CMO 2.0 Influencer Conversation with Professor Chris Moorman from Duke University

Written by on March 1, 2013 – 3:47 pm -

I thoroughly enjoyed conducting this CMO 2.0 Influencer Conversation with the T. Austin Finch Senior Professor of Business Administration at the Fuqua School of Business at Duke University, Chris Moorman — discussing the latest results from the annual CMO Survey. Chris has been in academics for 25 years and a professor at Duke since 1999.

The CMO survey, which has been conducted since August 2008 and happens twice a year, seeks to get the perspective from 500 or so top marketers in organizations on where markets are going, what companies are doing, what some of spending patterns are, and how companies track marketing excellence. While the interview happened before the new February results were published, you can review the latest results of the CMO survey here.

Here are some of the top findings that Chris picked  for further commentary in our discussion.

Social Media Spend

Social Media spend, which was at about 7.6% and projected to grow to 18% in the last survey is now at 8.4% and projected to grow to more than 21% in this latest survey, is clearly becoming a considerable chunk of marketing budgets. The interesting part of this budget item is that there are very few in-house people who are actually allocated against it. In August, that number was 3.6 and in the latest findings, that number came down to 1.7 people. So for a fairly sizable portion of the budget, there are very few people engaging with that strategy. Chris thinks that it could be that companies have not quite caught up in terms of building their human capital around this particular strategy.

Interestingly enough, many successful companies are not approaching social media as another marketing silo — instead integrating it as part of the other marketing functions (e.g., lead gen, thought leadership, innovation, customer support, etc.). Even though those companies are probably in the minority, and with the survey showing that most organizations are not well integrating their social media with their marketing strategies, it could account for why the number is lower than what it really is.

Big Data

The next topic we covered was that of marketing analytics. Companies in August reported they were spending 5.7% of their budget on marketing analytics and that number was projected to go up to 9.1% ( 6% and going up to 10% in the February survey). It is interesting to see a predicted 60% increase in marketing analytics budgets even though overall marketing budgets have only grown by 8.3% in the last two years.

Now keep in mind that this does not include budgets that might be spent in IT to support marketing analytics. Chris believes that when IT departments take over marketing analytics, they spend a lot time creating the infrastructure for it but then don’t spend an equal amount of time and effort on making sure that the information is getting used by decision makers. In fact usage is a problem with marketing analytics in general, with managers not using the analytics that are available to them or that have been requested 62% of the time. Chris is not surprised by this number, as her research in the past 25 years has shown a general tendency for managers to ignore market research. Interestingly enough, when companies have an evaluation process for the quality of the marketing analytics data, the date has a much higher likelihood of being used.

Performance Metrics

Performance metrics is another area of the CMO Survey that Chris finds interesting. The survey measures a lot of performance metrics, including growth, marketing leadership, and others. They do a really good job at looking at growth rates across multiple geographic areas — finding for example, not surprisingly, that companies were growing strong in China.

A real interesting exercise that they went through, and which Chris describes in one of her blog posts, is how much risk companies are willing to take with their growth strategies. As the economy has tightened up, they have not found an increase in low risk growth strategies, such as market penetration strategies targeting existing customers with existing products and services , but instead found an increase in more risky growth strategies — like launching new products or entering new markets.

Another growth strategy, found especially in the tech sector is — tech, software, and biotech, — through acquisitions. What is interesting in that space, as Chris describes in another great blog post, is that many companies are doing acquisition to acquire patents which they ultimately do not show an interest in developing — so in effect using acquisitions as a defensive strategy.

On the other performance metrics front, many of the metrics are pretty dismal. Customer retention is down, customer acquisition is down, and brand value is down. That trend continued in the latest February CMO Survey. Note that the numbers are still positive with companies still acquiring customers, but the fact that the growth has slowed shows that there clearly is a lot of negativity and uncertainty going around.

Marketing Spending

Despite the tough economic times that we are going through, a lot of marketing indicators are on the rise — including overall marketing spending. Not surprisingly,  the CMO Survey also found that investments in traditional advertising is on the decline. Somewhat surprising is the investments that companies were making in marketing knowledge, developing knowledge about how to market, although that number dropped in the last survey.

The CMO Survey also has a great set of interviews with CMO’s that can be found here.

Other things that we discussed include:

  • How lack of integration of the various marketing channels leads to not being able to track the customer journey.
  • How marketing analytics really should be supported by both IT and Marketing.
  • Why Apple has consistently won the CMO Survey Award for Marketing Excellence.
  • How customer priorities are shifting towards price and what that means for marketers.
  • Top rated skill sets that marketers were looking for in their new hires.

 


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CMO 2.0 Influencer Conversation with Steve Shapiro, author of Best Practices Are Stupid

Written by on September 28, 2011 – 7:56 pm -

steveshapiro(Re-posted from the Collaborative Innovation Community) It was a pleasure to interview Steve Shapiro about his latest book – Best Practices Are Stupid. I love the title, although for reasons that are slightly different from the reasons that Steve gives in his book. For him, implementing best practices is copying what others have already done and therefore not the best way to innovate. For me, best practices are so context sensitive, that it is really hard to recreate them within a different organization. Companies are better off understanding worst practices and avoid those rather than recreate best practices – no matter how you look at it.

Many companies try to innovate by asking customers and employees for ideas – not a good practice when it comes to innovation. As Steve explains, when you ask people for ideas you end up with a whole bunch of really bad ideas. The signal to noise ratio in open ended idea generation campaigns is typically very low. The sheer volume of ideas that needs to be sifted through to find the good ones would stretch the organizational capabilities of most innovation departments – creating frustration among those who have to manage the process. Not only that, but the low number of ideas that typically gets implemented also frustrates the idea submitting community, who feel like they are not being listened to. So frustration all around and poor results – maybe it’s time for companies to STOP asking for ideas.

