Category: Business OS

Silly Thing #3: Telling Stories That Don’t Make Sense

Not understanding what’s happening leads to misattribution. And misattribution leads companies to tell themselves stories that aren’t true. This causes them to do things that not only don’t work, but are insanely expensive and/or not scalable, and also don’t even stand up under the slightest scrutiny.

When someone is telling themselves stories that don’t make any sense, this is a sign that they don’t understand what’s going on on a foundational level. In the case of a business, it means management struggles to fully understand their own organization. Granted, it is a hard endeavor but this is a problem that gets harder with complex organizations.

A recent, semi-related but extremely well-known example of this is the 2016 presidential election. How much chaos has resulted from the fact that HRC couldn’t see that Wisconsin was important?

It seems like we work in the messy middle… always.

Amy Young said it best, “My name is Amy and I live in the messy middle of life. I have been Redeemed from permanent muck and live with the tension of the Already and Not Yet.”

We are never out of a messy middle. Things always change. Can you imagine the impact of the telegram? Steam engine? Clayton Christensen? Jeff Bezos? Does it stop?

Our digital world also brings amazing speed and access. AI, IoT, APIs, connected and driverless everything are on the edge but ‘not yet’. Tesla produces 0.25% of Toyota’s output. Lots of promise but… not yet.

“The messy middle of change can become the wasteland where good ideas go to die — or a place that creates confidence and energizes action…”

Our digital world brings the risk of knowing too much, but also not knowing enough. What?? Let me explain.

It feels like we are in the messy middle of digital marketing, analytics, statistics. All of it. We know what devices people are using when they visit our website. We know how long they spend on the homepage. We know what they click. We know their ages. How old they are. Urban v rural. All that data.

It’s a lot of data to look at, but also does that really tell you who I am? Can you take the data and create some content or speak to me in a way that will really resonate with me?

We often see that businesses have the data everyone else has, but branding doesn’t match. The website is geared towards middle-aged women when the customers are actually young, urban single men. Imagine speaking the language of your best customers, matching your brand to them.

When your brand isn’t matching your customers, you’re definitely in the messy middle. At MakeBuzz, we don’t claim to have solved every problem, but we can help navigate out of the depths of the messy middle. We’ve got the entire US CRM. Can you imagine the possibilities? We can.

Building a business that works like an old relational exchange model is possible today at scale. The relational exchange model is where the seller really knows the customer. Think Nordstrom vs Walmart. Nordstrom does its best to manage relational exchange models at scale. They did it without the benefit of much technology. So does the local store you shop at all the time. They know you. Maybe.

A long time ago, relational exchanges allowed buyer to seller exchanges to work well. The baker knew what you would buy. They could ‘predict’ sales based on who you are and some idea of past purchase history. Over time, they would get better at predicting you. Certainly buying bread every week does not predict the fancy cake. Subtitle hints could indicate a chance to sell that cake. The big assumption is going way back to when this type of exchange mattered. Your favorite coffee shop barista might know you but the minute you go to a new city, the far-away coffee shop has no idea who you are – even if it is Starbucks, who has a CRM.

For most companies, the only data sources to understand customers today are overcooked ‘data of the past’ methods. It is rare to find look ahead data built into a CRM or marketing plan. For the most part, it’s like getting socks for every birthday because you opened the box last year.

When you market this way, you are doing “one way to many”. It is a transactional exchange with very limited outcomes. Buy a printer, they recommend ink, buy a camera, they recommend a lens cap. Instead of guessing, maybe they could find other things that predict you want to go to Paris.

Due to growing cost and limitations of digital marketing and the lack of consumption of traditional marketing, brands must look to other things, like CRM, to grow revenue. The really good news is 2018 holds promise to inject relational exchange models into a CRM and entire business at scale without costly media budgets.

The downside is you must do things differently, but that’s where we come on. Let’s see how we can help you.

The list of things that people complain about in business these days is long. Very long. Pointless meetings, open workspaces, middle management lacking direction, websites that automatically play music, and so on.

Even though we could fill a book with complaints about the world of work and business, in my opinion only some of these silly things actually matter. Those are the ones I choose to focus on, because if they get fixed, it could mean the difference between success and failure of an entire business.

