Are you James? Or, are you Kim?
To often I think marketers and PR people think they are Kim. They dream about the massive weapon that simultaniously will reach and affect a wide audience.
At Ivy we think James Bond is a better option. Or Modesty Blaise. With scarce resources they move fast and change their target groups from inside. That't the way to change the world.
If you´re unsure of who you'd rather be, go test your self here
Figure yourself standing by a bridge over a deep chasm, just about to cross. How much research are you prepared to invest in, to make sure the bridge will be safe?
Probably quite a lot, your life may be at stake.
Then, figure, you know that an angry lion probably is having his daily lunch walk not far from where you are standing. How confident do you have to be about the bridge's qualities now?
Decision making is about eliminating risks. And most difficult is it to handle risks derived from completely different dimensions, in this case "time" and "amount of knowledge". Successful decision makers identify all risks and then optimize the distribution of resources to make a decision as good as possible.
In marketing too many conduct research as there were no lion in sight. But when there suddenly is, they throw all research and run in panic. That's why essential qualities of a good marketer often are "to run fast" and "have great luck".
Over time this of course lead to a perception that research doesn't pay and thus is rather useless.
So how can we make research more valuable? Well, one way is to make it more usable. Make sure it´s possible to digest and turned into a decision before the lion is running towards you.
Here are some thoughts.
If you are a decision maker:
If you are a researcher:
Although research may be advanced and complex the decisions that are to be based upon it normally aren't. The questions that initiated the research often are about "left" or "right", "yes" or "no". Then research should be designed to answer those questions. Before the lion bites.
President Bush wants to give people who buy hybrid vehicles tax breaks at $4,000 as a part of his strategy to make the United States less dependent on foreign energy sources. That's pretty well thought out, as it nearly exactly what a Toyota Prius will set you back in comparison to a similar non-hybrid car in the same size and with the same equipment.
Not many people will oppose. It's a hands-on, no-nonsense incentive that gives a clear signal to the American car buyer - we offer you a free ride to a cheap-ride car.
But is it effective?
Toyota will ship more than 100,000 Prius this year. Only in the US. That’s nearly the same number that SAAB will sell. Including all of their models - worldwide. So it's already quite successful. That also goes for Lexus with its RX 400 and Ford's Escape. That is, when it comes to hybrids, nowadays the production capacity is the bottleneck. Not the demand.
So, who will profit from $4,000. Well, all those people already in line.
The parallel is to be studied in the now lively debate in Sweden about "Home PC". Since 1998 employees in Sweden have had the opportunity to make a tax break when their employer buys a PC to be used in the home of the employee. The aim with the program is to increase the computer density in the country and make people more IT savvy. Today an employee pays a monthly rent by lowering their gross salary with the same amount. Which means the more you earn, the better the deal, as the taxes in Sweden are sky high. Since the start of the program more than 1.5 million PCs have been sold this way.
Now the responsible state agency has evaluated the program and has come out with the conclusion (in Swedish only): More than 80 per cent of those who've used the system did have a computer already in their home or were about to buy one anyway. That means only 20 per cent have used the tax break to do something they otherwise wouldn't do.
Another report I had the opportunity to study recently was a survey in the wood pellets heating industry. Small house owners who had got subsidies of SEK 15,000 or $2,000 when buying a pellets burner at around SEK 30 – 50,000 were asked if they would have bought the equipment even without the financial support. 9 out of 10 answered they would.
So, is financial aid never a way to change people’s behaviors or buying habits? Of course it is. But normally it works when the market forces don’t, or when the new promoted alternative is much less sufficient then the old one. But driving a Prius is not bad for you. Unless you really would like to drive a SUV. But the SUV is already more expensive than the Prius without the tax break so why would it matter?
I don’t like high taxes. But when they are cut, I like them to be cut effectively, bringing more good to our world than just some unexpected money to buy fancy extra equipment to the car I would have bought anyway.
As a consultant in innovation and behavioral change I often run into some presumptions that are deeply rooted in people's minds but so terribly wrong. Sometimes because they sound right. Sometimes because they are built upon knowledge that stands on very weak (or no) ground.