Instead what companies should do is focus on giving employees and customers business challenges – problems for which you are actively seeking solutions. A good example of that is when Netflix launched its $1M Netflix prize to get outside teams to help them refine their recommendation engine by 10%. Not only did they only pay for results, they also outsourced the failures that are typical with the serial trial and error nature of  innovation processes. In the podcast we discussed the differences between innovation tournaments and innovation bounty campaigns and when to use one over the other or when to set them up as competitive challenges versus collaborative challenges.

We also talked about the power of the crowds in innovation, and how crowds are notoriously bad at helping you find the good ideas among a mountain of ideas. If you use the simple voting up and down system, like the ones that are very popular in crowd-sourced innovation programs, you often end up with the most popular idea – not the best one. A better use of the crowd is to have them help you identify the duds – something they do really well.

It is amazing to realize that the main reason for new product and service failure is still “not meeting customer expectations.” While companies are getting better at doing market research, most need to change as their “market research really sucks.”  Instead of asking people questions that make their conscious part of the brain find an answer, which is not the part of the brain that makes buying decisions, companies should use anthropological techniques and metaphor based methods to uncover people’s unconscious needs. They also need to get out there and talk to non-customers instead on blindly focusing on their in-house customer data.

Motivators are another important factor to understand when managing innovation – and companies should understand the limitations of monetary incentives to stimulate proper behavior.

Steve closed the conversation by talking about USAA and how they found a way, through an innovation center for excellence and innovation ambassadors within the business units, to make innovation part of their DNA. This should be the ultimate goal of companies looking to change their practices. As an organization, you need to create an adaptability to change that will match the rate of change that is happening outside your corporate walls.

Other things we talked about include:

  • How companies who are 2nd or 3rd in their markets need to change the game in which they are playing rather than to play by the rules of the leader
  • VC like boards in innovation management initiatives
  • How Innovation Centers and giving people 15 or 20% of their time to innovate outside of their area of responsibility is better for recruiting purposes than for actual innovation
  • How measurements can kill your innovation initiative
  • How you need constraints to foster innovation
  • How expertise and innate cognitive biases can kill innovation
  • The importance of culture in innovation

You can listen to this podcast on the Collaborative Innovation Community.


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CMO 2.0 Influencer Conversation with Tom Asacker, author and speaker

Written by on August 19, 2011 – 8:30 am -

tomasackerI truly enjoyed my CMO 2.0 Influencer conversation with Tom Asacker – who I consider a friend and also admire as an original marketing thinker. Tom is the author of multiple books, including Opportunity Screams: Unlocking Hearts and Minds in Today’s Idea Economy, and also blogs at A Clear Eye. Before becoming a successful author and speaker, Tom started his career at GE, where he participated in a management buyout of an electronics firm. After that he became the founder and CEO for a medical devices company.

The first topic we tackled is that of marketing in a world where everyone, including executives, is increasingly overwhelmed with the amount of information that is coming at them. Tom is convinced that most executives need to pause and rethink their purpose and how they will execute that purpose. While the priorities of marketing have not changed all that much  - drive top line growth and grow marketshare -, those are results that come from understanding and feeding the hungers of your audiences and the customer insights, and from better defining one’s brand and how to deliver a differentiated value proposition. Marketing executives cannot optimize their way to success by measuring everything and everyone to death. They need to care deeply about their audience and create unique value that improves their audience’s lives. You cannot expect results from spreading messages all over the place hoping that somehow you will connect with the feelings of your audience – you have to really care.

Marketers also have to rethink their content, and develop it in a way that it will travel in those circles where buying recommendations are being made. That means that we have to understand what value people will derive from using the content we develop with others. After all, most people only do what they value – and that is true for making recommendations and reusing vendor content. Marketers need to switch from their traditional inside-out perspective and start looking at everything they do through the eyes of their audiences.

People need to realize that everything in the marketplace has changed – the amount of products and services is overwhelming, and the amount of information is overwhelming, buyers’ attitudes about how they filter and process information and how they are making their decisions has changed.

Next we switched to one of Tom’s favorite topics – branding. Branding is of course something that exists in the mind of a customer – it’s an expectation of value that gets created through interactions in the marketplace. Those interactions can include advertising, pricing, social exchanges with other users, packaging, financing options or interactions with company employees. As you can see, many of these interactions are happening with touch points that are somewhat controlled by the company. So to say that the consumer owns the brand is a fallacy. Tom wishes we would have a Deming-like figure in the branding space – someone who could influence how everyone in a company feels responsible for the brand.

About engagement, Tom said: “People at successful companies love what they do, they believe in what it is they get up in the morning and go to work to do every day. Secondly they love who they do it for; the’re interested in in their audience and what they’re all about and how to improve their lives and how to make things better. And the third thing, is which I call engagement, is that they like the process of keeping what they do and what they love connected to others: others’ interest and others’ values. They love the idea of injecting energy into their idea and bringing it to life for everyone’s benefit.” How is that for a definition of engagement? Much better than most definitions being bantered around in the agency space if you ask me.

Continuing on the topic of engagement, Tom described the three steps you need to follow to engage people – three steps that are described in more detail in his latest book “Opportunity Screams: Unlocking Hearts and Minds in Today’s Idea Economy.” The first step is you want to engage people’s conscious attention. How do you get someone to stop and think about what’s being presented? You do that by charming them and by providing some cue to value. Once you feed their hungers and you’re reflective of them and their self-identities, you entice them to participate. All they want to do then is believe, and you can help them believe in what you do by conveying purpose through your actions, by stimulating interaction and sharing like you discuss all the time. But you always have to have value and unfortunately most businesses don’t believe in the distinctive value they add to people’s lives.

