Business Imperative: Trend-spotting.

Source: Guardian UK / Corbis

It’s weird that fortune-tellers tend to work for carnivals rather than Fortune 500 companies. If I were a CEO, I would want to hire people who can see the future. It would save me a lot of heartache and worry. I could focus on the product R&D programs that I know would work and wouldn’t waste resources on projects that won’t. Deciding upon a course for a marketing campaign wouldn’t be such a dilemma: Do we go with the talking monkeys or do we tie our product to the Star Wars franchise?

Okay. Fortune-telling has its creepy disadvantages: Most people don’t want to know when or how they will die. Many of us want to discover what is around the next corner without spoiler-alerts. If you take all the mystery out of life, what’s the point? But there are advantages to having someone around who can see a little further down the line than others: Maybe you re-book your flight. Maybe you buy that lottery ticket. Maybe you start wearing sunscreen at a young age. Maybe you invest early in cool little start-ups like Apple and Nike (just like Forrest Gump did). Maybe you sign an author with promise before she has penned her first draft of her boy-wizard story.

Maybe you get the jump on your competitors every single time you make a move. Think products, services, channels, processes, even hires. Imagine if you could get a 12-18 month head start on everyone else in your industry. Wouldn’t that be nice? Wouldn’t that make a huge difference in how your business runs?

Well, like I said earlier, fortune-tellers don’t work for Fortune 500 companies. But trend-spotters often do, and when it comes down to it, that’s almost as good.

Source: Getty Images

Gentlemen, place your bets!

By trend-spotter, I don’t just mean hipsters who hang out with the cool kids until 4:00am and can tell you what the next hot street fashion is going to be, though for apparel makers and retail buyers, that’s pretty important. These folks prepare their seasons months in advance. If they get the trends wrong, three things will happen: 1. Their sales revenues will tank. 2. They will end up with a ton of inventory they won’t be able to get rid of, even at 70% off. 3. Their brand’s relevance will be put in question. They will lose market share. Ergo: Complete disaster.

Every year, companies place bets on a million things: Products, campaigns, services, technology, programs, media buying, hires, trade shows, agency selection, you name it. When you take a step back, it looks a lot like a giant game of pin the tail on the donkey. Nobody really knows if anything is going to work. For every reason why something might, there are three reason why it might not. Any decision-maker anywhere will tell you the same thing: They are in the business of taking risks. Calculated risks, but risks nonetheless. The philosophy then is this: Big risk have the potential for big rewards, but also costly blunders. Small risks have far less potential for rewards, but don’t sting quite as bad when things don’t work out.

This would be a great time for me to segue into the vital connection that exists between vision, courage and leadership, but that isn’t what this post is about. What we are talking about today is trend-spotting: The function within an organization that helps decision-makers minimize the potential for poor strategic decisions and maximize the potential for good strategic decisions. Every day, the big strategic croupier calls for business leaders’ bets, and every day, that call must be answered. Wouldn’t it be nice for these folks to have a roulette or card-counting savant at their side, whispering in their ear what plays will yield the highest probability of success?

Source: Google.fr

In the apparel industry, that savant’s job might be to attend fashion shows all over the world, hang out at popular night clubs, watch teenagers hang out at the mall or at skate parks, or just take regular trips to Tokyo, Paris, Milan, London or New York.

In the tech industry, that savant’s job might be to attend tech shows, hang out with venture capitalists, talk with a lot of start-ups, read key blogs, take regular visits to Silicon Valley, San Francisco, Boston, New York, Antwerp, and wherever else innovation is taking place.

These folks don’t have a crystal ball, they can’t actually predict the future, but they see what’s happening. They know what people are working on. They can spot innovation and place it on a timeline. They can see trends emerging and can gauge their momentum. They see how all the pieces fit. They don’t just have their eyes open, they also have a nose for it.

How do you think some mutual funds beat the S&P year after year? What do you think makes the difference between a great quarter and a lousy one for most businesses? Luck? Well… okay, there is always an element of luck. But luck strikes where and when it pleases. Industry giants aren’t betting the farm on a rabbit’s foot. Luck has nothing to do with engineering patterns of success. Having the right people onboard whose job it is to not only keep their eyes open but also understand where things are going, does.