In the interest of helping more great businesses NOT fail, I’ve identified three “silly things” I see over and over. Let’s go through them one at a time, and I’ll explain why they matter in the end.

Stupid Thing #1: Extreme Caution and Budgeting Only for What “Works”

The world is unpredictable. We know this. Just accept it. You’re going to make mistakes.

Extreme caution and lack of experimentation in business is a problem, because this attitude is how you become the next Blockbuster. Or the next Borders. Or the next Sears. Or any of the businesses that didn’t survive a disruptive technology, as Clayton Christensen so thoroughly explains in his many books and lectures.

In my 21 years of doing what I do, I’ve seen things get worse. Have you? Most businesses still operate on slow cycles, budgeting on a quarterly or yearly basis. And while I understand that you do need to save money somewhere in order to invest in other areas, no one seems to be experimenting – unless you are the disruptor. There’s less room for testing something, because most of the budget goes into something that’s considered to be working. Is it working? Likely yes, but is it sustainable and will this way continue to work next quarter or next year?

At Google’s ThinkFinance conference in Mountain View, CA the title of the keynote presentation was Digital Measurement is Broken, Let’s Fix It. 

During the hour, I shared the concepts and case studies that have helped companies form a different framework for media planning and measurement – one that I hope will correct many of the limitations of current methods, to become the new standard. This goal of this new framework is to help business seek out maximum profit volume, on a market-by market basis. Profit by volume, as MakeBuzz describes it, is the ultimate measure of efficiency – and the ultimate measure of growth. I suggest that our marketing objectives have been disconnected from this fundamental business goal for too long.

An update: Since our time with Google, we have moved on to 1 to 1 marketing, via named addressable marketing. This removes 90%+ of the post cookie audience and over 50% of the non-human media. Thus, performance is truly impacted.

Think of Your Business Like a Lawn. And the blades of grass are your profits. When you’re watering and fertilizing, you’re making the grass grow- that’s your branding. When you’re mowing- that’s your Direct Response.

Your lawn needs both these efforts to grow it’s greenest and it’s best. By the same token, a healthy marketing strategy is made up of Branding and Direct Response efforts in perfect balance.

Combine these two stories and you have a hint at how to build a business operating system.

You can’t just quantify business metrics and call that strategy and you can’t ignore metrics needed for creative endeavors.

Don’t Let Metrics Undermine Your Business. Tying performance metrics to strategy has become an accepted best practice over the past few decades. Strategy is abstract by definition, but metrics give… Read more.

Leading with Trust. Companies invest CEOs with the singular authority to address high-stakes challenges and make tough decisions. However… Read more.

Trust and strategy are hinting at where to find real growth strategies. Not a complete story but a start.

Not by making people work harder and longer but by doing the things that are innovative and more valuable. It is a mixture of many things.

There’s a lot of modern economic principles that don’t help innovation. Innovation is not efficiency. The results of innovation drive great efficiencies but are often capital intense efforts that drive out the older, less efficient system in the long run.

When we examine wealth creation, we don’t see linear thinking. Think about Google. They started as a free search engine. They acquired paid search technology. The initial investment is small compared to the bets they make today. The present value looks nothing like the initial presentation for money.

When you look at CDPs, there are many limitations to these technologies today.

What Can You Do With a Customer Data Platform?

“Other customer data solutions lack one or more of those capabilities: CRM systems handle just limited amounts of rigidly structured data, marketing automation offers limited transformations and external access, DMPs work largely with anonymous profiles. These are not flaws in those systems, whose designs were optimized for other purposes. But they do mean those systems are not well suited to creating unified, sharable customer profiles. That’s what CDPs are designed for and that’s why so many marketers are now using them to solve that part of their customer data challenge.”

Why are CRMs so limited and yet the opportunity to build things that scale a business are so close?

An Overview of Customer Data Platforms (CDPs)

“CDPs are the next step in the evolution of data management systems, using data from platforms such as CRMs and DMPs. They are a critical component of your martech stack if you intend to do true data-driven customer-centric marketing campaigns across multiple channels. CDPs can help you get a 360-degree view of your customers, and deliver a unified experience to them at all stages of the buying journey.”