You cannot have a conversation with Tom without talking about culture and so we talked about this whole notion that culture trumps strategy, and what that means for older companies that may not have ideal cultures to roll out new strategies. In older companies you often have what Tom calls cultural immune systems that end up blocking new ideas and new perspectives. Leaders need to be aware of this and be willing to take off their cultural glasses and expose themselves to new ideas (Note that we will be conducting a research project on culture and strategy in partnership with the Schulich School of Business at York University, email me if interested).

“Business is about people, it’s about culture, it’s about feelings, it’s a way to help people feel prosperity and well being. It’s not about numbers,” said Tom, and I must say that I could not agree more.

We talked about a lot more things than can be captured in this blog post. I hope you will find the time to listen to the podcast.

Other things we discussed include:

  • How Drucker’s moto that business is marketing never materialized
  • The importance of the last transaction on the brand perception
  • How the expectations that we have from brands has soared
  • The role (or lack thereof) of agencies in meaning making
  • How engagement is not the same as sustained attention
  • The resistance of middle management to cultural changes
  • Ways to change corporate cultures that do not involve a near-death experience
  • The importance of finding meaning at work and being able to bring passion to work

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CMO 2.0 Influencer Conversation with Grant McCracken, author of the Chief Culture Officer

Written by on June 17, 2011 – 10:28 am -

grant_mccrackenHaving known and admired Grant McCracken for a few years, I knew I was in for a intellectual treat with this CMO 2.0 Influencer Conversation. Grant is an academic with a background in anthropology, economics and complexity theory, a blogger and also the author of multiple books, his latest being The Chief Culture Officer, how to create a living, breathing corporation.

Grant has always focused on contemporary American Culture, making his knowledge a real treasure trove for marketers who are trying to understand people’s buying behavior rather than shoving products down people’s throat. His interest in economics comes from the fact that when you study American Culture, you quickly see that it comes from the interaction of culture and commerce.

Having so many definitions of culture out there, we started the discussion by defining what culture means for Grant. Forgive the technical nature of this part of the conversation (and also the fact that Grant was cut out for a bit – we my rerecord that part in the future), but being a new student of Culture, it was important to me. Grant does accept the classic definition of culture as presented by Geertz – which says that culture if a transmitted pattern of meaning embodied in symbols by which people communicate, perpetuate and develop their knowledge about and they attitudes towards life.

Grant then took us through the evolution of culture over time. In hunter gatherer societies, culture was very egalitarian, like language – everyone shared it and nobody had a disproportionate influence over it. In more developed and structurally more complicated societies with hierarchies, we saw the creation of elites who decide what meanings should be and what shape culture should take. In Western societies and all the way into the 20th century we had magazine editors, the keepers of mass media, marketers, and agencies that shaped public opinion and cultural meaning making. In the last 10 years, we have entered a new era, one in which the production of meaning and culture became more egalitarian once again. A kid with $2,000 worth of computer equipment in his parents’ basement can now influence public opinion as much as the elites do. A question in Grant’s mind is whether, with the democratization of culture and the emergence of the long tail, we may lose the centricity and shared-ness that Geertz was talking about and end up with a solipsistic world when everyone is their own universe. We both agreed that while it is structurally a possibility to end up there, we probably will never see that happen.

Next we talked about the importance of culture in business – and started with the example of Coca Cola, which without culture would be nothing more than sugared fizzy water. In the early days Coca Cola had the world to itself, with Pepsi not showing up for another 30-40 years. At the time, Coca Cola’s advertising shaped America’s concept of itself and even influenced how we think about Santa Claus. But then came the competitive phase , and a market crowded with alternatives. Brands now had to keep up with contemporary culture rather than shape it – you would pick a trend and ride that wave into mainstream acceptance. Now that world has completely gone as well. With culture coming from so many places, in so many forms, and lasting such a brief time. It’s like a perfect storm out there, you pick a trend and it’s gone before you know it. And so many companies end up engaging in a desperate game of catch-up, which means that they don’t really have any strategy at their disposal.

That is why Grant makes the case that every company should have a Chief Culture Officer (CCO).

We then talked about the role of agencies in the marketing and meaning making mix and how Grant believes  that  30 seconds spots are still powerful tools in shaping meaning. Contrasting a Volvo ad with the Ford Fiesta Movement program in social media, he argues that the Volvo ad did great things for the brand that could not be achieved in social media. In fact, and while the Ford Fiesta Movement was a brilliant program, it did not sell any cars.

Next we talked about slow culture vs. fast culture, and how most companies forget slow culture. Fast culture comes from the cool hunters who know only the hippest things. What they don’t understand is that 80% of all the meanings in our culture are relatively ancient – they come to us from the 19th or 16th century, or even beyond that. Focusing on the 20% cool hunting or fast meanings is what causes everyone to play the desperate game of catch-up he talked and to constantly repudiate their own brand.

I could have written a book with all the information that flowed during this conversation. You will have to listen to the recording to hear Grant talk about some of the other things we discussed, which include:

  • How many companies have lots of CCO kinds of people on staff, but no-one in the C-Suite
  • How agencies will have to adapt moving forward and how cultural intelligence is so important that you cannot outsource it to them
  • How successful brands are a set of meanings that are exquisitely responsive to the consumer and delicately and brilliantly crafted by the tactician, the brander, the marketer or the ad agency.
  • How brands are bundles of meaning that need to be manufactured and can be a conduit for sociality
  • The lack of culture training in business education
  • Whether co-creation of meaning making with consumers can work
  • How the older generation had multiple group memberships while teenagers have multiple selves
  • How social status no longer plays a role in American culture and how it was replaced by celebrity culture
  • How Gen Yers get their security from their networks where we got it from the workplace

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CMO 2.0 Influencer Conversation with Author Paul Gillin

Written by on April 30, 2011 – 5:42 pm -

pgillinHaving known Paul Gillin for years, I knew this would be an informative and rich conversation. Paul is a veteran technology journalist and the author of multiple books about new media. Most recently he co-authored “Social Marketing to the Business Customer: Listen to Your B2B Market, Generate Major Account Leads, and Build Client Relationships,” a great book if you are trying to find out what best to do with social media as a B2B company. He also recently became the father of twins.

