Time to get into startup mode again – Part 1

The insanity of knowing what the problem is, and doing nothing to address it.

“The definition of insanity is doing the same thing over and over again and expecting different results.”   – Albert Einstein

Yet here we are: Marketing firms are offering the same exact services they were offering this time last year. Ad agencies: Same thing. Public Relations: No difference. Their clients, watching customer spending drop 10, 20, 30% are scaling back, laying off, stocking less, reducing their marketing spend, trying to stretch every business development dollar to the max, and what’s the answer been so far? What’s been the Marketing world’s reaction?

Nothing. Zip. Nada. In the middle of the worst recession in our lifetime, the answer being given by the most creative business people on the planet is either a) go ahead and shrink and/or b) let’s just keep doing more of the same old thing.

2-3 months into the stock market meltdown, I understood it: Many decision-makers were in a “wait and see” mode. But that was then. It’s been 10 months. The fog has lifted now. The wait-and-see, deer-in-the-headlights, “holy-crap-now-what-do-we-do” paralysis mode should be long gone.

At some point, businesses (and their marketing partners) need to stop wishing for the economy to magically return to normal and DO something.

Yes, actually put on their thinking caps (finally), and come up with better, smarter ways of getting results.

That whole discussion about the importance of ROI, it isn’t a Social Media discussion. It’s a business discussion. Heck, it’s a business imperative.

I get it: Consumer spending has shrunk 10, 20, 30%. Okay. So you’ve reacted. You laid off your staff. You cut your marketing budgets. You tightened your inventory. You’re being forced to do more with less now. You’ve adjusted to the giant kick in the nads that Wall Street delivered back in September. So you’re back to square one. Now what? (Wait… don’t answer that yet. That’s the topic of tomorrow’s post.)

Sneak Peak into Part 2 of this post tomorrow: Recapturing the startup spirit.

Remember when you first started in the business world? When you were a hungry startup? When you couldn’t afford to compete against the big boys in your industry but you still went after them with guts and heart and smarts?

Remember those days of outsmarting and outperforming the competition rather than outspending them? What happened to those days? What happened to the drive that got you through those days? What happened to how clever you used to be back then? Whatever happened to applying that attitude, drive and cleverness to your business problems now?

You’re a small coffee shop and Starbucks opens a new location across the street. What do you do?

You’re a fresh new ad agency looking to score a big consumer brand campaign in the next 12 months. What do you do?

You’re a major software distributor whose biggest vendor just filed for bankruptcy. What do you do?

Sometimes, solving other people’s problems gives you pretty solid insights into solving your own. When done right, it’s a great exercise in both strategic and tactical problem-solving. This is no brainstorm. This is problem-solving. There’s a huge difference.

Tomorrow, we’ll talk about another type of example you need to put yourself through to get your business back on track, but for now, let’s get back to the topic at hand: The insanity (and stupidity) of doing the same thing over and over and over and over and expecting different results each time. Or rather, each quarter. And I guess it all starts with the importance of accepting (rather than rejecting) reality.

An example: What less spending but more of the same will get you.

Let’s look at the problem of doing the same thing year after year, yet expecting different results with a simple example: Company XYZ’s men’s watch sales tanked in Q4 2008 and analysts predict an even slower H1 2009. To keep the company in the black through H2 2009, production slows, 10% of the staff is laid off, and marketing/business development budgets get slashed by 30%. The marketing and biz-dev teams meet with their marketing partners look at the original marketing plan for 2009, and start trimming the fat. The end result is a marketing/advertising/PR plan that is basically the same as the original, though 30% leaner now. The full page national magazine ads get cut. Some TV spot concepts get shelved. Radio spots take a hit too. That new website redesign, it’ll have to wait.

What do you think will happen?

Let’s look at this graphically. Before belts started getting tightened:

And since the belts started getting tightened:

Bear in mind that nothing has changed in the way Company XYZ is going about trying to earn or buy business. It’s just paying for less of it, therefore it is doing less of it. Why? because the only variable in this emergency plan is the budget. (More on that in a sec.)

