CMO 2.0 Conversation with Mads Nipper, CMO at LEGO

Written by on March 20, 2013 – 3:01 pm -

For a guy who broke in to LEGOLAND in Denmark with some friends back in September of 1978 when we realized it was closed for the season, being able to have a CMO 2.0 Conversation with Mads Nipper from LEGO felt like being a marketer in a playground.

From all the CMO’s I spoke with, Mads took perhaps the most unusual path to becoming a CMO. He started off as a fisherman, but then realized that the Danish weather was too cold for him, and fishing was actually way too hard. So instead, he went to business school, and started working at LEGO 22 years ago. Mads’ responsibilities do not only cover marketing, but also product development, innovation, and all of the commercial activities.

Digitalization and gamification of their consumer base, trends that have been accelerating since the first introduction of the 8-bit Nintendo machine in 1990, present both threats and opportunities for LEGO. Digitalization has affected all parts of their business, including marketing, retail, and the whole play experience. Marketing campaigns are now always integrated with digital dimensions, e-commerce has become a dominant retail channel, and LEGO so far has sold over 100 million video games developed in partnership with TT Games, which is owned by Warner Brothers.

A major innovation effort at LEGO right now is to bridge physical and digital play, as they believe that is where the future of play will be in the next 5-10 years.

One of the big changes that LEGO had to make as they became more digital was to accept that they could no longer strive for the same level of perfection that they had grown accustomed to in the analog and physical world — the speed of change in the digital world just does not allow that. That does not mean that they compromise on consumer perception and experience, and certainly not on child safety — they just became faster at new products iterations and allowed their corporate product development heart beat to increase significantly.

At LEGO they don’t consider themselves in the business of toys or games; they consider themselves to be in the business of play. That is why Mads uses terms like communicate, socialize, and play when talking about his customers, and not toys, or games. While the concept of being in the business of play was on the mind of the founding family, the Kirk Christiansen family, they did not articulate it explicitly until five to eight years ago as they were emerging from a business crisis. Starting to consider themselves in the business of play, instead of being in the challenging and non-growth toy business, proved to be a very liberating experience. The business of play is right up there with food and love — one of the most important activities in people’s lives.

At LEGO they feel like they never know enough about children and shoppers — agreeing that if they were to know everything there is to know about their customers it would lead to the company becoming arrogant.

While children may display very similar play characteristics across different cultures, the people who buy them LEGO products — the mothers, the teachers, the grandparents, etc. — do not — they are much more shaped by the local culture than the kids are. That makes for a complex marketing challenge for a global company.

LEGO is very much a substance brand — meaning that the essence of the brand is built around the experience and the longevity of that experience. In fact, LEGO products, which are not a cheap play experience, often get more than a 30-40 year lifetime — much more than most other products in the world. LEGO is also a legacy/heritage brand — one that many parents and grandparents grew up with as children. It stays consistent, yet relevant to modern times, by having a digital component as well as a storytelling component while also having a compatible building system and design style with the LEGOs from 20 years ago.

Next we switched to the topic of culture. As you can expect, the LEGO employee culture is a very  strong one — with people sharing a passion to make a positive difference in children’s lives. There is also a strong correlation between the internal cultural values and the brand values — and many employees consider themselves brand guardians, without being tasked to act that way by management.

While they do have a strong-shared beliefs system, they do not expect employees to memorize those. They think of their belief system as the smell in the bakery — if you like the smell of the bakery, you will know immediately that you belong. If you don’t, you don’t need a belief system to know that you don’t fit in. One of the ways the belief systems comes to life at LEGO is through storytelling. Storytelling provides the emotional bond that drives the world much more so than paychecks and orders. Employees are also encouraged to bend the rules and processes if it means improving the experience of a child.

LEGO is successful in multiple national and regional cultures because it appeals to a very ancient set of cultural traits — the need for humans to play and innovate. You can then add other cultural layers on top of that, like national cultural elements, or pop-culture elements (e.g., Harry Potter, Star Wars, etc.), but it is the deeper and more ancient human cultural connections that makes LEGO universally successful.

Another interesting aspect of play is gender based — boys like conflict play while girls like socializing. When boys see LEGO, they often ask themselves: What does it do? Can I kill anyone? Can I win over my enemy? Girls, on the other hand, are much more apt to ask themselves: Is it pretty? They don’t have the need for it to do something. They want to create platforms for social interactions.

Other things that we discussed include:

  • The importance of content marketing in the marketing mix.
  • The role of online communities and social media in the marketing mix.
  • How they do not focus on the quality of the building blocks or the games first, but the quality of the experience.
  • The differences between marketing LEGO in Western cultures vs. Asia.

