Do not advertise to me

From the Center for Media Research, a summary of recent Forrester report on the advertising backlash:

Chris Charron of Forrester Research reports that an advertising backlash is upon us. Sixty million US households have signed up for the Do Not Call Registry. Fifty-four of online households have spam blockers; 20% have ad blockers. Personal video recorder households skip 59% of ads. Multitasking, especially among younger consumers, is sapping consumer attention away from advertising. For marketers, Charron says, the solution to the backlash comes as permission-based marketing and household targeted ads. Delivering relevant ads that are delivered based on consumer profiles is every marketer's dream.

There are glimmers of hope, he continues.

Twenty million households already have addressable digital cable boxes, which means that no new devices or interfaces are needed.
Direct marketers are ready and willing to pay hefty premiums -- up to $550 CPM rates -- for the privilege of targeting selected households.
54% of marketers say they would accept aggregating delivery confirmation data -- rather than demand household-level metrics -- which alleviates potential privacy concerns.

Anticipation

Here's a great blurb on the customer experience for purchasing a Mini Cooper:

So high is demand for Minis that the waiting period for a customized car (which account about 95 percent of those sold) is now generally in the 8-to-12 week range. So, Mini (which calls its dealers "motoring advisors") keeps its waiting customers happy with "Make Waiting Fun" welcome kits that "include retro 1950s games like Interstate Highway Bingo" and a "Mini Parking Only" stencil. Mini also created the "Where's My Baby" program online, which enables waiting buyers to track the progress of their cars, and a bulletin board where waiting -- as well as existing -- owners can exchange questions and share their experiences. The site has attracted some 12,000 registered users, most of whom seem to have "named" their cars. The real payoff, though, is the viral effect. Notes John Stramatos of Nissan, who stays in touch with long-waiting 350Z, www.z.com, buyers via postcards and coffee-table books: "Those people bring in other customers."

The Mini team understands that the period between purchase and delivery is a crucial one for customer satisfaction.... this principle applies whether you're selling cars or phone lines. In the telecom world, customers must wait for installation of a phone or internet line. Often there's a breakdown in the hand-holding process; customers want to know when they're getting their service and make numerous calls to find out the status. This creates a burden on the inbound call center and frustration for the customer. One of my clients is working on a web interface that will show a barometer for the status of T-1 installations, which is often a 45 to 60-day process. They're also creating a scheduling desk to make proactive communication with customers about the status of their order.

If the purchase process in your company includes a waiting period, what can you do to alleviate 'buyer's remorse' and create anticipation?

Quote of the Week

A business trip and eye strain have interrupted my normally steady stream of consciousness on this blog... I don't know how computer programmers do it. I just can't sit for hours on my computer without getting eyestrain! So...longer posts to come later this week. In the meantime, here's a great quote from www.buildingbrands.com:

"Our company has, indeed, stumbled onto some of its new products. But never forget that you can only stumble if you are moving."

Richard P. Carlton, Former CEO, 3M Corporation

How-To's of Branding

Jim Berkowitz of CRM Mastery asked the following questions about branding in a recent post entitled Brand Messages: Fact or Fiction?:

How do companies come up with their branding strategies and messages? Do they consider their "strategic" positioning versus their competitors? To what degree do they base their branding strategies on customer needs and expectation feedback? Is their branding strategies contributing to developing loyal customers? And finally, do branding messages need to be backed-up with programs that fulfill their promise, or are they just some type of psychological ploy to attract new customers?

The answer to all of these questions (except for bit about the ploy) is: Absolutely. I'll just roll up my sleeves here and tackle the how-to's of brand strategy. First, a few of my own definitions:
1. Brand. The idea of your company that resides in the minds of your stakeholders.
2. Brand Promise. The promise of value that lies at the intersection of what's deliverable by the company, desired by customers, and different from the competition.
3. Brand Identity. The tangible look/feel/tone that's created by design firms, agencies, etc. Includes logo, tag line, tone of voice, web site, advertising, etc.
4. Brand Experience. The tangible ways that the company delivers on the brand promise through every department.

The Mantra process:
1. Corporate analysis through interviews with exec team and front-line employees. Do a SWOT analysis, learn what's great and what needs fixing.
2. Qualitative, blind, open-ended interviews with existing customers. Learn challenges, unmet needs, motivators for becoming a customer, likes and dislikes of company versus competition, unaided/aided awareness of companies in category, etc.
3. Qualitative, blind, open-ended interviews with non-customers who are aware of the company. Why did they choose NOT to do business with the company in question? What are their likes/dislikes of companies in the category? aided/unaided awareness, etc.
4. Review of competitive marketing strategies and brand promises.
5. Synthesize all of the above information and find the core benefit that's desirable, deliverable and distinct.
6. Quantify findings and ideas through a survey that's created from the qualitative findings. The most cost-effective method is an online survey among existing customers. Be sure to include a question that ranks attributes -- including your recommended brand promise -- on two measures: importance to the customer, and satisfaction with how well the company delivers. This survey can then be used to benchmark and track improvements on communication and performance of the brand promise.
7. Develop marketing strategies that communicate the brand promise in a way that attracts new customers and keeps current customers.

