the intervention too ponderous for purpose, while at the same time failing to provide a sufficiently bold and radical intervention.

Einstein - as so often - provides a neat summary of the issue here. "We cannot solve our problems with the same thinking we used when we created them."

Where do breakthroughs come from?

There's something mysterious - even miraculous - about a breakthrough. It comes from a different place than any other form of realisation. The "before" is like standing in front of a thick, apparently impenetrable wall. The initial feeling may be one of utter bewilderment - perhaps fear, at the prospect of failure.

As mentioned above, I summarise such challenges into two basic types. We either have no idea where to go next. Or we have a desired outcome, but no idea how to get there, or, perhaps more commonly, see a huge block in our way that appears insurmountable.

Either way, when we do break through to fresh clarity, there's a sensation of having performed a kind of alchemy, having extracted conceptual gold from a mere handful of earth.

Can a breakthrough be made to happen? Is there a formula to guarantee success?

My own belief - and I'm happy to alter this anytime - is that any form of process thinking tends to reduce the potential for a breakthrough. Not least because - with a nod back to Einstein's point above - true breakthroughs seem to happen - to emerge - out of our unconscious, unstructured minds, rather than from a logical step by step development process. We need, it seems, to put down linear thinking in order to reframe and readdress the challenge.

In this sense, I believe that any useful thought tools and techniques that we may find useful are likely to focused less on "what to think" - what does a viable solution to the problem as currently stated look like? - to "how to think", and in particular, how to think differently.

A case in point. A friend of mine a couple of years ago, at a crossroads in terms of both career and life direction, asked me "What do you think I should do?" After reflecting for a few seconds - and, I should say, stepping back into what I think of as my mental breakthrough room (I know ... a bit pretentious and weird ...) - I suggested this: "Probably nothing at all."

Somehow this kind of counter-intuitive approach widens the field of consideration. In a way, it dissolves that wall that we confront, long enough to distance us from the obvious "hard wired" solutions (note that they're often hard wired by the way the initial problem is framed in words), and - I'd say importantly - to prise open the gates of the unconscious mind, whose processing power, by the way, is exponentially greater than that of the conscious mind, thereby enabling a far greater freedom and power of thought.

Or, perhaps, "non-thought". There's conclusive evidence that not thinking lends itself beautifully to the solution of thought problems. Well-covered elsewhere, of course. Certainly, the imp of the perverse seems to play a frequent and precious role in the magical unlocking process that leads to a true breakthrough.

Referring back once again - for the last time - to Mr Einstein - I've found that the vocabulary of the problem as stated has a knack of blocking the way towards a breakthrough solution. For that reason, reframing the challenge in a variety of non-traditional - even bloody-mindedly counter-intuitive - expressions, in particular, being deliberate about breaking free of sector and company jargon - is almost always useful.

A familiar example of this method is when we're looking for new customer value - in other words, for promising areas of innovation. As soon as we remove the problem statement from the area of "What might we, as the company, be able to do?", and move the discussion to, say, "How does it feel to be a customer in this or that situation?", the creative space invariably, and rapidly, opens up to enable more radical, energising options.

How do we know we have a breakthrough?

So far, so more-or-less-familiar workshopping techniques ... But what separates a true breakthrough from just another decent idea that no one had come up with before? In my experience, we recognise a breakthrough emotionally before we challenge it rationally. A true breakthrough is felt as an immediate "Aha!" moment, where a good idea is more of an "Ah ...".

Indeed, and this is an area of enquiry I'm excited to explore, a true breakthrough lands as more of a "HaHaHa!" moment. There's a useful and pleasing connection between a breakthrough and an excellent joke. Someone - I'd like to think it was me, though I think the idea originated with Sigmund Freud's work on humour and jokes - made the point that to hear a good joke is to be "ambushed by the truth". They have a lot in common: a kind of unforeseen collision of old and new meaning - sometimes of sense and nonsense, that in the business context we might describe as an explosion of fresh value, along with a lot of fresh energy to propel it forward into our consideration.

Here's Freud on jokes. "A remark seems to us to be a joke, if we attribute a significance to it that has psychological necessity and, as soon as we have done so, deny it again ... We attach sense to a remark and know that logically it cannot have any. We discover truth in it, which nevertheless, according to the laws of experience or our general habits of thought, we cannot find in it."