Why CDPs Can Fall Short for Marketers (and What to Consider Instead)

“Customer Data Platforms (CDPs) are a popular topic among B2C marketers looking to manage all of their customer data in one place. This is especially true as consumers are more conscious of their privacy — and as personalization continues to be the #1 priority across every industry.”

I think we will see further advancement in predictive data sets that are not based on ‘data of the past’. We will combine theories of customers (theories of the future) with data of the past. Are CDPs ready today? It looks like a great promise but too much complexity and not enough customer centric prediction. Stop making complex technologies and chasing too many data points.

Ken Favaro, David Meer, Samrat Sharma from HBR, May 2012 issue.

“Organic growth is not the inevitable result of a successful business model. All companies can become more skilled at growing organically with the business models they already have. But that requires active, engaged corporate leadership.”

That is a start. leadership allocates effort and capital against things needed to grow. Uninformed capitol allocates poorly. Capitol that has a technology core to help it find and allocate toward “where the puck will be” is smart leadership and money.

“Organic growth is not the inevitable result of a successful business model. All companies can become more skilled at growing organically with the business models they already have. But that requires active, engaged corporate leadership. The CEO and other senior executives don’t need to impose a lot of new processes or exercise a heavy hand.”

More skilled?…… If that includes a technology core to help inform decisions, eventually those decisions are more robust, sure.

“They just need to help the operating units keep an eye on the big picture, lead the fight against the business cycle, resist typecasting, and establish a common, rigorous language for organic growth. Respect those rules, and you will transform your company’s internal growth engine.”

In my opinion, organizations need technology that understands customers at a very deep level, independent of sales, marketing, and media. Especially data models of the past, building a true total addressable market based on ‘why people buy’ sets all the rest. It defines leadership choices, budget allocation based on a deep understanding of people.

When people are aligned, we have speed — and growth.

When people Inside of an organization understand the deep meaning of why people select them to fulfill a job to be done, they get the big picture. Things get concrete fast, it’s not consulting anymore. You’re removing the bias of why people make decisions, thus transforming the organization into a true growth engine based upon elements of a growth operating system.

Clayton Christianson teaches us that disruption needs a technology core. Having a technology that understands people that can be used across multiple departments as a source of truth is what is needed to fulfill the vision of a growth machine that David Meers and team describe.

In 1964, Daniel Yankelovich introduced in the pages of HBR the concept of nondemographic segmentation — thank God. By 2000, the idea of tracking clicks and cookies further distracted from the understanding of why people buy. Clayton Christensen introduced and expanded the concept of Job Theory, Jobs to be Done recently.

Daniel was a master and enlightened many.

It’s time for business to embrace an understanding of people and what is in their best interest, not what works for media or data. People don’t need things they don’t want. Bad products that don’t solve jobs to be done well are a waste of time and effort for everyone.

“The predictive power of marketing studies based on demographics was no longer strong enough to serve as a basis for marketing strategy, he argued. Buying patterns had become far better guides to consumers’ future purchases.”

Nothing has changed. It’s time to fundamentally change how we understand ‘why people buy’.

“But more than 40 years later, nondemographic segmentation has become just as unenlightening as demographic segmentation had been.Today, the technique is used almost exclusively to fulfill the needs of advertising, which it serves mainly by populating commercials with characters that viewers can identify with. It is true that psychographic types like “High-Tech Harry” and “Joe Six-Pack” may capture some truth about real people’s lifestyles, attitudes, self-image, and aspirations. But they are no better than demographics at predicting purchase behavior.”

“Now, Daniel Yankelovich returns to these pages, with consultant David Meer, to argue the case for a broad view of nondemographic segmentation. They describe the elements of a smart segmentation strategy, explaining how segmentations meant to strengthen brand identity differ from those capable of telling a company which markets it should enter and what goods to make. And they introduce their “gravity of decision spectrum,” a tool that focuses on the form of consumer behavior that should be of the greatest interest to marketers–the importance that consumers place on a product or product category.”

I trust this is an improvement. My bias is software must be a technology core for Jobs to Be Done to be effective and pervasive.