The outsourcing of America...and making it work

Here's a great link from the USA Today to an article that discusses how individuals and corporations are coping with current economic realities through outsourced and contract work. And if USA Today is reporting on the matter it must be prevalent and it must already be a firmly established trend.

Lacuna was created a few years ago to capitalize on this trend. Companies, facing quarterly expectations and profit pressure, are turning to contractors and partners as a means to ensure quality but minimize cost. Marketing is one realm of business that is at the forefront of change. Initially it was graphic design work or advertising that was given to outside parties and now it has expanded to include everything from demand generation functions to overall marketing strategy. We have a client whose sole remaining marketing employee is essentially a project manager who oversees the myriad contractor relationships and ensures consistency with the brand.

This is no longer a trend to observe but a firmly entrenched reality. If you are a service provider it behooves you to understand the reasons why a company outsources its work and what areas are most likely to be outsourced. Figure out what it is you do well and differentiate yourself. Land 5-6 regular clients and, like a mutual fund, diversify your income streams and embrace the freedom that comes with the new business model.

How companies use marketing analytics

We've spent the better part of the last several years trumpeting the benefits of analytics for marketing. Yes, there are benefits....very tangible benefits that make your CFO happy and your bottom line bigger.

The wonderful folks at the Adberdeen Group recently published a white paper highlighting the best practices of leading companies in regards to marketing. It is very insightful and serves as a great sales pitch for firms, like Lacuna, that specialize in marketing analytics.

One graph stood out. It is featured below. It highlights the top priorities for leading companies in relation to marketing analysis. It can serve as a road map for those companies that are looking to get their analytical operations off the ground.

Take a look at the list below. Spend some time on it. Would the insights that these tools can create be of value to your organization? I bet they would. Now, get to work and make your efforts more effective!

Turning data into gold

The internet has been both a blessing and a curse for those of us who are in the business of turning data and information into actionable intelligence. On the plus side, we have more and more information than we could have ever wanted. Not surprisingly, this is also the downside. Plus we will also need to spend more time validating discovered information because most of it is second rate.

Here is the standard hierarchy associated with knowledge management within firms. (From least to most important)

1. Data: Facts and Observations. Ex. 1st Qtr Sales for company X are up 5% over last year.
2. Information: Collection and some synthesis of the data. Ex. The sales growth was attributed to the launch of product Y.
3. Knowledge: The mix of information, experience, and context obtained in a value adding process. Ex. The launch of product Y by Company X represents an aggressive strategy towards attacking a new market and taking on a new set of competitors.
   

An experienced practitioner of competitive intelligence will know how to effectively mine information and data so that a solid hypothesis can be created and tested. These hypotheses will ultimately guide and direct strategic decision making.

More importantly, companies need to create an environment where every employee is capable of contributing to the overall knowledge management mechanism. This involves creating an appropriate culture, providing in the necessary infrastructure, and enabling efforts through the right IT support.

A previous blog entry mentioned the Chatter tool by Salesforce.com as an excellent platform for information gathering and sharing. We've also talked about the importance of promoting information gathering and sharing through every aspect of business activity. Finally, has the organization made the gathering and synthesis of information as easy as possible for employees through a proper infrastructure.

This graph, taken from McKinsey, outlines a proper framework for designing the appropriate knowledge management or competitive intelligence program.

Beating the Odds as a New Venture

We are spending more and more time working with companies on the far left end of the growth curve. These are nascent enterprises that are fueled by a great idea and a desire to shake up the market place. They are enterprises that are willing to take risks in their journey of growth.

Fellow BYU alum Clark Gilbert writes a great piece for the Harvard Business Review here.
It explains that while there are many risks naturally inherent in starting a new venture, most of the successful ones are able to identify certain risks and manage them. By discovering and managing their myriad risks they are able to see a better overall result.

One of the big risks that can be minimized? A proper understanding of one's competitive environment. Hint, Hint....just sayin'.

Lifting the veil and really understanding your consumer

Being "customer-centric" is one of the most overly used and lightly treated buzz words generated by executives today. It's the type of thing the CEO mentions in an annual report to make the company seem relevant and progressive. But beyond the blank commitment to the phrase, what does it mean to be truly "consumer centric"?