Jumping between the meaningful and the meaningless, as it were, we are, when we achieve a breakthrough, ambushed by the truth. And - once again speaking only in my experience to date - true breakthroughs do nothing so much as magically uncover fresh and important truths - whether deeply personal ones, that lead to a fresh world view, or market insights that research had failed to reveal - that were hitherto invisible to us. And that unlock the opportunity for significant, confident change.

To experience a creative breakthrough, perhaps, is akin to hearing the best joke you every heard. Closely followed by the profound satisfaction of knowing that you had written it yourself.

The consequent release of energy, of confidence, of clarity and of desire for change is - as anyone who has faced the forbidding wall between big problem and compelling solution will agree - one of the most precious outcomes a leadership team can achieve.

This, to conclude, is why I remain deeply fascinated by breakthroughs. And as always, I'd love to hear your thoughts.

Thanks for reading. MB.

 

Winning With Purpose

 

 

The only disruption that really matters now? The structure of the enterprise itself.

Much hand-wringing, and for far too long, about the future of the beleaguered CIO, torn like a pair of Levi's between the two mules of of Keeping The Lights On and enabling - or worse, driving - well ... here insert whatever digital transformation catchphrase that takes your fancy.

Enterprise IT of course has its many faults and failings. But the game of CIO-bashing has to stop now.

The problem that dare not speak its name, the underlying denial in the C-suite that is too often unfairly - explicitly or implicitly - laid at the CIO's door, is that few large enterprises (I'm sorely tempted to say none here) have a clear and confident picture of their required business architecture.

This is interesting, because exactly as we've seen with digital transformation, where business and IT bring highly diverse perspectives to bear, enterprise architecture and IT architecture are each profoundly different at every level. They may ideally overlap of course, but are essentially from different planets.

However they should reflect, enable and speak to each other. And this brings us to the nub of the problem.

For decades, IT had the relative - and often thankless - luxury of supporting and responding to the needs of a slow-changing enterprise that, more or less, knew clearly what it was, what it was here to do, and therefore both strategically and structurally had been able to connect the technology investment with its needs. Until the consumerisation of tech, along with the closely associated arrival of what is, perhaps unfortunately, known as the "SMAC stack", those needs revolved around classic business support functions: record keeping and so on.

For the "keep the lights on" (at all costs and by the way do not EVER f%^k this up ...) folks, to be flatly presented with the challenge of "driving the transformation of the enterprise for the digital future" is a very nasty shock. Not least because real budgets are often not allocated for the shiny stuff, but more importantly because, in isolation, enterprise IT cannot, in any seriousness, be asked to reframe the direction, strategy and, above all from their POV, resulting architecture of the business, in order to convert it into a plausible technical solution set.

The emergence of so-called "shadow IT", where LOB's, for example, define, brief and invest in their own segment of a naturally then-fragmented IT architecture, is not best represented as merely an understandable and commercially-led reaction to the inability of the CIO's team to acknowledge, support and meet their changing needs.

It goes deeper. Shadow IT - alongside this surely-now-out-of-date CIO-bashing - is a potent and tangible symptom of the chronic reticence of leadership (including, where they are still allowed into the war room, CIOs) to take on the direct and urgent challenge of redefining how the enterprise must - strategically as well as operationally - be shaped in order to remain relevant and with a chance of future growth.

This is not THAT difficult a task in itself, surely. So why the delay? Why the denial?

Under these ostensibly common sense challenges, lurks a Pandora's Box of far more disruptive implications that throw into sharp, uncomfortable relief huge questions about the raison d'etre of the entire business, the areas of competition it might feasibly address, its ability to thus continue to satisfy customers, grow shareholder value, and so on. Not to mention the competence of the leadership team itself. A very hot spot, then.

There is a psychological "There Be Dragons" issue facing leadership that cannot be over-dramatised. It's a life or death thing, in many sectors and for many global brand leaders.

Without seeking to end with a fatuous plug, I have directly addressed these issues - with no claim to providing all the answers, but with a confident one to have asked many of the right sort of Big Questions, in my recent short book: "The Liquid Enterprise".

Its goal is simply to point out why the knee-jerk responses of e.g. Digital Transformation, Customer Experience and Innovation programmes, while serving useful immediate purposes of efficiency and cost-saving, in themselves tend to deepen the very denial that pushes back the far larger, existential issues of enterprise purpose, shape and architecture, into the reassuring but still-dangerous background.