 

Bubble Blindness Syndrome

Having worked with a lot of companies over the years, I have come to observe that most organizations tend to fall into one of two categories: Organizations that are connected with the world around them (not just their market), and organizations that operate in a bubble.

Save yourself the trouble of arguing that bubbles come in all sizes. I know. Some bubbles are thinner than others. We are talking about varying degrees of disconnect here. Having said that, bubbles are bubbles. No matter how thick or thin, no matter how permeable or impermeable, bubbles effectively shield companies from the outside world. They aren’t just cultural cocoons; they also create a wall of opacity that makes any kind of trend-spotting impossible. As you can surmise, bubbles are bad.

Would you like to know a few symptoms of bubble-wrapped organizations. Here are a few:

• They have to hire people from outside the organization to go find out what their customers are saying.
• They have to hire people from outside the organization to go find out where their customers are playing.
• They have to hire people from outside the organization to tell them what new technologies they should use.
• They like to “wait and see” what the market will do and what their competitors will do.
• They have to hire people from outside the organization to tell them what the market and their competitors are doing.
• They often operate under the delusion that by virtue of the fact that they have been in business for 50 years, they will still be in business 5 years from now.
• They believe that having been relevant in the 20th century automatically makes them relevant in the 21st.
• They rarely hire from outside the industry. Most of their managers and executives have either worked there all of their careers or used to work for their competitors before coming to work for them. In these organizations, seniority and tenure in the industry are prized far above ingenuity and strategic insight.

It is virtually impossible to see what is coming next if you lock yourself up into a windowless room all day long, day after day after day. It is also VERY difficult to score big wins, much less engineer a string of them, if you have disconnected yourself from the field.

One of the first people I always ask to meet with when I begin working with a client is their director of innovation. This all too often draws blank stares. The people in the room with me look at each other and flex their eyebrows at each other, trying to figure out who that might be. Invariably, the question is asked: “How do you mean?”

“I mean who manages innovation for the company?”

Crickets. Then begins the discussion. “Maybe he should talk to Pete in I.T.” “Yeah, or Mike, our COO.” “Maybe Louise in Digital?”

“Okay,” I ask. “Who’s in charge of consumer insights?”

Crickets. “Um… maybe Paula in marketing?” “I think our agencies handle that.” “We work with research firms.”

And you wonder why so many companies adapt to change slowly, why so many CEOs tread lightly when it comes to integrating social media channels into their communications mix, why the ship turns so painfully slowly when it comes to incorporating social business principles across an organization.

Everyone is so task-oriented that companies forget the importance of using qualified spotters and scouts to help with navigation.

It isn’t about Pinterest. But in a way, it is.

I can’t go ten seconds without seeing an article about Pinterest all of a sudden. The company’s name is on everyone’s lips. And naturally, every strategic meeting I go into, Pinterest comes up: “What is this Pinterest thing I keep hearing about? What does it do? is it the new Facebook? Should we be on it? Bob, call Pete in I.T. See if he can join us. He probably needs to hear this.”

Pulling up Pinterest on the big screen and giving them a demo isn’t enough. You also have to give them context, and aside from numbers and demos, here is all the context they need:

“It’s interesting to see how conservative marketers are being with Pinterest. There seems to be a lot of wait-and-see happening and many pokes at how people are planning for action they’ll never take. I’m all over Pinterest and would recommend it as a strategy to many of my clients. I’ve been on Pinterest for about 6 weeks, or so. Just this morning I received the 7th thing I’ve purchased after seeing it on Pinterest and following the link to the main site.” – Sheila Germain

There. Get it? People share stuff because it’s fun. People discover that stuff as a result. Then they buy it. Your socks, your car, your leather gloves, your #2 pencil: The more people post about it, the more mindshare you earn and the more you increase your chances that people will buy it. Why this works doesn’t matter. That it does is what matters.

It’s like advertising without the advertising. It’s word-of-mouth publishing. Compared with the relatively low cost of being there, a platform like Pinterest can yield enormous dividends.

Now here’s the choice: As a company, you can sit around and talk about strategies year after year after year. You can hire consultants and research firms and agencies to tell you what’s hot – or rather what was hot last year. You can scratch your heads at all that newfangled stuff and end up “sticking to Facebook” because you’ve already committed to it this year and it is a known quantity. You can operate under the premise that if Pinterest is still around in three years, it will have probably grown into a legitimate channel that you will want to invest in. Until then… Meh.