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CMO 2.0 Conversation with Jim Davis, CMO at SAS

Written by on February 26, 2013 – 5:50 pm -

My CMO 2.0 conversation with Jim Davis, the CMO at SAS was  insightful and covered a lot of ground. Jim grew into the CMO position through the ranks of R&D and product management — a great path for a technology company. At SAS, Jim is not only the CMO, but he also runs HR, professional services, and education; positions at the executive table that should work much more closely together than they usually do. With his responsibility, Jim can  not only focus on providing a great product experience for the customer, but also a great place to work — resulting in being Number 2 on the Great Places to Work ® list and having a 2-3% employee turnover rate in an industry that averages 20-22%.

We discussed the long term benefits of investing upfront in the employee base and how unfortunately, public companies, driven by Wall Street’s relentless search for cost-cutting,  cannot always make those investments. For Jim, there are three types of relationships: the company-customer relationship, the customer-employee relationship, and the company-employee relationship; which is where most people fall down. At SAS, they are convinced that if you can satisfy the last leg of that relationship triangle, the other two will work well as well. Or as their CEO, Jim Goodnight, says — “If the employees are happy, then the customer is happy and if the customer is happy, the business thrives.”

While the cultural SAS Way and attitude in terms of how they treat people  is the same all over the world, employees in different cultural regions have different expectations of what it means to work for an exceptional employer — hence the need to execute a little bit differently depending on where you are in the world.

Realizing that people spend the majority of their waking hours at work, they treat their employees as family. A great example of that was what happened when the global financial crisis hit in 2008. Instead of hunkering down and laying off employees, as most companies would have done, the CEO did a global webcast and said, “I want to tell you something right now: I promise you I will guarantee no one will lose their job. I just need you to look after the company, look after the expenses and continue to produce quality software and build great relationships with our customers.” As a result, employees did not rush to update their LinkedIn profiles, and instead watched out for the business — resulting in the most profitable year in SAS’s history.

Next we talked about the impact of customers becoming increasingly digital and social on marketing plans and strategies.  Gone are the days of marketing getting the message out. Instead marketers now need to focus on listening and responding to the sentiment of the crowd. Marketers no longer need to be the company advocate in the marketplace — customers will do that, — but they instead need to become the customer advocate within their company.

Next we switched to the topic of big data and big data analytics. Jim described the various big data problems companies have and mapped them out in a two-by-two matrix that includes Business Intelligence (BI) and Big Data BI, both focused on reactive analytic capability; and Big Analytics and Big Data Analytics, both focused on proactive analytic capabilities. Jim has a great blog post detailing the different big data problems that companies may have.

Big data didn’t just happen. We have always had it. What was missing was the ability to gain meaningful and actionable insights from it to allow us to proactively make future marketing, product, and customer decisions.

We also talked about the benefits of real-time analytics, which has recently become in vogue. When you can place real time analytic models in line with the process by which we’re communicating with the customer, amazing new  up-sell and cross-sell opportunities present themselves.

In a recent poll SAS did with 800 executives at their Premier Leadership Series conference, 81% of respondents said that they are not doing a good job in terms of real-time, fact-based decision making. While we are still in the early stages of maturity, big data is definitely going mainstream, often driven at the board level.

In order to truly capitalize on the promise of big data, CIO’s and CMO’s need to work hand-in-hand. A good way to make that happen is to make sure that the CIO and the CMO have shared metrics for success. If the CMO is measured on customer retention or customer response or cross-sell, up-sell, then the CIO needs to be measured on those same metrics, not uptime and fall within budget. Here again, we are in the early stages of seeing this marriage between CIO’s and CMO’s happen, with many CMO’s still going at it on their own.

Lastly, we talked about the need to develop a fact-based decision-making culture — one in which human decision making gets supported by analytics and data modelers. If the human decision maker gets replaced with analytics and modeling, then we are in for big trouble — just look at the derivatives and the subsequent financial collapse.

Other things that we discussed include:

  • We briefly reviewed the results of the Social Workplace Trust Study that Human 1.0 produced with The Great Place to Work Institute, IABC and the Society for New Communications Research.
  • How they do not differentiate between consumer brand and employee brand.
  • The benefits of not being a public company with a quarterly time horizon.
  • How SAS has a deep culture of innovation and what that means.
  • How agencies are struggling with the decision to get into data or not — with the value of how you address the customer not being available in external data.
  • How to leverage social media data as part of Big Data solutions.
  • Metrics used by the SAS CMO to gauge progress and success.

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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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