Category Archives: Consulting

Flying Blind

I almost called this post “Nobody Knows Anything” but that might have been overkill. I’ll say what I have to say and let you be the judge. Let’s say that you buy a friend’s newborn a gift. You have it shipped to your house. The data says, correctly, that you bought an infant gift. That might also lead to an inferred piece of data that places your household into the “presence of infant” bin, leading to you seeing lots of ads for diapers. If you’re the one placing the ads for those diapers, you’re wasting money.

Lots of the data marketers routinely use is of that sort. It’s inferred. You can see that some thinking at work if you’re a Netflix user: the recommendation engine infers what you might like based on your past viewing. Of course, if your kids or someone else in the house watch something in which you have no interest, the accuracy of those recommendations is diminished (which is part of why there are separate profiles available when you log in). Inaccurate data is, sadly, more the norm than an aberration. Since this data is really what’s behind personalization and targeting, that inaccuracy is a big problem. Any business that buys data from third parties – and an awful lot do so – may be putting garbage into their system. Unfortunately, most don’t know that because there is little transparency in the data business and it’s impossible to verify what’s good and what’s not.

What should you do? Invest in collecting your own, first-person data. You can also demand transparency in any other data you use (good luck with that) with respect to how it was gathered and what it really represents. Is it inferred or does it come directly from consumers (did someone tell you they had a baby in the house or did you guess they did because they bought one infant item?). Who owns the data and was it gathered with the consumer’s permission?

When Facebook tells its customers (marketers) that they have data on 41 million adults aged 18-49 in the US and there are only 31 million of those adults living in the US, you know much of the data is inferred and also that we have a problem. A recent study that found that 70% of marketers believe that the customer data their organizations are using for marketing is low quality or inconsistent. Why bother to market at all when you’re just flying blind?

Advertisements

Leave a comment

Filed under Consulting, Huh?

Tribute Bands And Your Business

Over the weekend I saw the Dark Star Orchestra. For those of you unfamiliar with the band, they’re one of the leading tribute bands out there and they play the music of The Grateful Dead. I’ve seen them several times and oddly enough each time I do it reminds me of a few business thoughts.

I played in several bands as I was growing up. We always felt we were a cover band. We were playing someone else’s songs but doing so in our own way. Most tribute bands go beyond that and attempt to recreate the sounds and often the appearance of the original artists. If you’re any sort of fan of The Dead you know that their performances were very hit or miss. The DSO is way more consistent and they sound just like The Dead on a great night each and every time. So what does this have to do with business?

I think imitation is more than just the sincerest form of flattery. I think in many ways it’s better than innovation despite the fact that we often hear of the “first mover advantage.” Innovation is great, but by not being first the flaws in the original product or service become way more clear. The fact that you’re building later lets you correct for those flaws and get beyond the original. That usually is something you can do much more cost-effectively too.

What do I mean? The iPod was not the first music player, just the most successful. Anyone who looks at Instagram knows both that they weren’t the first of their kind and that most of their “new” features these days come right from Snapchat. You could video chat someone long before Skype came around and Amazon was not the first retailer on the web. Each of those companies, and other such as Spotify and eBay, were not first movers. They were imitators – tribute bands if you will, who took the best of the pioneers and made it better.

Is it easier to get funding for a copycat? Probably – the business model has been proven and, therefore, investor risk is reduced. Japan, and now China, built economies on imitating successful products and making them better and/or cheaper. A tribute band has a pre-built fan base. If you’re a Beatles fan or an Oasis fan or a fan of The Band, you have no chance to see the original but you can spend a night with their music. If you’re a business, you don’t have to be the original if you can make the original better and capitalize on their fan base. The DSO do it brilliantly. Can you?

Leave a comment

Filed under Consulting, Music, Thinking Aloud

Taking The Temperature

Foodie Friday! As much as I’d like to write about Pimento Cheese on this Masters’ Friday, I have a business thought that comes from an article I read on whipped cream. The folks at Cook’s Illustrated, about which I’ve written before, have a science page as part of their website. On it, they present the results of their ongoing tests into food preparation and one of the things they investigated was the old saw that you have to start with cold cream if you’re whipping the cream to stiff peaks.

The short answer is that yes, temperature matters and the colder your cream (and bowl and beaters) the better. You get much better results that way – a higher volume and much less whipping time to get the results you want. In fact, cream at room temperature never really got to stiff peaks at all. As I read the piece it occurred to me that the kitchen isn’t the only place where the environment matters.