This is a very brief overview of the process that I've used successfully for many years, but a good process doesn't guarantee results. If you don't have training in research and strategy development, it's worth your money to hire an expert to get it done correctly... otherwise you put at risk your entire marketing budget. (And I'm not just saying this to plug my services; I've seen far too many execs in small to mid-size companies say "marketing and branding doesn't work" because the strategy was based on faulty research and conclusions.)

Comments/questions are welcome. Let me know if any areas require clarification!

Building Trust

David St. Lawrence offers the following criteria for judging value or worth of companies and individuals:

You can accurately judge the worth of a person or organization, even yourself, by how well these three things are done:

1. Promising only what you intend to deliver
2. Keeping your word once given
3. Following through so as to meet expectations

We instinctively and accurately judge a person by how well they do these three things, whether they are a child or an adult. We trust people who do these things. People who don't do these things are untrustworthy, no matter who they are, how educated they are, or how important they may be.

To quantitatively verify his observations, here are the top 6 most-important attributes in a phone provider as ranked by over 500 small business customers:
1. Takes responsibility (92.6%)
2. Phone/internet services always work (91.6%)
3. Delivers on promises (91%)
4. Communicates honestly and clearly (87.6%)
5. Available when I need them (87.3%)
6. Offers the most competitive price (84.6%)

The company in question had been focusing all its efforts on offering the most competitive price. The executive team was quite surprised to learn that price was not even close to being the most important item on customers' lists. As a result of these findings, we began an internal campaign of "Delivering on Promises" to positively impact customer attraction and retention.

These soft issues aren't often measured or addressed by management teams, but they're the critical factors on whether customers continue to buy from your company. As David points out, they're drivers for organizational trust... and trust is a driver of success.

Buyer-centric no more

With his recent comment to my Semantics post, Damon B. resurrected the customer-centric versus buyer-centric debate:

CC, while it does have its short comings, is far superior to being BC. Buyer centricity leaves out some very important customers - most importantly the internal customers. Sure, a CC company can start looking at customers as acquisitions or transactions, but that's a result of the company failing to properly implement the policy. Claiming CC is not correct is like claiming fishing line is inferior b/c it broke when there was too much weight on the line. It's not the fishing lines fault, it was just poorly used.

If a company can not fully grasp how to be CC it will also fail at being BC.

Excellent point, and one we've been exploring in the running "Role of Marketing" dialogue. My most recent definition of marketing's role is to "catalyze communication and relationships between stakeholders." And, of course, that can best happen in a stakeholder-centric organization.

As Damon pointed out, buyer-centricity leaves out the internal customer. But customer-centricity comes with its own problems:
- Is commonly interpreted as the end-user or buyer
- Leaves out other stakeholders such as distribution channels, partners, key influencers, investors and the community in which the company operates.

On the other hand, a stakeholder-centric company is keenly aware of every group that is influenced by its policies and decisions. I'd like to revisit John Moore's definition of marketing as "resolving the conflicting needs and interests of stakeholders" and apply it instead as the definition of the stakeholder-centric organization (SCO). Executives of an SCO must make a comprehensive list of stakeholders along with their respective needs and interests, identify areas of conflict, and actively seek solutions that will resolve those conflicts. This is a great idea-generating exercise for innovative products, services, policies, operational enhancements, etc. that could reside at the intersection of those conflicting interests.

A stakeholder-centric marketer, then, would be involved in identifying core needs of stakeholders (specifically buyers and distribution channels), participating in stakeholder issue-resolution exercises with the executive team, and catalyzing relationships of the various stakeholders according to the resulting objectives, strategies and tactics that emerge from those issue-resolution exercises.

I like where these running blog dialogues are ending up. I'm officially changing my Buyer-Centric category title to Stakeholder-Centric. If anyone has additional thoughts on the subject, fire away!

Marketing Role, Part 3

Thanks to Paul at BrandAutopsy for the following comment to my post on the role of marketing:

One of the reasons the role of marketing is complicated to put in its own crate is that, while there is a department at the company with that name, marketing activity isn’t necessarily limited to only that department.

We’ve been using the word ‘customer’ to primarily describe the end-user of the product or service a company offers. However, within an organization, the sales force is a customer of the product team. The product team ‘hires’ the creative team to develop collateral. The operations team counts on the finance folks to help develop the sales targets.

To maximize effectiveness, each department in an organization would utilize marketing practices and ‘internal’ consumer insights. This would ensure they were delivering a product or service that met the specific need of an internal customer with the same fervor as they would an external customer.

Great clarification. This is why I like the word 'stakeholder'... too often we equate 'customer' with only the person who actually purchases and uses the product. I've been thinking about the term "relationship catalyst" as it applies to the marketing department. As Paul points out, everyone in the company *should* have a marketing mentality, but unfortunately that's not often a real-life scenario. Marketing has to get the ball rolling (or the CEO as 'top marketing guy', as John Moore notes in his excellent continuation of this dialogue on marketing). I see marketing's role as catalyzing communication and relationships between stakeholders by:
1. educating all departments on customer insights
2. educating all departments on how they can deliver on the customer-centric brand promise
3. providing 'dialogue tools' to customer-facing departments like sales and customer service (ie. brochures, presentations, scripts, etc.)
4. building dialogue/relationship platforms (ie. web site, loyalty programs, etc.)
5. developing brand promise and message strategies that invite customers into a dialogue/relationship
6. developing pricing/promotion strategies that meet customer requirements for entering into a dialogue or relationship.
7. raising awareness of the relationship opportunities between the company and prospective customers, employees and investors.