Or, you could wrap your mind around the potential that this and other new platforms or products have to offer and see what you can do with them. I don’t mean just task your agency with proposing a campaign that includes Pinterest or whatever next thing comes along (although… knock yourself out). I mean start thinking about ways that new platform and product capabilities fit into what you are trying to do: Sell something. It doesn’t matter of your company makes toothpaste, aluminum foil or ball bearings. It doesn’t even matter if you’re a non-profit or a government agency tasked with promoting good hygiene in the workplace. Use your brain: How could you use this?

But this isn’t about Pinterest. Pinterest is just one platform. There will be others. New ones pop up at regular intervals. So the question bears asking: Who in your organization was the first to bring up and recommend Pinterest? Who was the first to see the angles? For that matter, who first started talking to you about using Facebook and Twitter a few years back?

If no one in your organization saw this coming (or thought to bring it up), you have a serious problem. Your bubble has reached maximum density. You may not see it, you may not even believe it, but aside from a few narrow channels whose relevance is at best limited, you have become completely disconnected from your market and the world at large. Denial won’t help. Accept it and do something about it. Today.

On the flip side, if you are fortunate enough to have someone on staff who noticed Pinterest a few months back, if some of your managers or staffers even suggested that perhaps you should look into it, my question is this: Why didn’t you listen to them? The question is worth a few minutes of your time because at its heart is a key reason why your company is not doing as well as it should be.

The business sense of funding the trend-spotting function

Catching the right wave, not just once but set after set, requires both focus and insight. It also requires a certain instinct, honed over time through trial, error, habit and acclimation. Understanding emerging trends is about far more than crunching numbers and poring over data. The process of becoming good at this sort of thing, with or without the benefit of having a natural talent for it, requires deliberate investigation, long periods of observation, layer upon layer of context and interpretation. Perhaps most important of all, it requires exposure to the environment where the events leading to the trend will take place.

Understanding what comes next by putting all the pieces together isn’t something that can be done via a thirty minute conference call with an industry analyst who also spends most of his or her day sitting in an office, compiling reports.

If you seek to understand a thing, go observe it. Go touch it. Go live as close to it as you can for as long as you can. You aren’t going to ever understand lions by reading statistics and reports about lions. You’re going to have to go out to where the lions are and study them yourself, in their natural habitat. The same is true of consumers, of markets, of people. You can’t anticipate their needs and wants, their shifts in preference and taste from inside a corporate cocoon. You have to go out there. You have to talk to them, listen to them, hang out with them. In other words, you need people inside your organization whose focus is not a computer monitor and a set of spreadsheets, who don’t spend every minute of their day being pulled into pointless meetings or replying to email threads or entering data into a system.

In the best of worlds, you would create a business ecosystem that would allow most employees to become trend-spotters too – managers and staffers alike. Ideas and insights can come from anywhere, and so it makes sense to increase your potential for good ideas in this way. That is one of the promises of social business, by the way.

But the reality of most organizations is that people are simply too busy with a mountain of daily tasks to be able to effectively serve this function. (At least for now. Today.) They can participate in it, they can occasionally make game-changing contributions to it, but they just can’t be counted on to manage that function on a daily basis.

And yet, someone has to.

Let me say it again: Someone has to. Without this function, your organization is pretty-much flying blind. For all the bravado of many a self-important manager who “just knows” he is right about something he will gladly admit he knows very little about, for all the wishful thinking in the world, rare is the company that hits all the right notes quarter after quarter that doesn’t have a function like this in place, staffed by the right kind of people. Whether you are Gucci, Ford, the Obama campaign, Edelman Digital or Apple, this function is deliberately fed, fostered, and put to obvious good use. Most organizations, unfortunately, are not so forward-thinking in the way they operate.

The alternative is this: To be strategically, tactically, operationally disconnected from a changing world – an ever-evolving world – that doesn’t give a damn that you have been in business for 20 years, or 50, or 100, a world that only cares about two things: Do you provide the most value for my money or attention today? Will you provide the most value for my money or attention tomorrow? You can go with wishful thinking and the hope that “things will turn around” all on their own and see where that takes you.