As usual, our conversation started with Paul giving us some background on his career. Paul spent most of his career as a technology journalist before he turned his whole focus to social media and published his first book, The New Influencers in 2007.

We then moved on and discussed the need for a B2B-specific book on social media. It was my experience that the lessons to be learned from social programs in B2C or B2B were the same – since successful programs don’t involve B’s talking with B’s or C’s, but people talking with people. While that is true at the highest level, Paul and his co-author Eric Schwartzman make a good case for why there is a need for a B2B specific best practices book, and they do a real good job in providing guidance to B2B marketers. The main difference in B2B and B2C marketing that calls for a different approach lies in the buying process, which is collaborative and deliberate in B2B companies vs. individual and often impulse-driven in B2C environments.

One of the most frequently used social tools in B2B environments are corporate blogs, and of course it does not take all that long to look around and see that many corporate blogs are failures – corporate-speak-laden web sites that fail to capture comments and viewers, or sometimes don’t even accept them. Paul argued that most failed blogs come from organizations that consider them, along with Twitter, Facebook and LinkedIn, as channels through which to promote corporate messages, rather than social environments in which people have conversations with one another. Not only that, but in a recent study of resellers and system integrators, they only found 15 companies out of 100 that actually had a corporate blog – making you wonder whether those companies feel like they have nothing interesting to talk about with their partners, customers, and prospects…

Next we jumped onto the online trust issues and how some people claim that you cannot trust what you hear online. While true that it’s easier to tell a lie or spread a rumor online than it is in person, it is very hard to get a lot of people to believe it for a very long time. The crowd will usually “out” those falsehoods and that’s the reason why you don’t have big myths and big hoaxes going around online.

Social media should never be a goal, according to Paul,  and you shouldn’t have a social media strategy. Instead you should have business goals and business strategies that may or may not include social media.

If social media makes sense as part of your business strategy, then there are a number of ways in which you can sell it to your executives. One is what Paul calls shock-and-awe, where you show executives how people are already talking about you in the marketplace, and how your competitors found ways to join those conversations where you didn’t. For those companies that may be smaller and may not have a lot of conversations going on around them, a stealth or guerrilla approach may be a better way to get going. Another way is to do market research and bring back an overwhelming volume of case study evidence.

Paul did not necessarily agree with my assertion that in most social environments we would eventually see the Facebook effect, where over time one community per topic becomes dominant. He believes that fragmentation in many markets will continue to exist and thrive.

You cannot turn your organization into a social organization from the top down only, nor can you become one through grass roots efforts without the support from the top – becoming a social organization requires support from all levels of the organization. There are many different variants in which organizations transition from hierarchical organizations into social organizations, and Paul took us through some of them.

We also touched on the risks associated with social media and how companies need to develop social media policies that are encouraging use rather than discouraging it, but also need to educate and train all their employees on what works and what doesn’t.

We closed the conversation by talking about Social CRM, a topic that Paul writes and speaks about frequently. Paraphrasing Paul, he said “at its core CRM is about managing relationships with customers and whether those relationships involve social media channels or not should be irrelevant – so the social is really just an unnecessary adjective.”

Well said!

Other things that we discussed include:

  • An in-depth discussion on the differences between B2B and B2C marketing, especially as it relates to social marketing
  • Crowd dynamics and how crowds tend to be smarter than individuals, as well as the pros and cons of crowdsourcing in marketing and innovation
  • The importance of using guerrilla tactics and knowing when it can and cannot work
  • A more in-depth conversation of what happened with Dell
  • The impact of new communication tools and open communication on business performance
  • The consumerization of new technologies and how many social technologies come into organizations through the back door
  • The importance of having values and living by them in empowering your employees

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CMO 2.0 Influencer Conversation with Don Peppers, Author and co-founder of Peppers and Rogers

Written by on December 7, 2009 – 4:57 pm -

don-peppersI’ve been a long time champion of Don Peppers’ work and so it was especially fun to conduct this CMO 2.0 Influencer Conversation with him. Don is the co-author of  eight books, his latest one being Rules to Break and Laws to Follow, and he is also the co-founder of Peppers and Rogers.

We started off by having Don give an overview of his latest book, which came out last year. At a high level, the book deals with the evolving landscape of business competition and the changes that are caused by the rise of social media – with customers increasingly talking with one another.

In it, Don and his co-author Martha Rogers argue that while businesses operate under a set of assumptions that sound logical, they are, in fact, fundamentally flawed. And, as the title of their book advocates for, it’s these rules that need to be broken.

The first one is that the best measure of success for your company is current sales and profits. They think that this is a false assumption because customers don’t just buy things from you today. When they do buy things they also have an experience that changes their impression of you or their affection for you, which in turn changes the likely amount of business you’re going to get (or not get) from that customer in the future. So, the customer lifetime value goes up or down based on current buying experiences, and that is the metric companies should track – not current sales and profits.