As Tom Asacker pointed out in his entertaining comment, Marketing's the party organizer. We're the hub of the wheel, touching everything, mailing out the invitations and making sure the party's a hit.

New role of marketing, cont'd

Thanks to David Foster at PhotonCourier for his comment on my recent post on the new role of marketing. He says,

"I think it's a stretch to say that "marketing might think of its task as resolving the conflicting needs and interests of stakeholders.." That's the responsibility of the chairman and the CEO (or, in a multidivisional company, the division general manager). Attempts by marketing people to claim such a broad scope would disperse efforts and by perceived by many as a territorial grab."

This new definition of marketing originally came from John Moore at OurHouse. What I liked about the definition is that it didn't stop at the customer but considered everyone -- internally and externally -- who has a role furthering the success of the brand. However, David has a point... is this overextending marketing's reach?

I started thinking further about this definition after a strategy meeting yesterday with the Patient Education division of a large non-profit agency. We made a list of all their stakeholders including sponsors, doctors, nurses, patients, caregivers/relatives and affiliates/volunteers. 7 groups of stakeholders, all essential to the project. John's definition of marketing doesn't apply here; there aren't any 'conflicting needs and interests' to resolve. Our client's challenge is to enable and facilitate communication between all the stakeholders. I think this is the key challenge for for-profit companies as well... by understanding the needs of customers, marketing can enable departments within a corporation to have meaningful dialogue with customers.

So here's my vote for the new definition for marketing: Enabling and facilitating communication between all stakeholders of an organization. What are your thoughts?

UPDATE: After I posted this, I realized that this definition applies to Marketing Communication, but leaves out other marketing functions like pricing. Need to think on this a bit more... input welcome!

Are you a blogoholic?

Thanks to the Window Manager for the link to this short quiz. My results?

56 points is in the 51 through 80 precent You are a dedicated weblogger. You post frequently because you enjoy weblogging a lot, yet you still manage to have a social life. You're the best kind of weblogger. Way to go! * These results are just for fun. Do not sue me. Have a sense of humour.

Of course, I've only been blogging for 6 weeks so I'm still in the 'honeymoon' phase (that sounds weird, like I'm married to my blog... but you know what I mean).

Time for a Change

Rebecca's Pocket posts a summary of a Guardian article called "Always Time for a Change."

- We overestimate the short-term impacts of technology while underestimating long-term effects.

- Industries mature according to a pattern. They begin by being vendor-dominated but wind up with the consumer being sovereign.

- New technology always challenges the established order, and eventually a new equilibrium is reached.

Poll: Attraction vs. Creation?

Fast Company has a poll based on my recent post on customer creation versus customer attraction. What do you think? Hop on over there and take the poll!

Know-How Exchange

Marketing Profs is launching their Online Know-How Exchange today. Looks like it should be a useful tool for getting answers to marketing dilemmas. I'll be participating as an expert on the Branding, Customer Behavior and Strategy boards.

"Total War" and Marketing

The New York Times had an interesting article yesterday on counter-insurgency in Iraq. When I read the following I thought, “Ah hah, that’s a terrific analogy for marketing!” (and it’s just an analogy, folks… I don’t want any comments on the implications of bombing customers!).

Vietnam stands as an encyclopedia of what shouldn't be done. Foremost in the do-not-repeat category are the indiscriminate use of firepower, the resort to conventional tactics to fight an unconventional threat and the failure to implement an effective ''hearts and minds'' campaign. The preferred strategy has been referred to as "total war..."

So let's take each of these in turn.

Indiscriminate use of firepower:
First, all firepower is indiscriminate in the absence of a good cause. I’ve advised more than one client to refrain from advertising until their products and services were of a caliber that customers would actually want to buy. Ditto for commodity products with no real differentiation, or less-than-stellar customer service. It’s better to temporarily reallocate the marketing budget towards creating something of real value… otherwise you’re just creating awareness of mediocrity. It’s a losing battle.

So assuming the company has a good cause and strong value proposition, what’s the most effective firepower strategy to accomplish its objective? It depends on the situation. Here are two frequent problems in estimating firepower:

Problem 1: Underestimating firepower. In the past few years, everyone’s been trying to do more with less. But at a certain point, low spending becomes nothing more than spitting in the wind. I know of several companies that tested advertising or direct mail with a tiny budget and a sub-par agency, got exactly what they paid for (ie. no results) and then pronounced the verdict that “marketing doesn’t work.” Sort of like sending soldiers into battle with capguns and saying afterwards, “see, I knew we’d lose.”

Problem 2: Overestimating firepower. I once worked with a national agency that recommended the same overkill media strategy in every market from Dallas to Wichita. They just didn’t know how to creatively maximize a smaller budget.

