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Monthly Archives
December 28, 2004
Posted by Britton
Clayton Christensen, author of the path-breaking books The Innovator's Dilemma and The Innovator's Solution, is concerned that a "disruptive innovation" is about to overturn the success of the Harvard Business School where he teaches. In a recent speech at the Open Source Business conference in San Francisco, he explained how his students have become so "data-driven" that they are unable to imagine the disruptions that lie on the horizon. This leaves them vulnerable, as he sees it. 
Harvard Business School, he explains, is in danger of being over-run by corporate universities (like GE Crotonville), on-the-job training and web-based technical schools like the University of Phoenix.
"When we were having this case discussion about the disruption of Harvard Business School, I walked into the classroom and took a vote of the students, and there were 100 students in the class," he explains. “'How many of you think Harvard’s in trouble?' Three students raised their hand; 97 -- there were no abstentions -- voted that, 'Don’t worry, be happy, this could never happen to our school.'”
"And so I asked if one of the three who was worried why he was worried and he said, 'Well, there’s a real pattern here,' and he lists out the elements of the pattern and then he said, 'Now look in the case and everything that happened to all of these other people is happening to us. That’s why I am worried.' So then I turned to the don’t -- worry -- be -- happy crowd and said, 'So why aren’t you worried because it fits the pattern so closely?'”
"And everything that they cited related to the data, that more people are applying to Harvard then ever before, our students are getting more money than ever before, and the more money they get paid, the higher…we’re much further ahead of Stanford on the rankings, and so on. And so we had this argument back and forth."
"So then I asked one of the students who was the most vociferous defender of Harvard’s invincibility, 'So imagine you were dean of the school, what evidence would you need to see to become convinced that this is a problem that we need to address?' And he said, 'Well, I would look at Harvard’s market share amongst the CEO’s of the global 1000 corporations, and if it starts to dip, then I’d worry.'”
"And I said, 'Well, when you saw that data, would it signal that the problem needs to be addressed, or that the game is over?' He said, 'Oh, yeah, the game would be over!' And so I turned to the rest of the don’t -- worry -- be -- happy crowd and said, 'So any of the rest of you, imagine you were dean. Could you give me data that would convince you that it was time to take action?' And actually, every piece of data that they could come up with was evidence that the game was over."
One key insight that emerged from Chistensen's exercise is that data and analysis revolve around the past, leaving us blind to the threats and opportunities of the future. "And yet, the way we teach our students, at our school we teach by the case method and if the student makes a comment in a case discussion that can’t be backed up by his analysis of the data in the case, the instructors are trained to crucify the student on the spot," he notes. "And so we enshrine the virtues of data -- driven analytical decision making in the way we teach at our business schools, and the our students go to work for McKinsey and they carry data-driven analytics to the nth degree, but in many ways the very ways we teach them condemns our managers to take action when the game is over."
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December 20, 2004
Posted by Britton
The idea for this blog was heavily inspired by Michael Lewis' book Moneyball, in which the author showed that our intuition and conventional wisdom often fail us. In baseball as in business, it turns out that facts, evidence and statistical analysis are a crucial corrective to the dangerous tendency to "shoot from the hip" or "follow your gut." That's why companies like Harrah's and CapitalOne have been so successful in recent years. 
But the Lewis book seems to provide a metaphor for B2C strategy more than B2B. With B2C, there's a large base of consumers from which to draw key findings. It's about statistics. With B2B, it's largely about the account. And because every client is different and complex, statistics are less useful. What we are looking for in the B2B world are meaningful patterns.
So it was great to see that Michael Lewis had drawn a new and rich metaphorical portrait from the world of sports in the New York Times Magazine this past week. He profiles Eli Manning, rookie quarterback for the New York Giants (and son of the famous quarterback, Archie Manning). While the piece teases out some interesting insights about Manning's high intelligence and solid psychological grounding, what interested me were the insights about how statistics miss the true reality of the game.
"Football statistics do not capture the performance of individual football players as cleanly as, say, baseball statistics capture the performance of individual baseball players," explains Lewis. "No player ever does anything on a football field that isn't dependent on some other player. The individual achievements of football players are often, in effect, hidden in plain sight."