The way the enterprise does strategy, and the way its architecture is evolved, hold the combined key to enabling the notorious and increasingly toxic gap between IT and business to be reduced to a point of meaningful alignment.

Anything less? We are, as I like to say, fiddling when we should be burning Rome.

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.

------------ 

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

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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.

5 leadership fails that block transformation

1. "Not on my gold watch ..."

It's entirely natural to resist change. Business leaders who feel lost and disempowered to lead the type of transformation that's now needed, are tempted to bluster and, most importantly, to refuse to accept and define a business context that demands the most radical rethink ever. There is no simple solution to this. Without a truly Damascene leadership conversion, the enterprise will deliver nothing more than minor tactical innovations and incremental process improvements.

2. "It's all about digital ...

... therefore the solution must also lie in digital." Businesses that are still mired in the idea that "being more digital" is a way forward, to the exclusion of dramatic creative reinvention and growth, get stuck in the recent past. Life no longer goes on outside, it rushes past us. DT projects tend to net out as efficiency programmes. We're fiddling, when we should be burning Rome. Digital is not the endgame, it's an entry level ticket to the new game, one in which everything - and therefore nothing, usefully - is digital.

3. "I've been to Silicon Valley ...

... and now I get it." Most major corporates with any interest in technology are either making the pilgrimage or bringing a range of youthful Mohammeds to the mountain, in the form of hackathons, start-up parades and so on. Again, this is not wrong per se, but left in isolation is merely transformation porn, when what's urgently needed is consummation. There is nothing per se to learn from technology start-ups other than that, if we don't move very sharply, the future belongs to everyone but us. Great entertainment, but a sideshow. What should we be doing in the big tent?

4. "We have an innovation programme ...

... and we're really excited." Innovation, like digital, has become a term that excuses a lack of significant transformation. Too often, it's what we do - and worse, all we talk about - while we try to work up the courage to disrupt ourselves. Blind innovation without a respectable, and highly flexible, set of hypotheses for fresh enterprise and customer value is a waste of time, worse even than a waste of money in this accelerating market. Significant innovation, even done perfectly, does not lead transformation, it follows it.

5. "Are we there yet?"

From here on, there is no "there". We are never transformed, only transforming. This is perhaps the most difficult cultural shift of all. The language of business - in particular, the language of success - is peppered with metaphors of triumph over adversity, overcoming obstacles, and heroic, final arrivals. In other words, the conclusive delivery of results - laurels that we can proceed to sit on for a couple of years or more - has been the game. Well, it's over. Competitive advantage, to reference Rita McGrath's excellent book, is from now on only ever transient. No more heroes? Well, not exactly. But stone-faced rigidity and going down with the ship are so last century.

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.

5 words that are driving consumer brands mad

Talking the walk

The way we talk about anything defines the way we think about it, and in the end, the way we value it.

This is important, because marketing and advertising are suffering more than they ever have before from a chronic lack of clarity about their meaning, their value, and their purpose.

And yet surely the game is as simple as it ever was. Get people to care about your stuff more than other stuff, so they buy it at a decent price, and may do so again.

There's a lack of precision that underlies our usage of some of the most commonly used words in the business. And like anyone who's not quite sure of what they're doing, we respond by demanding results and value for money.

Let's look at a few repeat offenders and bring a little mental floss into the discussion.

1. Experience

There are almost no consumer brands whose delivered experience matters to the consumer. There are, however, a great many who are grasping the nettle of service innovation and scoring big points.

Too commonly, however, when we talk about experience design, we're talking about a bastard child of interface and/or information design. Good stuff, but at its best it simply "satisfices" the consumer, getting us out of the red of poor user experience, but nowhere near the black of fresh consumer value.

The great brands of this century almost all share a single common attribute ... they empower the consumer, and they do so with services that do more than meet needs ... they change behaviour. In this heady company, experience design is rarely more than table stakes.

Underpinning the wild and free usage of this problem term is the assumption that, at least at the point of contact with a consumer, a brand in some way "owns" their experience. This is dangerous nonsense. 

The connected consumer's experience at any moment is a rich palette, a giant pizza of optional choices and selections. Almost every individual brand encounter forms no more than a tiny anchovy on a very thin slice of that pizza.

Not everyone likes anchovies. What's more, as marketers need constant reminding - and this is the main job of advertising - consumers really don't care that much.