Conversely, a few years prior I worked for a scrappy small agency where one of our clients (a regional restaurant chain account) wanted to run mass advertising everywhere. But a cost/revenue/utilization analysis revealed where mass advertising made sense and where it didn’t. We used guerrilla tactics in markets where combined store revenues couldn’t justify the media cost, which allowed us to give sufficient weight to areas that needed it. (And if it’s relevant to you, here’s the tactical how-to: Add total revenue per market, then index the revenue against radio or TV cost-per-point in that market. Let’s say you have 10 locations in Chicago but the revenue/cost index is 300+… it won’t make sense to advertise unless you open more stores there. Next, look at store utilization per market and compare with the cost/revenue index. If the stores in Market A are running at 85% capacity, and the stores in Market B are running at 65% capacity, Market B gets priority for the ad dollars even if their cost/revenue index is higher. They need the extra media firepower.)

Resorting to conventional tactics to fight an unconventional threat.
Many companies keep turning to the old ‘tried-and-true’ methods to generate more sales: tweaking sales comp plans, running price promotions, changing their ad campaign, etc. But the rules of the game have changed; customers are now in control. And those customers have evolved to be more individualistic, better educated, and increasingly distrustful of corporations. They pit the conventional companies against each other in price wars for their business, then turn around and pay more with an unconventional company offering real value. The way to win is by reliably solving customer needs, authentically and transparently. Yes, this is tougher than changing the comp plan, but this is what’s necessary in today’s economy.

Failing to implement an effective “hearts and minds” campaign.
For a company to be a superpower, every employee – from foot soldier to commander – must be intellectually and emotionally engaged in the brand-building effort. As John Moore said in a recent post, “What hope is there of a brand engaging customers if it can't engage its own workers?” Harvard Business Review wrote that for "every 5% increase in employee satisfaction, there is a resultant 2% increase in customer satisfaction, returning up to 1.8% in net profit." Start with the hearts and minds of your employees, and the hearts and minds of customers will soon follow.

Deep breath...

As the Buddha once wisely said, "Suffering is wishing things were other than they are." I sure wish Explorer hadn't locked up after I spent 30 minutes completing a new post. So I guess it's time to stop suffering and start re-writing...

New role of marketing

John Moore at OurHouse expands our blog dialogue on Engaging Employees (original posts here and here) and offers a wonderfully concise definition of marketing's role in the 21st century:

...marketing might think of its task as resolving the conflicting needs and interests of stakeholders. I suggest this because a focus on the word customer risks oversimplifying the real challenge... And as Jennifer's comments suggest, if marketing is limited to pleasing customers, without having either the power or responsibility for squaring that with everyone else at the party, then it is likely to waste resources.

A role like this would certainly redefine marketing's place in the company and (if executed successfully) enable more marketing pros to move up the ladder to C-level positions.

Along these lines, here's the process I went through in my last full-time position:
1. Learned the unmet needs of our customers through qualitative/quantitative research
2. Created a brand position that was meaningful to both customers and employees
3. Translated the brand promise for every customer-facing department within the organization. Presented "this is your customer," here's why we're making this brand promise, and here's what you can do to make it happen. (BTW, employees on the front-line were thrilled to think that they could actually make a difference in building the brand. People like to feel part of something bigger than their own job or department).
4. Worked with customer-facing departments to realize the brand promise. This included simplifying billing statements, rewriting customer service scripts, rewriting billing/collection letters, producing standardized sales presentations, etc.
5. Worked with the agency to translate the brand promise into marcom tactics & Brand ID
6. Published weekly/monthly results of ongoing, online customer survey to each department head, which indicated how well we were delivering on the brand promise and what improvements needed to be made

Unfortunately the product didn't work and the company was sold to a competitor before we could track key brand metrics (customer attraction, customer retention, sales efficiency, etc). So although I have no tangible results to share with you, this was a very effective process flow. For future reference, I'd also add what John mentions in his post: work hand-in-hand with HR to align policies and hiring practices with the brand promise, and measure employee loyalty as well as customer loyalty.

The good news is, no area of the business is exempt from marketing's influence today. It's now up to marketers to step up to the plate and make it happen. Done correctly, marketers shouldn't run into many territorial, departmental roadblocks; simply position yourself as someone who can help them do their jobs better. You're bringing valuable information about customer needs, likes and dislikes. I've found no one inclined to argue with customer data. Ditto for HR: by offering to do an employee survey, you're making yourself a valuable ally to the HR team.

If anyone has experience that's run counter to this, please post a comment. Let's work together to figure out how marketing can best evolve and expand its role within the corporation.

What's the Purpose?

The following quote is attributed to Peter Drucker:

"Because its purpose is to create a customer, the business has two basic functions: marketing and innovation. Marketing and innovation produce results, all the rest are costs."

Hmmm. A company's purpose is to create a customer? I can think of plenty of companies who 'created' customers... and have since gone out of business. But according to Peter's statement, these companies successfully accomplished their purpose.

A business' purpose is to attract and keep customers. Its one basic function is to reliably solve customer problems... through innovative products, or exceptional customer support, or a powerful customer experience, or even low price (ie. WalMart). What attracts and keeps customers is the value offered by the company. Marketing comes second.

Thanks for the links!