The second rule to break, or false assumption that companies operate on, is that with the right sales and marketing efforts you can always get more customers. In reality, they argue, we have a surplus of products and services, and a shortage of customers – customers are the new scarcity and should be thought of as a productive resource the same way we think of capital or labor as productive resources. You cannot just get more customers with more marketing – there is a limit. Note that Don and Martha are not attacking the whole notion of customer acquisition, they just don’t think that it’s the only way to create value.  The other side of this coin is that capital is an infinite resource – you can always get more capital.

The third rule to break, also widely accepted as truth by most businesses, is that company value can be created by offering differentiated products and services. Products and services don’t create value – customers do when they buy those products and services. Customers create value in two ways. Short term, by buying products from you now. Long term, by buying more from you later and by creating additional business for you through their referrals.  So you should think of customers as productive assets.

Don then talked about a new customer-based metric that companies can use to measure the efficiency with which they are using customers to create value – Return on Customer. Return on Customer is very analogous to Return on Investment. If I have a customer who has a lifetime value of $100 and I make $5 in profit on that customer by selling him stuff during the year, and by the end of the year I’ve been able to increase his lifetime value to $110, then my Return on Customer is 15%.

We also talked about customer acquisition strategies and how you need to evaluate the total customer lifetime value when you prioritize which customers to attract. The least valuable customers come in for the most valuable offers – so having a customer acquisition strategy focused on discounts is not exactly the smartest thing to do. Research that we found as part of research for our own book, about which I will blog about separately, showed that customers who are acquired through word of mouth have not only a higher lifetime value than those acquired through traditional marketing programs, they also bring in more new business through their referrals. So, when you calculate customer lifetime value you need to include the business that will come to you because of a customer’s positive word of mouth. That is especially true in light of other research that Don mentioned, which shows that your highest spenders are not always your highest referrers.

We then talked about another important topic in all of Don’s writing – trust. Customers make most of their buying decisions based on trust, and they think that you are creating the most value for them when they trust you. So if you want to maximize the value your customers create, you need to focus on earning and keeping their trust. And you cannot have a trustworthy business unless you trust your employees.

We closed our conversation with a discussion around the evolution of CRM, and how CRM systems will have to start incorporating people’s social profile, not just their buying history with the company. Don also warned that if companies think of their CRM system as a tool to sell more things, they will fail. CRM systems should be put in place to create more value for the customers – create better offers, better delivery, or whatever will increase value for the customer.

Don had an interesting parting piece of advice for marketers:

…in the era of social media you should always step back from whatever marketing policy you’re considering, whatever kind of new idea you have and ask yourself, ‘Gee, if this became public, would it be an embarrassment to us? Would we be proud of it? Would some of our customers hold it against us?’

Because, you know what? It’s a really good chance it will become public in today’s age and if you want to protect yourself then you really have to have clean hands, not just a good alibi.

Other things we discussed include:

  • How trust is a combination of intent and competence
  • The impact of technology on corporate hierarchies and processes
  • How successful companies of the future will have a high degree of self-organization
  • The importance of culture in successful companies
  • How the most influential customers don’t want to be sold to

As usual, you can listen to the podcast below.


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CMO 2.0 Influencer Conversation With Alan Webber, Author and Co-founder of Fast Company

Written by on October 25, 2009 – 6:10 pm -

alawebbersmHaving been a customer of Fast Company since the first release and having been an early advertiser in the magazine, I truly enjoyed having my CMO 2.0 Influencer conversation with Alan Webber, the co-founder of Fast Company, and most recently the author of a great book called Rules of Thumb.

As usual, we started by having Alan give us some context about himself – incidentally, one of his rules of thumb (#32  – “content isn’t king, context is king”). I had forgotten what the first cover of the magazine said: work is personal, computing is social, knowledge is power, and break the rules. Talk about being ahead of your time – that was 1995! That was a true manifesto which led to Fast Company becoming one of the fastest growing publications and the second largest acquisition in U.S. magazine history.

Rules of thumb pulls together 52 core lessons that Alan learned during his 40 years of working in government, academia and publishing at the Harvard Business School, as an entrepreneur at Fast Company, and as a globetrotting, global “detective,” as he describes himself, trying to make sense out of all the changes that are currently going on in business, politics, and society all over the world.

Next we touched on Alan’s Rule #15 – “every start-up needs four things: Change, Connections, Conversation, and Community” – and how that happened at Fast Company. Fast Company, of course, was one of the first companies to successfully leverage communities as part of their business model. Readers of the magazine formed a real tribe – one that wanted to hang together in the context of ideas and conversations about the trajectory of change in business, work, competition, and in individual’s careers. The tribe, as you may recall, was called Company of Friends – and like most successful communities it became a true movement, one that the company would have been hard-pressed to close down.

Bouncing around a bit we next talked about rule #42 – the survival of the fittest is the business case for diversity. Not only did they have tremendous diversity within their employee base, with people coming from all over the world, with different backgrounds, different educations, race, color, etc. , they also had a lot of diversity among their readers. The diverse employee gene pool allowed them to be very innovative – for example making them one of the earliest magazines to turn their customers into co-marketers by giving away their web content for free with the first “send this page to a friend” feature.

Next we spoke about a number of rules related to talent and leadership, including Rule #19, “memo to leaders: focus on the signal-to-noise ratio,” or Rule # 21, great leaders answer Tom Peter’s great question: “How can I capture the World’s Imagination?”, or (maybe my favorite) Rule #26, “the soft stuff is the hard stuff.” Alan sees a shift from leaders who have all the answers to leaders who know the best questions to ask. He thinks that in the wake of this economic crisis, many of us feel like we’ve been let down by those leaders who were supposed to make sound business decisions. The problem is that they did not ask the right questions and in many cases did not ask any questions. Good leaders, he explained, are those people who start out thinking they are not necessarily in positions of authority to give everybody answers. They’re in a position of authority to ask really tough questions that make their organization think very hard about what they’re doing and why they’re doing it. Good leaders in this period of economic retrenchment should have a mix of intelligence and humility – they don’t need to be the smartest person in the room, but they do have to be the person who’s willing to ask the hardest questions and insist on really good answers. As a leader you need to have clarity about your purpose, honesty about your values, and focus about your metrics.