You don’t have to look very far into the business world to find companies that produce excellent results because the management creates optimal conditions for the team to do so. I’ve worked in places where I’ve seen two similar departments produce very different results based on how the managers treated the staff. I wouldn’t say that one department had very different levels of skill or intelligence but it did have some managers that created the best conditions possible for success. They outlined the group’s goals clearly. They were supportive and encouraging. They didn’t hesitate to praise great work (and publicly!) and they very quietly made sure that the underperformers knew they were not meeting the standards of the group. The people in the group weren’t impersonal names on a page. They had personal relationships with each person and communicated effectively with each person. They led by example and didn’t hold themselves above the group or to a different standard of behavior.

Creating the right conditions for success really is the only job a manager has. Much like making sure the cream, beaters, and bowl are cold, they make it easy for the team to produce the best possible outcomes with the least effort and drama. Doesn’t that sound like a plan?

Leave a comment

Filed under food, Consulting

Going First Class

I’m going to be on an airplane later this week. I used to travel a lot for my job, often going over 100.000 miles a year. I never tallied up the time that took, but the air portion alone was probably the equivalent of 5 or 6 work weeks aloft. Add in getting to and from the airport plus time at the airport itself and travel was a significant part of my life.

JAL

(Photo credit: Wikipedia)

One great thing happened to my travel life when I made VP. Suddenly I was allowed to book travel in business or first class. Back in the 80’s and 90’s, it was a little bigger seat and some better food. Today, it’s the difference between leaving the plane with sore knees (from the person in front of you hitting your legs) and hungry vs. arriving relatively intact and ready to do business. Still, if you’re paying your own way or traveling on vacation, why fly first class instead of coach? After all, you get to the same place at the same time and the price difference is extremely significant. My answer is something that I think applies everywhere in business.

The airline business has a system now that packs people into planes in a way that maximizes profit. The seats are closer together and an in-flight meal consists of generally unhealthy snacks (stick to the peanuts, kids). You’re charged for everything from bags to blankets. Flying in first is, in short, a much better experience. You’re paying for better care, not for faster or better transportation. Once again, cost vs. value.

Here is the thing. In the course of maximizing profit, the airlines have relegated the comfort and happiness of the majority of their customers to secondary status. I suspect they’re not alone in this. One supermarket will have people walking throughout the store to help you while another will have you walk to the customer service desk if you need help finding something. Yes, the prices may be a bit lower at the latter but isn’t the former a better experience and worth a small premium? First class vs. coach in terms of the experience. Have you ever bought shoes from Zappo’s? They cost about the same as elsewhere but their customer service and support is legendary and a significant point of differentiation. It’s flying in first vs. coach once again.

Customers don’t forget. Think about the grievances you have with most businesses and I’m willing to bet they’re both relatively petty and related to the business choosing profit over customer happiness. Because I refuse to step foot on one of their planes ever again, I will pay a little more this week not to fly an airline that has treated me and many other customers like crap. I’ll also fork over a few bucks to sit in an exit row because it’s a better experience for my legs but I’m not happy about having to do so when there are open seats that in the old days I could have chosen for nothing but now cost more. The real question for your business is how can you provide that first class experience at a coach price even if the bottom line takes a tiny hit?

Leave a comment

Filed under Consulting, Helpful Hints, Thinking Aloud

The Road To Hell

English: McDonalds' sign in Harlem.

(Photo credit: Wikipedia)

Let’s end the week with a Foodie Friday screed about the embodiment of the old saying that “the road to hell is paved with good intentions.” To do so, I’m going to turn to one of our frequent subjects, McDonald’s.

While there are several ways the maxim can be interpreted, I’m focused on the meaning that even good intentions can bring about unintended consequences. That’s what happened when the fast-food king tried to improve things for their customers and, in so doing, made things a lot worse for their employees. As Bloomberg reported, the company is implementing new technology and pushing workers for faster delivery. While the intention is to help customers get in and out of the store quickly, the result is that it is breeding chaos in the stores as well as precipitating higher worker turnover. The unfamiliarity the staff has with the new systems, as well as the higher turnover, means that the food is actually taking longer to get served and drive-through times are increasing.

Another food example. Back in the 1970’s, catfish farmers introduced the Asian Carp into their breeding ponds. The idea was to keep the ponds clear of algae and plankton which would improve the health and quality of the catfish they were breeding. The carp, however, are aggressive and eat voraciously, eating up to 20% of their body weight in a day. They managed to escape the limited areas of the breeding ponds and have found their way to the Great Lakes via the Mississipi and Ohio Rivers where they are decimating native species of fish.