A big thanks to the bloggers who recently added a link to Brand Mantra. Lots of terrific reading in these blogs!
BusinessPundit: Business strategy, economics, neuroscience, etc.
A Penny For...: Business, current events
Synergy Partners: Finance, Decision Science, Risk Management
Photon Courier: Politics, Culture, Business, Tech
Tontheman's Weblog: Tech/software
Keith Devins: Software, politics, science
Decafbad: software, politics, science links
BlogBusinessWorld: Blogs in Business, Marketing, Search Engine Optimization
Living Room: Blogging, Emerging Church
A special kind of Stupid (Carnival of Capitalists host): Current events, business
Mutual Marketing: Buyer-centric business and marketing

And from December...
John Porcaro: Business & Marketing
Ripples: "stable data for dealing with a turbulent world"
Chris Lawer: Buyer-centric business & marketing strategy
Cote's Weblog: Tech, software, current events
Thinking: Advertising, Marketing, Technology and Culture

Quote of the Week

"In matters of style, swim with the current; in matters of principle, stand like a rock."

Thomas Jefferson

Citizenry, Part 2

Many thanks to those of you (Ali, Chris, Mike and Director Mitch) who commented on my last post about Bush's proposal to legalize undocumented workers. You spurred me on to research the facts and come up with a solution instead of simply ranting (although sometimes it just feels good to rant, and it sure generates good healthy debate!). I have some thoughts that I'll post later today -- particularly immigration's impact on business -- but first I wanted to share a well-researched paper on The Social Contract web site called "Sorting Through Humanitarian Clashes In Immigration Policy". It presents the pros and cons of open, closed and restricted immigration policies. Highly recommended reading. Here's part of the summary:

The ethical basis of the current U.S. immigration policy would appear to be to help:

- consumers to benefit from lower prices,
- business owners to restrain the growth in wages and to more easily fill job openings
- families — primarily upper income — to obtain the services of nannies, gardeners and housekeepers,
- the owners of capital to make larger profits (immigration is a key ingredient in the rising income disparity in the nation).

And immigration, according to those studies, currently harms:
• lower-skilled workers, especially the foreign-born,
• poor Americans trying to leave welfare and join the labor force,
• students in crowded schools, especially racial minorities in core cities,
• middle-class taxpayers in high-immigration states who subsidize the average immigrant by $1,500 to $4,000 each,
• hunters, anglers, boaters and outdoor recreation enthusiasts of all types who suffer extra congestion from population growth caused primarily by immigration,
• breathers of air in cities that do not meet clean air standards because of population growth,
• users of the 40 percent of the nation’s lakes and streams that still do not meet clean water standards,
• all who value the wildlife, natural habitat, ecosystems and bio-diversity that are reduced each year by the pressures from population growth,
• traffic-weary motorists and residents of small cities, towns and rural areas trying to preserve their culture of living.

Because the effect of current immigration numbers is so drastic on the rate of population growth, people who place a high ethical value on clean air and water, protecting eco-systems, resisting congestion and sprawl, and preserving community cultures will have to consider great reductions in the overall numbers as they create an ethically ideal immigration policy.

Before deciding what our ethical position dictates in terms of “how many?” we should consider that the U.S. Census Bureau projects that under the current rate of immigration the 1970 population of 203 million will nearly double to 394 million by the year 2050... The Census Bureau states that replacement-level immigration currently is 225,000. So illegal immigration would have to be stopped entirely, and legal immigration reduced from 915,000 in 1996 to 225,000 to allow the U.S. population (267 million in 1997) to stabilize soon after 2050 at around 320 million. If we don’t want to add another 50 million people to the country, we will have to choose an immigration level below 200,000.

Top 3 questions in business today

Great article in the McKinsey Quarterly (free but registration required) called "Learning to Grow Again".

In recession, most companies know what they need to do: cut costs. But in recovery, corporate muscles that have gone unexercised must be flexed anew. In preparation, boards and top managers would do well to ask three basic questions.

What is success?

In earlier eras, the success of a company was judged by a mixture of measures, including its fundamental economic performance, its reputation with customers and employees, its stock price, and its responsibility to society at large. That changed in the 1980s and 1990s. Academic theory, the takeover boom, and shareholder activism led to a focus on share-holder value, all too often measured through the narrow prism of short-term movements in stock prices....

Factors outside management’s control, such as investor sentiment and overall market conditions, can have a major impact on share prices. Did all those CEOs really deserve to get rich from the rising tide of the 1990s? Likewise, some strong management teams have doubtless been punished unfairly during the downturn.
This raises troubling questions as companies look to manage the next era of growth while avoiding the pitfalls of the last... A more balanced view of success, and the time over which it is measured, would ultimately serve shareholders (and society) better by encouraging more innovation and growth.

How can we nurture talent?

...When the downturn came, there was an abrupt shift from "we value talent" to "you are a disposable cost." The options evaporated, the perks were withdrawn, and the layoffs came swiftly—in some cases, brutally. This tore the social fabric of many firms and left employees cynical. Trust will have to be earned again and a new compact forged between companies and employees.

...The best companies will create jobs and roles where employees feel they have some control over what they do, where professional relationships are valued, where more than lip service is paid to the work-life balance, and where there is a real belief in the social and ethical responsibility of the employer. The companies that translate these principles into concrete practices and build the social and knowledge capital of the organization will establish a source of competitive advantage not easily displaced.

What is the role of business in society?