Some quick and simple advice:

Don’t focus too much on Pinterest. Like every digital/social platform, it will have its rise and its fall. Right now, Pinterest is hot. Chances are that it will remain so for some time (long enough to be worth making a few plays with). But as we have seen time and time again, whether Pinterest sticks or fades into fad country, new platforms will come to compete against it for our collective attention the same way new technologies will disrupt the way we shop and do business, and new fashions will disrupt the way we dress. The question is this: What are you doing about it?

Before I go back to my croissants, I want to leave you with three simple points:

1. Assess your ability to spot trends: If you didn’t see Pinterest coming, your organization doesn’t have an adequate trend-spotting function in place. Either you don’t have one at all, or you thought you did but it failed pretty miserably. Whichever one it is doesn’t matter; the result is the same. Let that be your litmus test for this quarter. Unless you are growing at a double-digit rate and whooping your competitors, I would make that an item of immediate concern. Fix it. Learn from the winners. They get there first for a reason.

2. Think short-term and long-term: Some technologies and trends are slow to mature. I remember being shown technologies and devices 6 years ago that are only now entering the mainstream and will take another half decade to really change the way businesses operate. That’s okay as long as you understand the timetable. It’s as important to know what is coming 5, 10, 15 years from now as it is to know what will be hot in 6 months. Why? So you can start thinking about your company’s path beyond next quarter or next year. Being able to see the changes on the distant horizon is probably the most important factor in any organization’s ability to effectively adapt to BIG change, if not lead that change outright.

Short term focus is also pretty important. Some products just come out of nowhere and take markets by storm. Their development might be stealthy, or just completely out of the way until a journalist at Gizmodo, Mashable or Elle discovers it and turns it into a massive success. Look for those short tickets too. If a horse you have never heard of looks really good two weeks going into a race, pay attention. You don’t always have to score massive wins to roll on ahead. A series of well paced small wins can have the same effect and create excellent growth momentum.

Keep an eye out for anything that will help your long game and your short game.

And remember: The sooner you spot an opportunity, the more time you have to leverage the hell out of it.

3. Be operationally nimble: When a platform like Pinterest pops up on your radar, be ready to seize upon the opportunities it has to offer. If you are a chocolate maker, a flower shop or a jeweler and you only just found out about something like Pinterest a month before Valentine’s Day, don’t put yourself in a position where your company can’t bridge the gap between potential and experiment in that month-long window. You can’t afford to wait until next year to give it a shot. Everyone else will be using Pinterest next year and your first-mover advantage will be gone. Make sure your organization is nimble enough to change course (or test a new channel, product or technology) quickly. If you suddenly realize that the hot new fashion accessory in Tokyo is fingerless gloves but you just received an order for 10,000 pairs of full-fingered gloves, be ready to invest in a bunch of Kai scissors and retool a bit as needed. Today. Not two months from now when you have to sell your entire stock at 70% off.

The faster you can move on an opportunity, the more likely it is that you will score a win (or avoid a catastrophe). Works every time. Spot. Scout. Keep your eyes open.

Cheers,

Olivier

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Time to get into startup mode again: Part 2

Part 2 of 2. In case you missed it, read Part 1 now.

For those of you catching this post on a mobile device, don’t forget to check out today’s video. If it doesn’t load properly for you, feel free to go watch it here.

Caught up on yesterday’s post? Done with the moving pictures? Good. We can begin then.

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? This is the spirit you need to get back to if you want to make it out of this recession on your feet rather than on your knees… or on your back.

It’s the mindset you need to adopt if you want to ensure that you don’t become another victim, another statistic of this economic nosedive.

But before you can move forward, you have to accept that the economy is no more responsible for your success or failure than your competitors. Or who happens to be in the White House. Or whatever the excuse of the moment happens to be. The war in Iraq. The price of oil in Dubai. The butterfly beating its wings in Brazil. Fact: There will always be obstacles in your way. Small ones. Big ones. They’ll always be there. As soon as you figure out how to overcome one, another will appear to take its place. It’s just the nature of business: If it were easy to succeed, everyone would.

Yet not everyone does.

What you have to realize is that there is no middle-ground here. No gray area. No safe zone. This game either has winners and losers. That’s it. Those are the two outcomes, and that’s pretty much it. Those are your two choices. The two buckets calling your name. Whichever one you end up in is entirely up to you.