Here are five myths we all could do better without:
1. Innovations are like fruit
A common presumption in high tech is that the market will mature and then the products will take off. I always wondered what this magic power is, that in fact can ripe the market while everybody can just sit and wait. The truth is of course, there isn't any. Markets don't mature by themselves. They develop by users who find products, ideas or services useful and who can change their behavior in a way they wanted but never have been able to do before.
When a company say they were too early it's not the whole story. Rather I would say they failed. I don't say it's easy to create markets or new behavior. But it's possible. And if nobody does it, no market will emerge.
2. We have to change people's attitude
If you have to change people's attitudes to succeed you're in trouble. It's not impossible to do so but it should rather be an effect of your success than a prerequisite.
Instead you have to find the people with the right attitude. Then you also have to be prepared to refigure what your product actually stands for and what qualities to elicit. And you still have to make sure the target audience with the right attitude is big enough and that it can lead to other audiences.
Then when you have attracted an initial market you may use to reach new ones. A long the way attitudes will change. But you are not the one who will do it. Your users will.
3. A company with an established brand is the gateway to the market
No it's not. Companies with established brands normally caters to more mature markets (matured over time by successful products). Then, most importantly they have to take care of their brand and their existing customers. Very little tells us they will be better to change the behavior of people then you are. Why should they? Instead they put all their energy to keep the current behavior of their customers. Take Microsoft. They never bother to change the behavior of there users. Instead they wait for other companies to succeed and then they use their position to launch similar products (e.g. Lotus 1-2-3 - Excel, Real - Windows Media, Netscape - Internet Explorer etc.)
Building a strategy on being a sub-supplier makes sense in mature markets, but not in new ones. Fine, if you're lucky. But if you're not, your product becomes one feature among many others and the chances that your product will win the race aren't bigger than if you would arrange the race yourself. Remember, innovation is something that happens with the users. Then let's mingle with them, not their current suppliers. When you then have succeeded it's time to keep Microsoft off your back.
4. There's a first mover advantage
Theoretically there is an advantage of being first. But this implies only when there are two players that are doing everything right. Then of course it's better to be first. But the real clue still lies in "doing everything right". Yahoo didn't get to where they are because they were first (they weren't). They got there because they did everything right.
5. There's a second mover advantage
This implies when the first movers managed to do something right but not everything. Then you may, sure. But you still have to do that. Right, that is. You still have to understand what needs the customers really have and what you can do to satisfy them. To do the same thing as the first mover with a lower price is not the solution.
The only advantage you actually have as a second mover is that you can study what the first mover did wrong and do it better. That's it.
Here's a story about how Absolut launched its ready-to-drink Absolut Cut in Australia. Previously the drink has been launched in the UK and Canada.
In essence, they used everything but traditional advertising, including two short-leased Sidney pubs, rebranded in Absolut style.
One of the real challenges is to convince the beer-loving Australian men to switch to something sweeter. And that's really a challenge I guess.
To me as a marketer that sounds extremely exciting and creative. On the other hand, Absolut is a state-owned company (Swedish state has a 100% ownership) that hopefully not would like us to increase our total alcohol consumption. It's also a rather big company, in fact one of the largest destillers in the world;
So, if you so eagerly want to reach out to the beer-drinking men. Couldn't you just buy a brewery instead and spare yourself some marketing money?
Far too often when I meet innovators, marketers at large or small innovation companies or campaigners managing health, environment or traffic campaigns, I find my self thinking: He (or she) sounds like an artist!
They are enthusiastic, dedicated and commited to change the world we live in. They focus on higher values and they feel they are there for a reason. But the most characteristic feature is the strong whish their customers (or audience) should share the same view as they do. If people don't get it, they shouldn't buy our art.