Next we talked about the importance of  knowledge flows and how you absolutely have to have trust within organizations for knowledge to flow. We also touched on talent being one of the key drivers in successful business and the irony associated with the fact that while most leaders will agree to that, they will also promote CFO’s before HR VP’s, and at the first signs of trouble ditch the talent in order to get their stock prices up.

Alan then spent a fair amount of time talking about a new movement he sees emerging, that of social entrepreneurship and social innovation – a topic he covers in his book as well. People are no longer waiting for governments to come up with solutions to small and big social problems – they are assembling the best of business practices with a strong social mission to tackle the problems as for-profit, non-profit, or hybrid organizations.  They are baby boomers as well as young people right out of college. He believes that social entrepreneurship, which is a true global phenomenon, is changing the world.

In a way, Rules of Thumb is very much a book on leadership. It tries to get people to be leaders on their own terms, and to mint a new group of people who don’t look to others to provide the rules.

Other things we talked about include:

  • The need to match left brain people with right brain people
  • How most successful magazines mobilized a community that didn’t know it was a community until the magazine came out and gave it the organizing principles so people knew they belonged to a community
  • How leadership is a test of character
  • How you need metrics to show people how they are doing but how you cannot have too many metrics

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CMO 2.0 Influencer Conversation with Dave Logan, Senior Partner CultureSync

Written by on July 27, 2009 – 10:01 am -

Dave_LoganI had another great CMO 2.0 Influencer Conversation with Dave Logan, the co-author of “Tribal Leadership,” professor at USC and co-founder and Senior Partner at CultureSync.

Dave started off by talking about the research that he and his colleagues, John King and Halee Fischer-Wright, did over a period of eight years and which led them to uncover five distinct organizational cultures. The context: as you move up through the various stages, everything you want – such as effectiveness, productivity, and innovation – increases, while everything that you don’t want – such as stress, anxiety, and even workplace violence – decreases.

Dave then took us through the aspects and details of the five tribal leadership stages and what the key motivator is for each. Worth noting: the reason they settled on a tribal metaphor is because they found that it is not the individual that determines a company’s culture, nor is it the organization as a whole. Rather the culture gets determined by ‘tribes’ – those naturally occurring groups of 20-150 individuals in organizations through which the work gets done.

Here is a summary of the five stages of Tribal Leadership:

  • Stage 1 is motivated by the motto “life sucks.” This is the domain of workplace violence and it makes up about 2% of tribes.
  • Stage 2 is motivated by the theme “my life sucks.” These tribes move very slowly, they don’t collaborate and they have very low performance – in fact they do the bare minimum not to get fired. They also have a high degree of cynicism (done that, been there) and they comprise 25% of the tribes.
  • Stage 3 is where people think “I am great, but you are not.” Productivity and effectiveness in these tribes increases, but they need to verbally compete to operate.This stage is very typical of professions where knowledge or personal achievement is key – or where you need to outperform you peers to get ahead. Again there is very little collaboration at this stage and people talk a lot about themselves. They comprise 48% of the tribes.
  • Stage 4 is where people are motivated by “we are great and they are not.” You find those cultures primarily in young organizations and high tech environments where there is little bureaucracy, making it easier to get things done. Because they are based on shared values, there is less politicking going on, less anxiety and much more collaboration. They make up 22% of the tribes.
  • Stage 5 cultures no longer need rivals and their theme is “life is great.” It’s focused purely on values – e.g, curing cancer. This is where the breakthroughs happen and they make up 2% of the tribes.

As a leader, you need to stabilize the level that your tribe is operating before you can work on moving them up to the next level. If you do not push into a new level from a stable position at the previous level, your tribe will operate in a position of weakness and have a high likelihood of regressing back. Of course, that also means that you cannot skip a level. Dave used the example of many dot.coms to make that point. They deluded themselves into thinking they were operating at level 5 without having gone through the previous stages. When the bust hit, many of those tribes regressed multiple stages – some as far as Stage 1.

As he describes it, one’s goal should be to reach Stage 4 and then stabilize your tribe there. That requires you to constantly review the values that you share with your team – always making sure that you are still fighting for the same thing. You also continuously need to connect people with other people as Stage 4 is characterized by fused relationship – where groups of three operate as a single unit.

Organizational change can come by changing one tribe at a time, and if you want to change the level of an organization as a whole, you have to start with the most senior executive tribe first. That is especially hard considering that traditional management structures are very much designed as Stage 3 environments – the leader is great and most others are not, they are dominated by two-people relationships, and they are very political.

The most important leadership skills for tribal leadership are: 1) the ability to notice and identify tribes, and 2) the ability to assess tribal stages, which is primarily based on listening skills to uncover what language tribes are using and what values they share. Transparency is important as well. Without it you cannot build the trust to get to Stage 4 and 5.

Other topics we discussed include:

  • Co-existence of the different tribal leadership stages within companies
  • How people in Stages 1-3 feel threatened by people who are better than them and therefore hire people who they can control – and how companies at Stage 4-5 develop processes to avoid this
  • Some simple techniques to help move an organization forward
  • How people can belong to multiple tribes, some of which span the corporate boundaries, and what that means for companies.
  • How good leaders get (re)defined by their tribes

As usual you can listen to the recorded podcast below and soon we will be putting up a transcript.