...Market economies depend on integrity to function; companies should adhere to the values and norms of the communities in which they operate, as the great majority of businesses do. The drive for growth need not be at odds with environmental and other societal concerns...

Excellent summary of what businesses must do to survive and thrive. Far from being rocket science, it just comes down to the basics: balancing short- and long-term perspectives, valuing employees and acting with integrity.

And I'm a citizen... why?

I don't normally address political issues in this blog, but announcements like this really get under my skin. NY Times top story in my inbox today:

Bush Would Give Illegal Workers Broad New Rights

Under Mr. Bush's proposal, which effectively amounts to an amnesty program for illegal immigrants with jobs in the United States, an undocumented worker could apply for temporary worker status here for an unspecified number of years, with all the employee benefits, like minimum wage and due process, accorded to those legally employed.

Not only that, but

The plan also includes incentives for workers to return to their countries, like a promise of retirement benefits there based on income earned in the United States.

So it's now it's ok to give jobs to illegal aliens when 5.9% of our citizens are unemployed? And since when do we need to provide financial incentives to illegal aliens to go back to their country? Between this and Clark's proposal to eliminate taxes in the under $50k bracket (funded by an extra 5% surcharge on the rich), it seems like we're out to create a society of moochers. Let's make sure that the middle class and the rich pay for a societal infrastructure that any claimant can benefit from -- free of charge -- just because they need it. Let's dis-incent the poor families from crossing the $50k income mark because they'd suddenly have to pay taxes, deal with paperwork and actually earn their place in society. (BTW, I'm all for helping people out, but I believe that handing people a fish -- instead of teaching people how to fish -- is what reinforces a welfare mentality and ultimately does more harm than good.)

But oh, my mistake: Mr. Bush didn't propose this with the express purpose of taking jobs from our citizens or cheapening the value of American jobs:

The president's proposals were designed to appeal to Hispanic groups, a constituency that the White House is focusing on as Mr. Bush seeks re-election this year. The proposals are expected to be embraced by President Vicente Fox of Mexico, who has been lobbying for them for the past three years.

Oh, ok, I get it now. Just can't quite figure out what benefits I get for actually being a citizen of this country.

Analysis Paralysis

Thanks to John Moore (who passed it on from Piers Young and a list of others) for the link to the following story:

The ceramics teacher announced on opening day that he was dividing the class into two groups. All those on the left side of the studio, he said, would be graded solely on the quantity of work they produced, all those on the right solely on its quality. His procedure was simple: on the final day of class he would bring in his bathroom scales and weigh the work of the quantity group: fifty pound of pots rated an A, forty pounds a B, and so on. Those being graded on quality, however, needed to produce only one pot -albeit a perfect one - to get an A. Well, came grading time and a curious fact emerged: the works of highest quality were all produced by the group being graded for quantity. It seems that while the quantity group was busily churning out piles of work - and learning from their mistakes - the quality group had sat theorizing about perfection, and in the end had little more to show for their efforts than grandiose theories and a pile of dead clay.

I love this story. It reminds me of a few experiences I've had:

A few years back I served a brief stint as Market Intelligence Director for jobs.com. Several of the guys on the exec team came from a big 5 consulting firm. Every week I'd produce a report with a laundry list of all the competitive activities for the week -- new programs, new products, etc. -- and recommend a few immediate actions that would at least keep us in the game. But no, analysis paralysis was the dominant mindset and nothing ever got done. Funny how the company rapidly went under.

More recently I've consulted for a couple companies who just weren't sure whether they should invest in marketing activities. I recommended that we spend a small amount to test some ideas; if they work, we'll roll them out systemwide. If not, it wasn't a waste: we'd just try something else. Like the famous quote by Thomas Edison: "I have not failed. I've just found 10,000 ways that won't work." Unfortunately my clients were a bit too risk-averse... just like the quality group theorizing about perfection.

Of course, it's all well and good when it's someone else's money... but a bit tougher to apply it to one's own personal life (Yes, I too have been guilty of analysis paralysis!) It does take some courage to make a decision based on available information and stop second-guessing yourself. I think too often we can doubt our gut feeling because our brains are in overdrive, and we forget that 'gut feeling' is really the summation of unconscious brain calculations...

The Secret to Cisco's Success

I just read this article on BrandChannel about Cisco. The author opines that the company's success is due to its advertising and tag line. Wrong. Sure, advertising helps, but the secrets to Cisco's success are: the products are reliable, their customer support exceeds expectations, and customers are fanatical.

I did some focus groups a couple years ago among IT Directors in 5 major markets. Whenever Cisco was mentioned, almost every group member had a great story to tell. My favorite: one guy's network went down at 3:00 in the morning. His Cisco rep showed up at his office at 3:30 and helped him get it working again. No one in the group had ever had a vendor go the extra mile like that.

Here's what Kirby Drysen, Director, Customer Success Engineering at Cisco, has to say about their customer-centric corporate culture:

At Cisco, we view customer satisfaction as a continuous process rather than a singular event. This process is based on two principles: 1) maintaining a continuous flow of customer feedback, and 2) engaging our field teams and business units in the survey process.