Incidentally, which bucket you end up in isn’t a result of fate. What obstacles the world throws at you may be harder to overcome than those it throws at everyone else. I’ll give you that. Maybe your mountain is taller, steeper, meaner than everyone else’s. Okay. So what? What does that have to do with anything? The obstacles are irrelevant. What matters is is choice you make: What bucket you want to end up in. The winning bucket or the losing bucket.

Yes, success is a choice. From start to finish, it’s a choice. Why? Because before success can become an outcome, it has to begin as a mindset.

(Even if it takes 40 years for the mindset to turn into outcome. Sometimes, that’s just how the pebble rolls.)

Fact: You either let excuses run your life or you kick them out of the way and press on. It’s that simple. It really is. Not easy, but simple.

And this “recession”, boys and girls, this “down economy”, whatever you want to call it is nothing but another excuse to blame failures on if your mindset isn’t right. Sales are down? Must be the economy. We have to lay off another 1,000 workers? It’s the economy. We need to slash bonuses? Yeah, the economy.

Bullshit.

How about this for truth: As a business leader, you didn’t have a Plan B. You weren’t ready. You were hoping the Titanic wouldn’t hit the iceberg, but you never stopped to ask yourself what you would do if it did.

To throw another analogy at you in mid-stream, when the grizzly came running out of its cave and made a bee-line for you, you froze in terror and then ran off.

Because you weren’t ready. Fight or flight: You picked flight.

That’s failure #1. And frankly, I won’t be the one to kick dirt in your face for having screwed that one up. A lot of people did. It happens. We all screw up from time to time. It’s okay. Brush yourself off and get back in the saddle none the wiser, right?

You would think. Unfortunately, something still isn’t clicking: 10 months into this economic slowdown, most are still hiding in the bushes, waiting for the big bad grizzly to go back into its cave, waiting for the coast to be clear, waiting for things to get back to normal before “doing” anything differently. Failure #2.

Well no. That’s no kind of strategy.

It’s been 10 months, people. If it isn’t clear to you yet, let me spell it out for you: The duck and cover model isn’t going to get you anywhere (we went over that yesterday).

It’s time to come out of hiding and face the bear.

If you don’t, you’re done.

The grizzly, the iceberg, the mountain, your competitors, the economic crisis, the recession, the price of rice in China… They’re all one and the same: Obstacles to overcome. Nothing more. Nothing less. They’re nothing new, and they’ll never stop coming. If you think that you’ll eventually get to a point in your career when obstacles will magically vanish, I have a bridge to sell you.

Fact: Right now, hundreds… no, thousands of companies are facing the bear. Taking it head-on. Wearing it down. Learning how to outsmart it, outmaneuver it, outfight it, and they’re taking the lead.  From you. While you are hiding, “waiting” for the bear to go away, they are taking the initiative and becoming the next decade’s market leaders. While you’re in a hiring freeze, shrinking budgets and hoping to avoid another round of layoffs by hopefully landing new clients (how is still unclear since you are not innovating), they are adapting, evolving and growing.

You aren’t growing. All you are doing is shrinking. Watching from the sidelines. Playing defense with what now amounts to a skeleton crew.

Take a quick 10,000ft view of the situation: Who do you think is winning? The companies rethinking, revamping and retooling, or the companies with a wait-and-see attitude?

Which one do you want to be?

So let me ask you again: How do you want to come out of this recession: On your feet, or on your knees?

Honestly, if you aren’t already looking at this recession as an opportunity to gain market share and crush your competition, if you aren’t at least in the process of rebuilding solid bridges between you and your customers, if you still don’t get that this is your moment to create something extraordinary, that this recession is actually the best thing that’s ever happened to your business, it’s time you asked yourself some pretty crucial questions, starting with… Are you sure you are cut out to be a business leader?

Because whether you like it or not, business is a fight. On a good day, it’s nothing short of a friggin’ grudge match. And this is a bad day. A very bad, very long, very punishing day that’s bound to get worse before it gets better. So my question to you is: what are you going to do about it?