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CMO 2.0 Influencer Conversation with John Hagel, Co-Chairman of the Center For the Edge at Deloitte

Written by on July 8, 2009 – 7:19 am -

John_HagelI had a lot of fun conducting this CMO 2.0 Influencer Conversation with John Hagel, the Co-Chair of the Center For the Edge at Deloitte, and one of my all time favorite business thinkers.

John started off by explaining the meaning behind the name of the center which he co-leads with John Seely Brown – the Center For The Edge. For them, the edges are those areas on the periphery where you first see emerging new opportunities. The challenge with the growth opportunities at the edges is to scale them – either by connecting them to the core where all the money and all the people are, through collaboration, or through competition. There are many different types of edges, including geographic ones (think China, India), demographic edges (e.g., the younger generation entering the workforce), marketplaces with unmet needs, or technology edges. The key take-away for executives is to keep focusing on those edges as they are the places where future growth opportunities will first show up. They also need to realize that many of those edges are not part of their organizations or their existing ecosystems.

Next we talked about the newly released  Shift Index, a set of three indices and 25 metrics designed to make longer-term performance trends more relevant and actionable (you can download the full report here). The Index, which was based on a yearlong research project, helps explain, among other things, the intensification of competition that many companies are witnessing today, and which has lead to the mean for company survival to come down to 10 years compared to 75 years in the 1930′s. Other metrics within the index help executives measure the consequences of that intensifying competition and also allow them to measure their performance relative to others. The research also uncovered some concerning trends – one of which is that ROA (Return On Asset) in the US decreased by 75% in the last four decades. And that in the face of consistent increases in labor productivity over that same period.

One of the key conclusions of the study is that competition is intensifying and that companies are not doing so well – their existing management practices are not keeping up with the changes.

We talked about some of the things that companies can do in order to cope with the changes afoot. One of those is to shift from a knowledge stock mentality, where you aggressively protect and hoard proprietary knowledge, build scalable offerings around it, and then extract value from it for the longest possible time, to a knowledge flow mentality, where you realize that what you know today has rapidly diminishing value and where you refresh your knowledge stocks by participating in knowledge flows. One of the big challenges for companies is that unlike information or data flows, knowledge does not flow easily – as it relies on long-term trust-based relationships. So the key to success in this new economic reality is to move from a transactional world to a long-term trust-based world. Examples of taking on a knowledge flow approach include letting your key customers participate in product innovation, or turning them into affiliates to allow them to help one another.

In this increasingly fast-cycle world, John believes that the role of serendipity will be progressively more important. He defines serendipity as “unexpected encounters that are valuable and generate pleasure when you encounter them,” and rather than believe that serendipity is based on pure luck, he believes that we can shape serendipity – both by increasing quality and quantity of unexpected ecounters. One way of doing that is by selecting location. By choosing a “spiky” physical location where there is a high concentration of talent you are much more likely to encounter serendipity than if you were on a farm in Iowa. The same is true for the virtual locations you decide to hang out in – whether social networks or communities. Choosing location by itself won’t do the trick however. If you want to shape serendipity you still need to set yourself up so that you are attracting attention, and increasing visibility and findability for yourself.

Another thing that companies need to focus on to better deal with this new economic reality is to shift from a push model to a pull model – one in which you attract partners, customers and talent, instead of pushing out products and messages. John reiterated the importance of shifting from an intercept, insulate and inhibit marketing mentality to one of attracting, assisting and affiliating customers and prospects.

We wrapped up by talking about John’s evolving views about business communities since he wrote Net Gain almost 12 years ago (to date, and in my biased opinion, probably still one of the most important books on business communities). He would reaffirm that there are huge challenges to building communities, but that if you build them around the needs of the members they can be very powerful. He would also expand on the need for three distinct, and sometimes conflicting, skill-sets or cultures that  are required to ensure successful communities – centered around content, social interactions, and economic business models. Unfortunatelly, most communities only have one or two of those skill-sets engaged.

We also talked about:

  • The need to shift from firewall around the company mentality to a modularized firewall around core company IP
  • How you cannot participate in knowledge flows for very long if you are only a “taker”
  • The importance of face-to-face in building trusted relationships
  • The importance of having hyper-local face-to-face components in large online community
  • The balance between the need to increase the number of partners we engage with with the need to build deep relationships in order to allow knowledge flow
  • The talent Dilbert paradox and how talent is motivated by the talent development
  • How you need a high growth strategy to attract and keep talent
  • The importance of the “collaboration curve”  in scaling the organizational learning, which they described in detail on their new blog - The Big Shift
  • The importance for companies to start adopting a federated view/architecture for their online community efforts

You can listen to the actual CMO 2.0 Influencer Conversation below and soon we will be putting up a transcript of this conversation.


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CMO 2.0 Influencer Conversation with Dan Ariely, author and Professor in Behavioral Economics at Duke University

Written by on May 24, 2009 – 3:51 pm -

Dan_ArielyMy CMO 2.0 Influencer Conversation with behavioral economist Dan Ariely, who is also the author of one of my favorite books, Predictably Irrational, was particularly insightful and instructive.

Dan started the conversation by talking about his past, and how a life changing event – having about 70% of his body burned  by a magnesium bomb that detonated close to him – led him on a path of human experimentation.

We quickly moved to one of my favorite topics – how people make decisions either in a market framework or a social framework, and how mixing the two, which inevitably happens in the world of business, is not a good idea.

People are inherently social creatures, and when we talk about money we create a different set of expectations than the ones we have in our social world.  The social world and the market world have different rules and regulations. What do you think would happen if instead of taking a bottle of wine to a dinner party you were to give the host cash so that she could buy her own bottle? It would no go over so well, would it?