For the sake of clarity, let’s say that historically, Company XYZ knows that – using existing tools and tactics – it must spend $100 on marketing to sell each $1,000 watch. Let’s assume that we know this. That this is fact. And now let’s say that this company reduces its spending 30% without changing the way it does business. Without exploring new strategies. New tactics. Without trying new tools or methods. What do you think the impact will be?

That’s right: A 30% reduction in net sales.

Way to make all of your worst fears come true. Welcome to the business version of the self-fulfilling prophecy.

What’s the solution then?

When the only variable in the equation is spending, guess what: Less spending = less results.

So what’s the solution? Simple: Change the variables. (Don’t make spending the only variable.) Make the strategy, tactics and tools your variables: Rethink, revamp and retool. That goes for client companies AND for marketing firms and agencies.

This is not brain surgery. Holding on to the same model when it no longer produces the desired outcome is dumb. Doing it it quarter after quarter isn’t just dumb, it’s insane.

Yet this is exactly what is happening every day in the US. Even as customer engagement vehicles, business intelligence tools and technological platforms continue to evolve (and along with them both strategies and tactics), very few companies are looking to redefine the variables in their own business equations. Social Media, anyone? Customer engagement? Community management? Conversations? Handshakes? Hello? Let’s lay the cards on the table here:

If you’re a company whose marketing budget has taken a 30% hit, start thinking about new (and in some cases really old) ways of engaging with your customers again. Don’t just do the same crap you were doing five years ago, only less of it. That’s just moronic.

If you’re an agency or marketing firm whose billings have dropped 30%, don’t just sit there looking for bigger, better clients to fill that gap by offering the same old crap: Find new services to offer. Partner with other firms with specific specialties you can’t support in-house. Change your model. Adapt. Evolve. Grow into something better, stronger, more valuable.

The attitude of “don’t fix it if it isn’t broken” doesn’t apply anymore. If you’ve had to lay off more than 5% of your staff in the last year, trust me: It’s broken. If you haven’t been growing organically (acquisitions don’t count) by more than 15% annually in the last 5 years, guess what: It’s broken. If you don’t own a majority share of your market right now, it’s broken.

Facing reality isn’t admitting defeat. It’s just facing and accepting reality. That’s it. Nothing more. Incidentally, accepting reality is the first step towards saying no to insanity.

Moreover, being in touch with reality is simply called situational awareness, and without it, no solid decision (business or otherwise) can be made. Be honest about your business’ situation. That’s a pretty good start.

For every company exec who puts up a front and proclaims that s/he has it all under control, that it’s “the economy”, that their company will rebound as soon as the economy does, I have two words: Bull, and… well, the other.

What economy? What is that? Some magical entity that decides when businesses are able to make money? Seriously?  Is that the answer? Is that what they teach in business schools these days? Is that what 25 years on various boards and whatnot have taught you? The economy is responsible for my business still looking at a lousy H2 in 2009? 😀

Here’s something to chew on: The economy won’t start getting better until businesses start doing better, and that my friends is not something that will be decided in Washington D.C., Wall Street or even CNN. It isn’t a chicken or egg question. Businesses ARE the economy. No one is going to magically make the economy fix itself. Not Jesus, not President Obama, not the Fed, not even Kanye West. It starts here. Right now. With you. Not with some vague distant fairy godmother of business called “the economy” but with you: The business leaders. The CEOs. The CMOs. The creative directors. The agency principals.  The Social Media directors. The community managers. The customer engagement managers. THAT‘s where it starts.

And let me tell you something: Doing the same old crap you have been doing for the last decade isn’t going to cut it. Don’t kid yourselves. It isn’t. Not in the advertising world, not in the PR world, not in the sales world, not in the lead generation world, not in the retail world, not in any world.

And now, to illustrate my point, let’s dispel a popular misconception about what Darwin really said about survival of the fittest:

“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”       – Charles Darwin

Tomorrow, in Part 2. We’ll see if you really have what it takes to come out of this recession as a winner… or as just another casualty with a bagful of excuses.

Have a great Monday, everyone.