We have to consider even the most remote negative consequences as we put our well-intentioned plans in place. A zero-tolerance policy forbidding teachers from touching students? Great idea until a fight breaks out and teachers can’t step in. Putting a bounty on snakes to eliminate a health hazard? Wonderful, until people begin breeding snakes for the bounty (the Cobra Effect). In McDonald’s case, they had the best of intentions in reducing a friction point for their customers. They didn’t, however, fully consider the other possible consequences and that created a bit of a fail ultimately. Take the time to consider as many outcomes as you can and you’ll increase your chances of staying on the road to places other than hell.

Leave a comment

Filed under Consulting, food, Huh?

Who Are Those Guys?

I don’t know if you remember the classic film “Butch Cassidy And The Sundance Kid,” but I thought of it as I was reading this morning. Paul Newman and Robert Redford play the title characters who spend much of the movie being pursued by a group of men determined to bring them to justice. Every time they think they’re in the clear, the posse turns up again, at which point Newman or Redford asks “who are those guys?”

I suspect that a number of my former colleagues in television have had a similar experience over the last few years. I remember having one back in the 1990’s when ESPN became a major presence in sports. In the late 1980’s, we used to laugh about them at our TV sports sales meetings.  After all, even though the industry, spurred on by the 1984  Cable Act, was wiring the country like crazy, cable was barely in half the homes. Even as late as 1992, Springsteen told us there were 57 channels and nothing on.

Then BOOM. TV ratings started to dive and cable ratings started to climb. The peach baskets the broadcast networks used to stick out the window and fill up with money started to take a lot longer to fill up. Who were those guys? Well, we identified our competition and started to extract payments from cable carriers just as our cable brethren did. Things we different but more stable, and the broadcasters began buying the cable content providers.

Things continued to change. I’ll let the CEO of Turner (as quoted in Digiday) explain what happened next:

All of a sudden, our biggest competitors are no longer Disney, Fox, NBC, CBS and other networks; it’s these “digital companies” that are coming in and taking two-thirds of all digital ad revenues and 85 percent of the marginal growth in digital ad revenues.

Who are those guys? The point that any business can take away from the TV experience is this. Someone is always chasing you. You have something they want, whether it’s customers, market share, technology, data, or just plain attention. Like the posse, they’re going to be relentless. Unlike the posse, it’s never going to be the same guys all the time. You need to be attentive and take countermeasures, hopefully not like Butch and Sundance do by jumping off a cliff.

Leave a comment

Filed under Consulting, Thinking Aloud

Pay Me Now Or Pay Me Later

One thing that frustrates me is some folks’ inability to understand cost and value. There have been a few times over my last decade of consulting when that inability manifests itself in a particularly bad way. I’ve begun work with clients on more that one occasion where the client has spent a lot (in one case, close to a million dollars) of their seed money to build websites that didn’t accomplish what the client needed them to do. Most of the reason for this was that they hired the lowest-cost option. They failed to see that the value they needed was in their provider understanding the client’s business and delivering a solution that met the business requirements. Instead, they hired someone who made them a beautiful website that was fairly useless from a business perspective. That’s cost vs. value. They saved on cost and failed on value.

Startup companies are notoriously short of funds. Often the founders are working without pay and the thought of paying consultants, lawyers, accountants, and other professionals is anathema to them. That’s a big mistake. I worked with another startup that took intellectual property advice from “a friend who had done this before” instead of a lawyer. I noticed a potential problem with their name immediately but they were happy to go with their friend’s advice despite my asking about a legal opinion. As a result, once they launched their brand, they received a cease and desist letter informing them that they were infringing on another trademark. That resulted in a major depletion of their remaining funds to rebrand and to pay a lawyer to respond to the C&D. Cost vs. value in action.

What’s my point? If you’re venturing onto new grounds, hire some guides before you get lost. You’re going to be paying these professionals at some point and you might as well do so early on. Yes, it’s a cost you don’t think you can afford, but the value you receive can prevent very expensive mistakes and will ultimately save you money in the long run. Had I or any reasonably smart consultant been involved early, we would have talked about what analytics we needed from the website to make actionable business decisions before we worried about anything else. Every dollar spent on the site afterward would advance the business’ goals and not to making art rather than commerce.

Pay us now or pay us later. I think the sooner the better. You?

1 Comment

Filed under Consulting