In the business world we have no choice but to mix the two together, as we hire people in return for a salary, but also tap into social drivers that money cannot buy (i.e., an extreme example of that is firefighters putting their own life on the line, which could not be motivated by any amount of money). Too many companies try to put a monetary value on things where they would be better off leaving it in the social realm. They need to understand the trade-off between economic efficiency and social efficiency. Who would be more motivated to work overtime when you need it – the person who got a $1,000 cash reward for doing well or the one that was sent on a trip to the Bahamas worth $1,000? Research shows that it is the person getting the gift. The same is true for healthcare – why put a monetary value on the healthcare services that you provide to your employees? It does not buy you social efficiency which you could otherwise derive from providing them with that service as a social reward.

Next we talked about group dynamics, especially herding, and how that affects people’s buying behavior. People tend to herd – buy the music that got the most downloads, stand in line at the restaurant that has the longest line, etc. We also follow the herd of our own self, meaning that we buy things based on the way we bought before – even if that was based on a random act.

Dan also reviewed recent research that shows how we internalize the social. In an experiment he gave some people shirts with the term generous printed on it and others with the term stingy printed on it. After wearing the shirt in public for awhile people who had the generous shirts were behaving in a more generous way than those that had the stingy shirt. The interesting part of the experiment is that he got the same results when people were wearing shirts with the same terms printed on the inside of the shirt – so in a way that they were the only ones to know.

Another issue near and dear to many marketers is that of free trials. Free trials for products that are known quantities, i.e., Godiva chocolates, will not lead to the depreciation of value of those products in our mind. Free trials for products that we do not know, and do not assign value to, will diminish the value of that product so that when you start charging for it we will refuse to pay for it.

Other things that we talked about include:

  • The dark side of social rewards
  • How the feedback you get from focus groups can be very suspect because people have bad intuitions about their own behavior
  • How ideation works best when other people can build on your ideas
  • The importance of experimentation and business education in business
  • How pricing is not determined by supply and demand and the importance of self-herding
  • Behavioral economics and its impact on the economy and the stock market
  • The honesty mindframe and its influence on cheating

As usual you can listen to the podcast below and soon we will be putting up transcripts of this CMO 2.0 Influencer Conversation.


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CMO 2.0 Influencer Conversation with Rob Kozinets, Marketing Professor at York University and author

Written by on May 7, 2009 – 9:01 pm -

Rob_kozinets

For my first CMO 2.0 Influencer Conversation, I spoke with Rob Kozinets, a professor of marketing from York University in Toronto, about communities, consumer tribes and word of mouth marketing – not surprising considering that Rob was the editor of Consumer Tribes, a collection of research papers on consumer tribes, recently finished a book on word of mouth, and is one of the few researchers looking at the practice of business through the eyes of an anthropologist/ethnographer (among other things).

We started the conversation by talking about the disconnect between the world of academics and the world of business, especially as it relates to marketing. It is an unfortunate fact that many mistakes could be avoided if marketers were making informed decisions based in part on some of the recent findings in the fields of behavioral economics, anthropology, complexity theory, sociology, and psychology.

One of Rob’s main themes is that consumer learning, opinions and transmission of influence happens in smaller groups – hence the idea of tribes. Today’s tribes have looser affiliations and are more hedonistic in nature than ancient tribes. They are nomadic by  interest, rather than geography, and centered around expertise and commercial culture. Consumer Tribes are also not typically focused on a single brand but rather on a whole group, a whole culture or lifestyle, or a set of activities.  Another challenge for marketers, according to Kozinets, is that consumer tribes don’t typically develop long-lasting relationships. Even some of the stronger tribes, like the Star Trek groups that were so popular in the 90′s, aren’t as active anymore – people move on as they get more options. It would actually be interesting to see if the Harley community is still as strong as it used to be. People move in and out of consumer tribes, and the tribes seem to have a natural life and death cycle – including a revival stage sometimes.

Of course, most marketers don’t think of their customers as tribes yet, or don’t realize the enormous impact that successful customer communities can have, so for many of them this is an non-existent problem.

According to Rob, one of the big problems with communities is that companies are setting them us expecting fixed ROI. In reality the measurement of the the impact of communities is very hard. They are hard to set up, take time to take off, and are challenging to maintain. And, as Rob points out, a lot of the successful community marketers have had their communities formed for them by their customers – much like Harley.
We also talked about the proliferation of special interest communities sponsored by various companies – e.g., small business focused communities, of which there are dozens. Obviously members will not want to belong to multiple small business communities, so what then? Consolidation, with most members gravitating towards the most successful small business community, or further fragmentation, with more user-driven communities aggregating around micro objectives? It’s hard to predict where we will see consolidation vs. fragmentation of communities as we do not quite understand how people move in and out of those spaces.

An interesting concept which Rob brought up was “share of community time,” which, in a way, is a measurement related to John Hagel’s Return on Attention (John has also agreed to conduct a CMO 2.0 Influencer conversation with me – stay tuned for a date). The problem with calculating share of community time is that there is a huge spread in the estimated number of people who participate in communities – between 100M and 1b.

Other things we talked about include:

  • The role of payments and incentives in communities
  • Whether online focus groups are stretching the possibilities of online community environments
  • How to engage with your detractors as well as your champions
  • How, if you are going to open things up, you should have a strategy to deal with criticism that will come
  • The pros and cons of having a neat classification system for communities based on the different needs that they are trying to solve
  • How community organizers need to think about members first and brand second

We also touched on word of mouth and how most marketers expect word of mouth to amplify their message, when in reality most word of mouth will transform your message.

As usual, you can listen to the podcast below, and we will be releasing transcripts soon.


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