A recent article from the Harvard Business Review (view here) helps separate the posers from the players by outlining what some leading companies are doing in order to be truly customer oriented. And the positive results of their actions help lend credence to the notion that listening to the customer is good for business.

It specifically highlights how "Best Buy for Business" was able to distinguish itself from its competition and thrive in a difficult retail environment because it of its core commitment to responding to consumer needs. As someone who has helped lead marketing efforts for "Best Buy for Business" I can attest to how in tune they are with their various and different customers. Their genuine commitment is tangible and acknowledged by most who shop there.

One other thing regarding the use of consumer research to the benefit of marketing and product development programs. Companies need to leverage both internally led and external information sources for their efforts. Most larger companies that I work with have some sort of consumer research mechanism that queries their customer base. But you would be surprised at how few of them monitor the wider universe for what consumers are saying about their brands outside of the control of a focus group.

Social media and internet search capabilities now provide companies with an incredible ability to hear the unfiltered and unsolicited opinions of their valued consumers. This is the truest and most accurate way to measure the pulse of the brand. More and more companies are acknowledging this and developing programs to monitor these groups.

The bottom line is technology is enabling us with more and more means to connect with our customers. And companies that connect with customers are the ones that last and that case studies are written about.

President Obama, Terrorism, and Corporate Intelligence

We were all disturbed when we heard of the alleged terrorist plot that took place on Northwest Flight 253 on Christmas day. While the plot ultimately failed it unnerved a sensitive public that is forever scarred by September 11th. Almost immediately the media, policy makers, politicians, and members of the intelligence community quickly jumped into the fray to mete out blame and determine fault. This was especially disturbing considering that the intelligence community reportedly had credible intelligence on this man and possible threats to the U.S.

President Obama said it well when he stated "The system has failed in a potentially disastrous way,...The bottom line is this: The U.S. government had sufficient information to have uncovered this plot and potentially disrupt the Christmas Day attack,...But our intelligence community failed to connect those dots." Very chilling words.

Now international terrorism is far more serious, important, and wide reaching then corporate intelligence but there is still a lesson for the business community to learn. It is one thing to collect competitive information and it is a whole other thing to actively analyze and respond to this new found knowledge. We simply can't be satisfied that we are gathering information from the internet or trade shows. We need to adequately digest all of the information that we gather and act on what the intelligence says. Your inaction can lead to some serious negative consequences.

All companies should perform an internal audit to determine whether or not their current CI infrastructure is capable of connecting and acting on the disparate and distant dots that form actionable intelligence. Because we all know that it is one thing to passively monitor your competitive landscape and it is a completely other thing to harness this information in the development of sound corporate strategy.

Helping people understand why they need you

I recently met with a CPA to help his firm evaluate its marketing messaging. Up to this point his firm has been successful at generating revenue through reputation and word of mouth referrals. But now he is looking to grow his business and to get more aggressive with his marketing.

His firm goes beyond the traditional accounting model by offering full service IT integration and systems implementation. His model might be similar to Accenture except that his target market consists of far less sophisticated companies in the $1 to $50 million range. Those who have used his firm can attest to the value he offers. But in spite of his success with his current customers he still faced several challenges as he endeavored to grow the business.

Among them:

• How to communicate his "added" value to an audience that was used to looking at IT and Accounting separately.
• How do you begin to develop a marketing strategy when there is no one in your competitive space to benchmark against?
• How can you convince this market that your services are a necessary catalyst to growth and not a cumbersome cost?

Through the course of the exercise we tried to look at past examples where new services or products faced a market with seemingly unchanging and archaic views of what was available. Apple Computers, Netscape, and Nike were all examples of companies that revolutionized things by redefining the rules and perceptions of a given space. They didn't get bogged down in apples to apples comparisons with the competition, they focused getting to the heart of how their offerings could redefine the lives of those who used them. For example, in the early 1980's a write up on the computing power of a Tandy computer wouldn't have meant anything to the average American. But once you are able to convince them of why the PC was able to enhance our lives we witnessed a something that was game changing.

We took the same approach. We didn't want these unique services to be "cubby holed" in with the existing offerings by other CPA's or IT firms. This firm did all of those things but it also did so much more. We wanted to focus on the "Why" and not the "What". That led to the creation of some messaging that really resonated and communicated value to the intended market. Once we determined why this offering was a solution for what was plaguing the market the rest fell into place.