During the winter I have met with a lot of people in the automotive industry discussing new technologies for lowering fuel consumption and dangerous emissions. It always have ended up in a discussion about Toyota Prius. And the discussion always goes like this:
The story is the same when it comes to organic food and residential energy systems but also for new services for mobile phones or new enterprise resource planning systems. Companies stand looking on its competitors thinking they use arguments that will damage the art.
But innovation marketing is not an art. It's business. And the arguments people are using for buying their products are the true arguments.
Here's some advice:
Something odd is happening in mature industries. When new entrants succeeds in stealing the old guys market share it seems only one strategy is available: Follow! And as new entrants often base their success on lower prices, and they are organized for it, that means considerable lower margins for the previous leaders as they often have a rather high fixed-cost structure. This is what airliners are suffering from, as well as the retail industry.
But, hey! What happened to innovation and making your customers trading up?
Customers doesn't always live for paying less. They live for experiencing more. But if the same experience is available to a (considerable) lower price they that's the price they want to pay.
In fact there are a lot of companies getting this. And they profit from customers who doesn't want to live in a capitalistic communism, where everything is the same, although it's the capatilists that has narrowed our choice. BMW, Victoria's Secrets, Virgin Atlantic, Apple are just a few who are doing fine with this strategy.
Seth Godin also writes about this, whith the retoric question:
So, I think I understand what happens when you win the race to the top. You end up with a healthy, motivated workforce that's focused on adding art and joy to your products. You end up with profits and market share and a community that's glad you're there.
What happens, though, when you win the race to the bottom?
Some people that should be extra worried are the environmentalists and people fighting for better conditions for third world workers (I hope we all are). Because as price turns more and more important (and we are talking low price), less customers are willing to pay a premium. This means products that are sold with ethical and environmental arguments will only be sold because of good will. And, I am sorry, there is not enough of that for building markets.
However. Don't blame the customers. Blame the uninnovative industry that hasn't got this. Or even better, take their business by trading up.
If product developers knew more about marketing, then marketers wouldn't be that busy we are today. At least not by delivering end-of-the-line activities. Because then products would have been more attractive to the target audiences in the first place.
Instead of advicing on how to make products that fit in the needs and prospective needs of the customers, marketers are asked to fix the buggs.
Carson McCormas examplifies this with his post about the effects of Oprah's spectacular give away of 276 Pontiac G6 cars. According to Detroit Free Press the sales of the Grand Am replacer won't exceed 90,000 cars a year, from almost 200,000 Grand Ams. A proof that buzz not always generate sales? Definately. But I am like McCormas pretty sure it would have been a better idea if only the car have been more interesting in the first place.
According to Seth Godin not only bad products are expected to be fixed by marketing. Also bad marketing is expected to be fixed by shortcuts. He told a journalist that the key to successful marketing is to to create and deliver an attractive content that they could make use of and even would like to share with their friends. But the remaining question from the journalist was: what about if you don't have an attractive message to deliver.....
The thing is, far too much marketing is purchased as shortcuts:
The paradox is that the marketing industry has it self to blame. And we make money of it as well. For years we implicitly have argued that creative communication can replace good, interesting, stimulating, attractive products. Then that's what we have to deal with. Shortcuts.
"Underpromise and overdeliver" is normally seen as one of the most important strategies for generating and stimulating buzz for new products. And the king of the concept has always been Amazon, I never stop appreciate that "Wow, already today"-feeling they normally give me.
But David Lidsky of Fast Company worries that the strategy actually could be bouncing back. Instead we may feel like loosers when we, because of the underpromise, order super delivery and yet it had arrived the same time with normal standards. And with the new Amazon Prime program, that sets you back $ 79 a year for a guaranteed two days delivery on more than a million instock items, Lidsky wonders if we actually can win something we haven't already won.
There are three types of companies on the innovation arena:
American Leather is such a company. By adopting a production philosophy from the Japanese car manufacturings ideas of Lean Production they have manged not only to grab a fair share of the American furniture market. They also now manage to keep the so much bigger Asian threat away by sticking to their oustanding delivery standards. Virginia Postrel has the story.