'St. George Slaying The Dragon' by Hans Von Aachen

I have three simple questions for you. Write them down, take them home, and take your time answering them. They’re important. Very important. You’re basically stuck in business limbo until you answer them thruthfully, where you go from here is completely up to you. I can’t make you want to be successful. I can’t make you want to be a real leader. All I can do is help you find your way and let you do whatever it is you decide to do:

1. Fight or Flight: Either you want to be in this fight or you don’t.

Boiled down to its core, this is a simple fight or flight question: First things first: Do you want to be in this fight? It’s okay if you say no. It’s okay if your heart isn’t in it. If you don’t look forward to the blood, sweat and tears it’s going to take to win. The hard work. The really long days. The sleepless nights. The doubts. The blows. There’s nothing wrong with packing your bags and walking away. No shame in it. If that’s what you want to do, if your heart isn’t in this, then don’t lie to yourself: Do yourself a favor and go do something else. Go start another company. Go work for someone else. Go take a year off and be with your family. Go learn how to paint in Provence. It’s all good. Go live your life. Go do what makes you happy. Nobody needs you to pretend to be something you aren’t. Nobody is forcing you to fight someone else’s fight. Nobody is forcing you to fight the grizzly if you don’t want to.

But if you want to be in this fight, then BE in this fight. Jump in, heart and soul and all. Run into it swinging and land some good punches from the start. Don’t just hop into the ring to put in a valiant effort and get a pat on the back from your spouse or golf buddies for good measure. Get into the ring to win. There’s no A for effort here. In the real world, the worst team in the league doesn’t get a trophy. In the real world, it files for bankruptcy, shuts down, and sends families into financial upheaval. So don’t take up the challenge if your heart isn’t in it to win.

2. Why are you here? (No, really. Why are you here?)

Okay, so you’ve answered the first question. You want to be in the fight. Okay. Now tell me why.

Do you even know?

Is it pride? Is it fear? Is it desperation? Is it because you really want to be here or is it because you feel like you have to be here, that you owe it to the company founder or to the employees, that it’s either that or early retirement?

Why are you really here? Say it. Write it down. Turn your answer into a manifesto. I don’t are as long as you can actually explain to me or anyone what your purpose for being in business is. If you can’t figure it out, then maybe you’ve answered Question 1 (above) incorrectly. If you don’t know what you’re fighting for, if you don’t know what you want out of this, if you can’t articulate this, then what are you doing here?

What do you want out of this? In a perfect world, what would you be known for? What would be your legacy when it’s all said and done? Is that really what you want? (Back to question 1: Do you really want it?)

Why are you here? Tell me.

3. How do you define “winning?”

How do you define winning? Simple: How do you define success?

Does success manifest itself as hiring back all the people you had to lay off? Is it restoring your revenue stream to the pre-September 2008 bust? Is it capturing 50% market share again? Is it making the cover of Fast Company or Inc. or Rolling Stone? Is it becoming the leader in your industry? Is it selling x amount of widgets? Hell if I know. Don’t ask me. I’m not you. How do YOU define success? What do you want to accomplish in the next 3, 6, 12, 18 months? What are your specific goals?

Ask yourself. How do you want to beat the grizzly?  Be specific.

Do you know? If you don’t really know, don’t you think after 10 months of playing defense (whatever that means) you might want to put brain to light bulb and pencil to paper and figure it out?

If you’re in this fight, be in it. Be in it for the right reasons. And know what you’re fighting for. That’s it. Give it some thought. Write it down. Say the words outloud until they become part of you, then go kick this grizzly in the snout and become the leader you dreamed you would someday become.

Here’s your new mandate: You’re in startup mode again. Whatever you’ve accomplished so far, however successful your company may have been in the past, all of that is irrelevant. If you want to win, if you want to come out of this thing swinging and on top, you have to go back to the hunger, the adaptive drive, the can-do mindset that characterized the start of your career and the eraly days of your company’s history. Outsmart, don’t outspend. It’s back to the basics for you and your organization. It’s time to turn a brand new page.

And by the way, if you’re a CEO, CMO, business manager or entrepreneur and you still haven’t figured out that this recession, that the grizzly bear threatening to tear you apart is the best thing’s that’s ever happened to you professionally, that this is your moment, your Normandy, your Everest, your defining battle royale, you are hopelessly blind.

One last little thought for you today: You don’t have to win at everything, but you do have to win at this.

Consider the alternative if you don’t. Stop waiting for something to happen, and make something happen.

Have a great Tuesday, everyone. 😉

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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.

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