If you are trying to reshape a rather commoditized market or if you are trying to create demand for something new your messaging has to be spot on. You need to clearly define the added or new value to your audience. If you don't they will see no reason to change what they are doing irregardless of how much your offering may help.

A virtuous bank?

The travails of the current recession have had the thinking public looking for the source. While the list of culprits is long and varied the popular voice almost uniformly heaps the lions share of the blame on Wall Street and the financial sector. Whether or not this disdain is fully justified is a question for another day but the current actions- think AIG and Goldman Sachs bonuses- within this sector have only strengthened the anger.

But new forward thinking businesses are emerging out of the malaise created by the greed of the previous generation. Whether or not this latest iteration of businesses can succeed will probably depend on their ability to reign in the universal drive for excessive lucre. Among the companies leading this new charge is none other then organization from the oft hated Financial Sector, Spanish bank Caja Navarra. It is this bank and its unique business model, referred to as "Civic Banking", that I want to showcase.

Since 2000 this bank has been quietly and effectively turning a healthy and guilt free profit in Spain. Their motto, "Future financial institutions will be civic...or they won't survive" not only explains their Raison d'être it also serves notice to the other financial institutions that they are harvesting a new wind of change.

Picture this. I have a bank account and I receive a monthly statement that details my charges and what I've made in interest. Pretty standard stuff. Caja Navarra does this but they also will let you know exactly how much money they made off of you and they give you the ability to designate 30% of those profits to charity. So we now have increased visibility and incredible corporate responsibility.

The bank is now poised to enter the US Market. They have met with institutions such as Columbia, Wharton, and Thunderbird evangelizing their message of corporate responsibility. The way the public currently perceives the suits on Wall Street this type of move couldn't come soon enough. We need more organizations and corporations that think beyond themselves and, hopefully, this will inspire more of them to follow suit.

Thriving in the new economic reality

Let me borrow from Mr. Huxley by calling the current job market a “brave new world”. The current economic conditions, technology, and geography are conspiring to create a whole new paradigm for the next generation work force. The younger generation is catching on; the seasoned vets need to take note that the game is changing.

First, let’s define what is taking place….

Companies are restructuring in an effort to cut costs and streamline operations. The typical byproduct of such activities is layoffs and unemployment. Because Arizona is so reliant on industries that have been specifically pummelled by the recession- think construction/real estate- we find ourselves in especially dire straits. According to the US Department of Labor the unemployment rate in Arizona has doubled over the past year to 8.9%.

Second, let’s illustrate how proactive people are responding to this trend….

We have a very educated and resourceful job base, despite the numbers. There might be fewer formal jobs but that doesn’t mean that are no opportunities. Things are evolving and we, taking a page from Darwin, are adapting to the new changes. Companies still have work to be done, just not enough to justify full time employment. Smart people are engaging these companies and contracting those specific services. For those of us who are not up to speed on this trend go and do yourself a favor and read a great book like Free Agent Nation.

So companies still have work but just not enough to justify bringing you on. What do you do? Smart people are becoming “free agents” and selling their expertise to multiple companies. In a strange mutual fund sort of way this approach builds additional stability by diversifying your streams of income. It also provides for increased flexibility.

As more and more “free agents” enter the market it creates a need for cheap or free workspace like Gangplank. It is one of several locations valley wide that is popping up to provide entrepreneurs and other free lance workers with the traditional amentities of the office. That and the company is far better. One of the great side effects of such an arrangement is that it provides job seekers and entrepreneurs with the chance to interact and create synergy.

People are also taking advantage of opportunities to find affordable ways to further their education. For profit universities like The University of Phoenix and Grand Canyon University are all seeing growth as education tends to act in the reverse of the economy. Places like Training to You are able to use government stimulus money to provide professional training in areas like computer programming and project management.

In short, times are tough. But smart people are heading the words of Churchill and vowing not to give up. Smart people are taking a page from Darwin and changing with the times. Eventually things will turn around but it will be the people who are adapting now who will be in the best position to profit.