Imagine thousands of MDs sitting by their computers at home or at their offices developing a new drug against the AIDS virus. Without pay, without knowing each other, they research, analyse and write a common spec of how the drug can save thousands of lives.
Uthopia? Perhaps. But why is it possible in the world of IT to develop an operating system that seriously challange the market leader but not in the world of medicine?
Richard Watson from Global Innovation Network elaborate on this in a Fast Company article about open source innovation, or distributed innovation. Using the ideas from open source software projects where probably Linux stands out as the best known example , Watson means innovation may be carried out much more user centric to no or little cost. In many ways it equals the integrated approach of innovation I have previously been writing about.
The ideas are great. Because, as innovation is the behavior of the user, why don't we let the user do the actual development as well?
Shoes from Oregon have made some footprints in the sports world over the years. And now another venture may challange Nike by offering a "one-size-fits-all-technique" that creates the perfect fit for your feet.
The inventor Rob Lyden has developed a technique based on insoles filled with polymer, designed to be light-cured in less than two minutes to conform exactly to an individual's foot. Now he is looking for investors and retailers. Everything according to The Business Journal of Portland.
I think it´s a great invention that I would have payed a lot to lay my hands on. But my question is, will I be able to do that within reasonable time? Because we have some serious strategy issues here. What strikes me the most is that Lyden is offering his own designed shoes instead of licensing the technology to other shoemakers. That means Lyden now is in the fashion business, which is a completely different industry. In short here are the problems:
- Fashion people normally don't care about technlogy, not even when it comes to new clothes - if
Lyden manages to sell his own design, he probably could have done that without the tech in the shoes
- By selling his own shoes he has to build a brand from scratch. Why not have a free ride on the one of the leading brands that can profitize from being first.
I hope he will make it, the idea is terrific. But somebody should help him with his strategy.
Just coming back from giving a lecture at the Göteborg University about integrated communications I popped into Forbes.com. With a perhaps not groundbraking but interesting article about how companies like Danone, GM and toy manufacturers are profitizing from letting customers be a part of the design process. Either by choosing from prospective alternatives, or even be a part of the actual design.
By doing so companies can not only meet the customers judgement before their products are hitting the shelves but also get insights from the customers they never otherwise would have get.
I think advantages are even greater. By integrating customers, or potential customers, in your product development you not only get their opinons. You can also study their behavior, and you can better find out what use they actually have from the products. You have also generated a network of ambassadors. Danone nowadays have 750 people who rightly can say - I was part of the design of that Low Fat youghurt!
How about if a hamburger restaurant invited their customers to a "burger designer's night" Free eating when you design your own hamburger, while being video taped. Then the avarage burger design can be offered as the true local specialty, burger made for our customers, by our customers. Let it be salads, pastries, 3G phone content, radio playlists or whatever.
Let the customers in!!
Perhaps I am just tired. But after rerread this Fast Company article at least 5 times I just don't get it. John A Byrne writes about an exciting research project unveiled by the Alexandria, VA company Peer Insight offering new ideas of how to initiate innovations in the service sector.
The company stress the difference of innovations in service businesses and in product businesses. But I still don't get this vast difference. Services are created while they are consumed. Yes. They cannot be inventored. Fine. So how does that affect the innovation process?
In my world a service and a product can compete on the same arena and the process of how the offerings will change the behavior of people are quite alike. Take for example the San Diego start-up On Tech. They offer self-heated drink containers that enables you to heat your coffee on the go. It's truly innovative and it may compete with cold drinks, food or even candy. But of course also with Starbucks and Seven Eleven. Why is that? Because both products and sevices do "jobs" for its users and it's the job that really is the innovation. In this case I personally think Seven Eleven and outlets alike are more threatened than is Starbucks as the job Starbucks does is to provide a "third place" and premium coffee. Seven Eleven provides hot coffee. So does On Tech. But they do it whenever, wherever.
When a service organization innovate they has to do it with competitors in both the service and product businesses in mind. And again, an innovation is the use the customer will make of the offer. Service or product doesn't matter. It's not different. In fact it's quite similar.