The continuous flow of customer feedback is an ever-present reminder that customer satisfaction is achieved or destroyed with each interaction or customer experience. Rather than wait for an annual satisfaction score, our employees can identify problems almost as soon as they occur and work to resolve the situation quickly. And, access to real-time information promotes accountability rather than excuses for why the customer complaint was not resolved.

By involving those who work with our customers in the survey process, we ensure the questions we ask customers are relevant and actionable. In turn, this drives a strong sense of personal ownership among our field teams and business units to take action on the information, and allows us to maintain constant energy for driving customer satisfaction.

With a culture like that, advertising is secondary. Is it any wonder that they maintain 42% market share in networking products? Cisco is a great case study of brand rule #1: build a strong customer-centric brand and sales will follow.

Promoters Versus Detractors

There's a great article in the December issue of Harvard Business Journal: "The One Number You Need to Grow." . That one number is how many customers promote your business. Instead of measuring customer satisfaction, simply ask your customers one question: "How likely is it that you would recommend (company X) to a friend or colleague?" The author's research indicated that responses to this one question were highly likely to predict actual customer behavior that would lead to profitable growth. The article summarizes what Church of the Customer has been evangelizing: "The only path to profitable growth may lie in a company's ability to get its loyal customers to become, in effect, its marketing department."

Here's one of the takeaways from the article that will help me do a better job in consulting for my clients. I've been working with an online research firm to develop online customer surveys with live cross-tabs for several clients... it's pretty cool, and generates extremely useful and actionable information. I always include questions on likelihood to recommend and likelihood to purchase additional products. However, here's how the HBR article recommends structuring the survey:

"Resist the urge to let survey questions multiply; more questions diminish response rates along with the reliability of your sample. You need only one question to determine the status -- promoter, passively satisfied, or detractor -- of a customer. Follow-up questions can help unearth the reasons for customers' feelings and point to profitable remedies. But such questions should be tailored to the three categories of customers. Learning how to turn a passively satisfied customer into a promoter requires a very different line of questioning from learning how to resolve the problems of a detractor."

Great suggestion.

On a related note, here's the 'duh' quote of the day from the top story at Reveries. They're interviewing Robert Lutz, GM's Vice Chairman of Product Development, on getting Pontiac out of the 'cheesy' category. He says, "You just have to get vehicles more to the point where people want them."

Self-Deprecating Humor

Visit David St. Lawrence's blog and click on the thumbnail pic of "The World According to the United States of America."

I happen to fall in the mere 20% of map viewers who burst out laughing. Hope you have a similar reaction.

Blogging and the Singularity

This is a bit off my normal subject matter, but it's something I've been thinking about lately.

Since I started blogging, I'm starting to feel like a neuron in a vast brain; my thought processes are improving and speeding up with every new connection that's formed. Yet I just started my weblog a month ago; where will I be in one year from now? Ten years from now? And just where is this whole blog thing going, anyway?

No ideas are truly new; they evolve from prior knowledge. Centuries ago, it took years for an idea to be disseminated throughout society and find a mind who had the capacity to adapt it, refute it or build upon it. More recently, ideas are transmitted through mass media: books, TV, magazines. They are spread like seeds into the soil of society; however, only a few minds are capable of both evolving the idea and having the connections to mass-publish the updated version, often months or years later. The advent of the Internet helped speed up the process, but not by much. It's primarily used as a glorified library, and if users don't stumble across the data needed to validate or evolve their idea-- or attract the right visitors to their websites -- the ideas can often stagnate.

Now enter the blogosphere, where ideas are born, nurtured, transmitted and evolved -- all in a single day. Ideas have a life of their own; good ones seem to create their own connections. I may have a seed of an idea; you recognize it and spread it; someone on the other side of the world has complementary knowledge to expand and evolve it. In brain terminology, neurons that fire together, wire together. The same principle applies to the blogsphere: bloggers who think together, link together. And so the connections form, faster and faster. More pathways for an idea to spread, evolve, mature. This, I suppose, could be called hyper-meme theory: self-propagating ideas combined with exponential pathways that enable rapid evolution (see Thought Contagion for more on memes; it's a fascinating subject).

And blogging is still in the early adopter phase. Where is it leading us? Could it be a factor that brings us closer, quicker, to the Singularity? (the Singularity is a future time when societal, scientific and economic change is so fast we cannot imagine what will happen from our present perspective.) At first I was doubtful; I didn't know that much about the Singularity, but based on my own personal experience it seemed plausible. I can see a time when a much higher percentage of the population is plugged in to the blogosphere: more neurons, more connections for this growing electronic brain, and an exponentially faster evolution of ideas.

So I Googled the topic and found this white paper by Vernor Vinge. He believes that the Singularity could be caused by two events: the creation of Artificial Intelligence (AI) or Intelligence Amplification (IA: computers plus humans). He states that one scenario could be to

"Exploit the worldwide Internet as a combination human/machine tool. Of all the items on the list, progress in this is proceeding the fastest and may run us into the Singularity before anything else. The power and influence of even the present-day Internet is vastly underestimated."

What the Internet facilitates is 3D parallel processing, which is how our brains work. I chatted with Graham Glass, who knows a heck of a lot more about this topic than I do... he believes that we'll start seeing a transition from humans as 'neurons' or nodes in the network (bloggers!) to an increasingly higher percentage of machines (and/or 'enhanced' humans) as nodes. As this occurs, the overall system gets exponentially smarter.