Numbers Do Matter....now more then ever

Back in the old days a superior product, value chain, or marketing campaign could win you easy market share and profits. These days companies offer similar products and often share similar technology. Geography doesn't matter as much and technologies can be easily replicated. One of the last remaining vestiges of competitive advantage can come from a superior use and understanding of relevant company data: Business Intelligence.

Yes, this especially pertains to the world of marketing. Think of all of the new developments pertaining to marketing in the past decade. Whether it is running a series of online marketing campaigns or managing the efforts of a sales team the one common denominator is the increased presence of analytics. A recent quote in the American Marketing Association "Marketing News" magazine by Mike Linton, former CMO of eBay, underscores this point. "At its core, marketing is 70% math." Now I wouldn't quite go that far but you have to blind to realize that marketing is becoming more and more numbers driven.

Marketing needs to embrace numbers and math, and statistical analysis. It allows us to make smarter decisions and it gives us more ammo when we have to justify our marketing efforts to those curmudgeons in the Finance department. There are a whole host of tools that are now readily available and priced to fit most budgets. I have listed several in past entries so take a look.

The bottom line is that you need to measure and evaluate your efforts. You can start off by generating simple and straight forward reports. Eventually you can move to more sophisticated work that will allow you build models that will allow you to forecast the results of your efforts. This framework below was developed by SAS and was recently featured in the recent HBR book "Competing on Analytics". It does a masterful job of outlining the place and impact of most forms of analysis that most successful businesses employ today.


So take a closer look at your operations. Determine whether or not you have systems in place that allow you measure the performance of all facets of your organization. If you have any gaps or deficiencies than please bring in someone, like Lacuna, who can help you out. Marketing dollars are becoming more and more scarce. You absolutely, postively need to be able to analyze and exploit those actions that are generating the best returns.

Relevant Reading

A great presentation from the good folks at Aquent.

Making Marketing Smarter Amidst the Cuts

View more presentations from Aquent Webmaster.

Why marketing is essential to your company’s survival

To paraphrase an old maxim, “Change is constant.” We see it in our lives, we witness it within our communities, and we certainly face it every day at the work place. Companies that don’t embrace this truth run the risk of losing relevancy, market share, and the hearts and minds of their consumers. The enterprise that can effectively gauge trends and act on them has the clear upper hand; just ask Ford, Yahoo, or Palm the price of not adapting to market trends.

The marketing organization is in a unique place when it comes to shaping corporate strategy. It conducts the market research that helps determine product characteristics. It monitors the competition and pores over endless trade and industry journals. It has the structure and discipline to handle the insights gained from the sales force in the field. Marketing conducts the focus groups that are designed to flesh out the concerns, wants, and desires of their consumer base. These kinds of insights are invaluable. There is no better organization within the company to be manning the ‘crows nest’ to help the company steer clear of threats and challenges.

So marketing is in the cat bird’s seat when it comes to determining corporate strategy. What are some things it can to do to ensure that it gets its just due?

• Aggregate and effectively manage information- Make it a point to collect information. Make it a bigger point to organize your data in a manner that allows it to be easily sorted and accessed. There is a tremendous amount of gold that can be mined with a little bit of focused and structured data mining. Create an appropriate taxonomy that will allow you to easily search through everything ranging from point of sales (POS) data to the results from your latest email campaign.
• Invest in someone in a strategic capacity- Earnings pressure typically force most companies to become short sighted and cut back on concerted strategic efforts. While the short term results might not be affected it has a major detrimental impact on the company to be able to forecast events in the future. A smart company will have someone whose job it is to manage all market observations and to provide thoughtful recommendations based on these trends.
• Find ways to communicate with your customer- You need to have a meaningful and frequent relationship with customers. There are several traditional means to do this such as focus groups and telephone interviews. Technology also allows for many new forms of interactive or permission based marketing initiatives. Your most loyal customers will be flattered that you are considering their opinion and will often provide brilliant and frank opinions.
• Capitalize on your internet strategy- We live in a time where we are swimming in information. Chances are there plenty of chatrooms, blogs, and web communities that actively discuss your products relative to their competition. These sites are gold mines for determining what is taking place on a grass roots level. Don’t be afraid to aggressively obtain customer information and don’t be afraid to use that information in tailoring your marketing campaigns.