Lewis then goes on to share something even more interesting: "[T]his hidden game can be seen, though not by the average viewer. Shot unceremoniously from two pillboxes on the stadium's upper rim, the videotape made by the Giants coaching staff frames all 22 players on the field. The view the coaches want is the view from the cheapest seat in the house... The coaches want to see that shot because they know it is the only shot that will enable them to figure out who did what -- and assign credit and blame -- on any given football play."
Giants Stadium is compared by Lewis to Plato's Cave. "The millions of people watching the game are inside the cave, staring at shadows on the wall," he writes. "The shadows are distortions of the reality outside the cave, treated, erroneously, as the thing itself. No matter how he plays, some part of Eli Manning's game, like his personality, will remain hidden from public understanding."
This is similar to the problem that afflicts most company leaders trying to understand complex, collaborative and interrelated B2B activities. They can make sales projections. They can count leads all they want. They can monitor the performance of their individual sales people. But unless they step back and look at the whole field (the company and the account) from the cheap seats above, they won't understand the patterns of activity that contribute to overall success (and failure).
Too many of us are trying to manage and coach from the sidelines. We are emotionally wrapped up in the high intensity drama that's right in front of our eyes. But we aren't getting advice from the sky box during the game and we aren't watching the game films on Monday.
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December 09, 2004
Posted by Britton
Many marketers think of customer intelligence as a key resource in the development of campaigns. However, the future of marketing may not lie in campaigns, but rather, conversations. As the mass advertising of Madison Avenue continues to lose its luster and even targeted, direct mail marketing falls off a slope of diminishing returns, it may be time to take "viral" or "buzz" marketing -- or whatever you want to call it -- much more seriously. Conventional marketing is losing its credibility. So where does one find it? 
Word of mouth. That's the answer that the next wave of marketers -- including Tremor, an enterprise backed by Procter and Gamble -- have come up with. According to a recent piece in New York Times Magazine, "The thinking is that in a media universe that keeps fracturing into ever-finer segments, consumers are harder and harder to reach; some can use TiVo to block out ads or the TV's remote control to click away from them, and the rest are simply too saturated with brand messages to absorb another pitch. So corporations frustrated at the apparent limits of 'traditional' marketing are increasingly open to word-of-mouth marketing."
One new agency, BzzAgent, has a network of 60,000 volunteer "agents" who go out and spread the word about products they find compelling. Tremor works on the same model. Turns out, these agents -- who may say a good word on everything from a new book to a great perfume to their friends and acquaintances -- are not primarily motivated by money or other conventional rewards. They seem to enjoy the power, importance and influence they gain by being ahead of the fashion curve.
While researchers have long studied "opinion leaders" and the "diffusion of innovations," the marketing industry may now -- through trial and error -- be generating some important new insights about word-of-mouth persuasion. As Steve Knox, Tremor's CEO, said recently, ''We set out to see if we could do that in some systematic way."
Can they do it? Will marketers successfully build new and valuable networks of influence? Or will consumers "catch on" and start to get skeptical? Will they begin to question the credibility of folks they were once predisposed to trust? Since I haven't made up my mind about the implications of this trend, I'll be listening for the word on the street.
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December 03, 2004
Posted by Britton
Is Wal-Mart losing its connection to customers? The disappointing holiday numbers and other disappointments throughout the year have some questioning whether the company's weaknesses are starting to show. One question is whether the company has focused on enhancing internal operations to the detriment of customer-facing efforts. "It gets to a point where you pretty much max out on optimizing the supply side of the business," says Sebastian Shapiro, a senior director at Interpublic Group of Cos.' FutureBrand, in the Wall Street Journal. "Even though people are going to a place that is affordable or has good value, you want it to be a pleasant shopping experience. You want to feel good about your purchase, and a lot of other low-price retailers have realized that." 
It's hard to imagine that the company will fall too far. Despite the recent hit job from PBS's Frontline, it's clear that Wal-Mart's promise of "everyday low prices" resonates far and wide. But prices aren't everything. In fact, consumers appear to be growing hypervigiliant about price offers in the newspapers, particularly around the holidays. Wal-Mart has lived by the price-cutting sword. But can it continue to live and thrive that way?
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