Ray Kurzweil in his paper, The Law of Accelerating Returns, believes that we'll experience 20,000 years of progress in the next century. Vernor Vinge believes that, based on current technological progress, we could see the Singularity in less than 40 years. Reading Ray and Vernor's papers makes one believe that T3 and The Matrix are not just imaginary movie constructs but could quite literally happen in our lifetime. It's an unsettling thought. But to paraphrase Agent Smith, it has the sound of inevitability. I find it interesting that my last blog post dealt with the unraveling of our social fabric, whereas this one addresses the rapidly increasing connections of our minds. Perhaps the former is fuel for the latter. I can only hope that we use our human endowments of morality, intuition and reason to direct this runaway train down a path that won't end in our ultimate destruction.

(Whoa, a lot of gloom and doom for the first week of 2004!)

Let's be the change we want to see

New Years Day. Always a time of deep introspection, reflection and reiteration of what I want my life to be all about. I like to think about my life in relation to the whole; in other words, what do I want my relationships, family, business, etc. to be like, and what actions must I take to make that happen?

Along these lines, I couldn't help but think about some of the major trends in business today. There's been so much written about the failure of corporate America to satisfy the needs of customers, and in an attempt to fix the symptoms we've created new mantras (create customer evangelists!), new technologies (CRM), special programs (frequent flier miles), and the list goes on.

But who, exactly, is "corporate America"?
We are.

The corporate transformational change that we consumers have been crying for will happen when we -- the consumers, the customers, the employees -- begin living the changes we want to see. Instead of fixing the symptoms, let's address the root cause. Putting the blame on faceless corporations is the same error as putting the blame on our spouses, our co-workers, our families. Not only are we all connected, but we ourselves are individual components of multiple intersecting wholes.

We, the individuals who make up today's society, have created the world we see today. We've made -- and are continuing to make -- different choices than our parents and grandparents did at our age. These choices have created consequences that we often don't want to recognize or own, so we point outside ourselves and declare the culprits to be the big bad corporations (for whom we work) and government officials (whom we elect) and 'the system' (which we accept).

So what are these choices? Here are a few factoids from Bowling Alone that indicate that our social and family ties are loosening, and we're increasingly withdrawing into ourselves:
- In the past 3 decades, participation in government, local clubs and organizations dropped by up to 50%.
- Job instability, churn and the increasing numbers of independent contractors have resulted in a measurable decline of social connectedness in the workplace.
- Americans are entertaining friends at home 45% less frequently now than in the mid-70s; the number of picnics declined by 60% in the same time period.
- The fraction of married Americans who say that their family 'usually dines together' has dropped from 50% to 34%
- The number of families who vacation together dropped from 53% to 38%; watch TV together from 54% to 41%; sitting and talking, from 53% to 43%
- Reported charitable giving dropped by almost 20% from 1980 to 1995.
- The percentage of those who feel that "people in general today lead as good lives -- honest and moral -- as they used to" dropped from 50% in 1952 to 27% in 1998.

It's interesting to note that these percentages have remained more stable in small towns versus large cities. It's tough to be impersonal in a small town, but quite easy in a city. It's harder to be impersonal when you run a small business than when sheltered in the walls of a large corporation.

These statistics don't just show trends; they reveal our choices. We have chosen -- under the veil of 'too busy, not enough time, not enough money' -- to distance ourselves from our families, our co-workers and our communities. As isolated individuals, it's much easier to forget that we're part of a whole; that we're interconnected with everyone else and that our choices impact others as well as ourselves. We have made these choices individually but the combined effects are now reaching critical mass. How can we connect with a customer when we're not making meaningful connections with our own loved ones?

The lack of corporate/customer relationships is just the tip of the iceberg; it is symptomatic of a much more far-reaching issue. We've somehow adopted an us versus them mentality: not only between companies and customers, but between departments within the same company, between neighborhoods, races and religions. For real change to happen on the corporate and societal level, each one of us must first decide to build richer relationships within our own sphere of influence.... the forged bonds will move upward and outward, but we must start at the core, where we live. We must start by breaking down silos and walls within our own communities and companies and neighborhoods; by reaching out to others with compassion instead of holding back in distrust.

In a similar vein, we're calling on corporations to be more authentic, transparent and honest. Yet how will that happen if we're not transparent and honest ourselves? We so often are fearful of what others will think that we lose sight of our own authenticity. Political correctness has its limits. It's time for both individuals and businesses to stop trying to be all things to all people, and give ourselves permission to live honestly, and -- most importantly -- allow others to live their own truths without trying to change them. Each employee, each member of the whole, must be encouraged to live their own personal brand honestly and openly. When that happens, authentic and transparent corporate brands will naturally fall into place.

So perhaps our 2004 resolutions need not be so mundane. If each of us chooses to take ownership of our small section of the vast social fabric that ties us all together -- to tighten it up and halt the unravelling, not just with technology but with our own authentic goodness -- our society can be irrevocably changed for the better. Speaking for myself, I plan to seek out ways to be more authentic and transparent, more compassionate, and more willing to make time to deepen my connections with others. These are a few of my New Years resolutions; I hope you'll join me.