2. Relevance

We've all been followed around by the exhaust from a search or the momentary exploration of a site. We've all had persistent recommendations that meet a need that was met long ago.

This we might call bad, or toxic relevance. The experience is one of disconnection, of being talked at by an obsessive maniac.

What's good relevance then?

Well good relevance is not, in fact, an advertising concern at all. The fantasy that matching a consumer's profile - or at least the feeble proxy of whatever data we hold about them - in some way creates a value in the communication that would otherwise be absent, needs a firm hand-off.

Relevance is a brand marketing concern: we need to create, position and communicate our offerings in ways that resonate with corresponding consumer needs and desires. This is why we call hitherto unarticulated, important consumer wants "insights". Insights are fresh gaps in the idea market.

But the critical role of brand advertising, interestingly, lies in irrelevance. For this reason, great creative work always rules the roost: it's the alchemy that makes us care when a moment ago, we didn't give a damn. It takes the apparently irrelevant and makes a magical connection.

So, is that resulting connection "good relevance"? I'm still not convinced, and for now I'd be happier with a less precise, more traditional term: impact.

3. Storytelling

I'm really bothered by this one. Not because great brands and their advertising don't tell great stories that really matter to millions of consumers. That's a given.

Perhaps it's the very fact that this is a given that bothers me. Time and again I've been in meetings, presentations or seminars where something like "omni-channel storytelling" is trotted out like a Very Big New Idea.

I suspect that the villain here is a faulty assumption that, as in days of old - no soap ad, no soap opera - brands and the content they pay for still perform the important role of joining up an otherwise fragmented consumer world.

No. Consumers are already joined up, and the corresponding challenge for brands is to find new, meaningful ways of creating upfront value for them. Treating them like experience-starved media orphans that need nothing more than another story is to fatally miss the point.

 The great and still-referenced Nike+ was, and still is (not to mention its offspring, FitBit, Jawbone et al) to paraphrase Le Corbusier, "a machine for storytelling. Lonely, arguably insane runners (myself included, till age and a poor attitude took over) are given a tool to convert their sweaty journeys of personal triumph over adversity into ... well, elegant, well-designed and highly shareable stories of personal transformation.

The stories our brands may have to tell are forever secondary to the rich, potent and pervasive personal narratives that consumers themselves are spinning. We are, and only if we're lucky, the chorus, no longer the leading lady.

4. Content

It's not for nothing that this awful atrocity has been dubbed "the new c-word".

A well-known contemporary novelist and critic was recently quoted as saying, incredibly, "I just want the opportunity to create great content."

As soon as we use the word, we condemn ourselves to the ranks of those who will never, ever come to grips with the power, the value and the meaning of great music, great stories, great movies and TV, even great dirty jokes and YouTube clips.

"Content" co-opts some of the best, the most important cultural things that we have ever produced, minimises the awful hard work, the creativity and personal risk that it takes to get them, and turns them into files on a server.

It equally elevates utter dross to the level of being, at least when paired with an unsuspecting brand, taken seriously, when it should have been thrown in the bin.

Above all, "Content" is an easy excuse, an apology, for lazy advertising. And by the way, some of the best advertising we've ever seen is entertaining, engaging and meaningful.

So what are we talking about when we use the c-word? Is there a better word out there somewhere?

I really, really hope so.

5. ROI

Every other presentation or report on advertising still begins by referencing - and misquoting - the words of the US department store owner John Wanamaker. "I know half the money I spend on advertising is wasted, but I can never find out which half."

The assumption that follows is that this successful businessman was criticising the business of advertising for being somehow inefficient, that he was demanding either a slash of 50% of his investment, or a doubling of impact.

The spirit of this misconception haunts us today, as we repeatedly sacrifice truly great ideas, ideas that have the power to make the irrelevant interruption into the compelling and timely offer by sheer force of wit, at the altar of accountability. The current obsession with targeting (see Relevance above) both feeds and is fed by such thinking.

But Mr Wanamaker was making a far more sophisticated point. He was acknowledging that, in advertising as in so many other fields, art and science will always be uncomfortable but entirely necessary bedfellows.

Of course advertising much pay for itself. But it does so not by swinging to one side or other of the debate, but by forever succeeding in living between the two. When we ignore the imperative of balancing creative impact with business sense, we produce bad advertising that wastes money.

More prosaically, big brains in the absence of big balls are of no use when we're building brands.

 

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.