CMO 2.0 Transcripts
CMO 2.0 Conversation with GE’s CMO Beth Comstock
This interview was held on March 6, 2009. To listen to the podcast, click here.
Excerpts from the Interview:
On Tensions Between Being Process Centric and Accepting Messiness That Comes From Innovation: Sure. And I actually think that tension is good. It’s frustrating, no one likes it, but it’s healthy and if you have no tension, I think maybe you don’t have passion.
On How to Get Customers Involved in Innovation: We found that if you peer too far out in the future with your customers it’s just hard to make it real and if you’re too close, it’s just too tactical.
On Incubating New Ideas: I think it is hard to incubate something inside a traditional operating company because all the systems are organized to leverage the cost and leverage the intellectual property. There are some really good things in that, but I do think it’s hard. I think – and we’ve found this time and again, when you incubate within the sort of normal operating rhythm of the company, you start to go to near-term metrics, you start to operationalize when maybe those are the wrong things.
On Who Owns Innovation: And I’d say we’ve spent a lot of time trying to make sure that people understand that innovation is everyone’s job.
On the Marketer’s Next Hurdle: I think marketers’ next hurdle is a knowledge management one. One where we have to figure out how to start to harness the data that exists, so that you know your customer better than they know themselves and that you can understand and intuit and feed them data back that’s going to make them even smarter.
On Letting Go of Control: And I think that leads to the last thing we’re focused a lot on. It just sounds so silly, but it’s this idea of letting go. Your customers have a lot more access to things that you don’t have control over and you’re never going to get that control back, so how do you make it work for you? How do you use your customers as your extended sales force?
On the New Marketing Skillset: I think it’s some of those softer skills we’re focusing on and going really heavy in digital capabilities, community building and building networks as partners. Those tend to be the skills, the harder skills that we’re focusing on.
On Trying Things Out: We sort of have a little skunkworks team and it’s made up of marketers from across different businesses and we were calling them our rogue marketers and we’ve asked them to come up with a set of rogue marketing tactics that need to be part of everybody’s toolkit.
CMO 2.0 Conversations – an Interview with GE’s Global CMO Beth Comstock
The following is an edited transcript of the CMO 2.0 conversation that Francois Gossieaux, a partner in Beeline Labs conducted with Global CMO for GE, Beth Comstock. This interview was held on 3/6/2009. To Download a PDF version of the transcript, please
Francois: My guest today is Beth Comstock. She is the Global CMO at GE and she has been through a lot of transitions at GE over the years. Right, Beth?
Beth: I sure have.
Francois: Thank you so much for making the time to speak with me.
Beth, I thought maybe as a start it would be good for you to give some context. You’ve been at GE for a long time, you’ve seen massive changes, I’m sure, during your tenure there, you’ve also been in a central position, and then you moved into an operating company and back into a central marketing position. Can you tell us a bit about what this was like and how did you see the role of marketing change over the years?
Beth: Yeah. Thanks, Francois. It’s a really good question you’re asking. A couple of thoughts just to get started: one, GE is a multi-business company focused very much on technology and manufacturing.
And so, we hadn’t – as a rule we hadn’t invested so much in marketing certainly in this decade. So, one of the things we did in the early 2000’s was to say, “Hey, we need – if we’re going to grow more, we’re going to need more marketing people in the company.”
We had largely, up to that point, defined marketing as sales support, marketing in a communications’ capacity. And those are important roles, but we needed marketing to do a lot more, to step up and help drive organic growth was the focus.
So, in about 20003 we said we’re going to make a big investment in the company in marketing in a couple ways: one, we’re going to bring in people who have expertise, we’re going to train internal people to be more marketing savvy and we’re going to invest in training programs meaning we went out and hired a bunch of MBA graduates, and have an ongoing program to fill a pipeline with great strategic marketers.
So, that was important in 2003 and I think one of the best things we did was to say, “Hey, we have to have some kind of – one, an initiative, some way to pull these pieces together and ensure that we’re getting the growth we need and ensure that marketers play a role not only in driving sales, but in driving innovation.”
So we set up an innovation pipeline, which I think you want to talk about at some point, but it was a way to start to hang a definition of “This is what we want marketing to do.”
A couple years ago they shipped me off to NBC for a couple of years to work in an innovative space. And I went to work for NBC Universal on a new white space, which is digital media. I have to say it was a great assignment. I did some traditional things; I oversaw the traditional advertising and marketing and sales, but the digital media was new – I didn’t come to it from a technology background, but I came to it as a marketer.
And there were so many times in that job I’d say, ‘Gosh, if I were in my old job at GE, wow, I’d really think things differently now understanding this digital – the digital technology and the way the digital world’s evolving.”
So I think that’s the privilege I have now is to bring some of that – those experiences and apply it. I feel like I’m looking at the job very differently now and certainly with a slower-growth world, with the economy that we’re in, we’re having a much different challenge for our sales and marketing teams than we did back in 2003. So, it has been an interesting ride and a lot of learning.
Francois: Very cool. Yeah, I definitely want to go and talk about innovation at some point, but before doing that I want to stay on the differences between marketing in strong operating companies versus doing marketing at a central level.
You know, you guys are in so many different businesses: you’re in healthcare, you’re in media and entertainment, you’re in finance, and you’re in aerospace. I mean, a lot of those don’t seem like they have much in common, but yet in talking with some of the people at GE in prep for this call, I do understand that you’ve been able to find an ability to build platforms across the difference business units.
And when I say platform I don’t just mean product platforms, but also if you could talk a little bit about opportunities to build the brand platform, customer platforms, channel platforms, which cross all the business units. I think that would be really interesting.
Beth: Sure. And that very much is what we think our calling is being the central marketing. We actually call it the central commercial team, so we get involved in directing sales teams as well. So, for us centrally we’ve pulled together sales, marketing and communications.
And at the central level what can you do? I mean, one it’s clearly there’s a brand mission because especially when your company as broad and diverse as pointed out as GE, we all go to market – except for NBC, we all go to market with the GE logo. So, that’s clearly one big calling that you need a central group to do.
We do a lot of cross-selling, so having strategic accounts and trying to connect the dots around the customer. So, how do you bring together finance and aviation and even, in some cases, NBC? So, that’s another cross-function, cross-business opportunity that we have.
And when you’re a central function you end up spending a lot of time on functional development. So, making sure that you’re training, that you’re hiring, that you have all the great capabilities in your marketing and sales and communications teams, so that’s a lot of what we do.
What I’m most passionate about is that we drive some central initiatives. And so, innovation has been one of them and I think I’m probably most proud of what we’ve been able to work on in commercial innovation and that is exactly what you said: it’s creating a new platform.
So, we did this back in 2005 with what we launched as Ecomagination. It was our clean technology fuel – you know, energy efficiency platform and at first it was a way to package who we are and be more clear to our customers. Then it became a platform for investment and a platform for R&D.
It’s a platform for business development and it’s basically a shadow P&L, if you will, across the company. We’ve targeted about $25 billion of revenue over a period of time that it’s going to generate.
And when we started it you could see where our energy business might be involved, maybe our aviation business, our water, but it’s really now consumed the company in such an exciting way. We’ve got teams at healthcare that are launching eco hospitals, we’ve got a real estate division that’s doing a lot with eco certification and it’s just defined the company in a way that certainly we never anticipated, but it’s been very exciting.
So, I’m a big believer in, one, commercial innovation and, two, a need for central functions to add that kind of value because that’s what you do in the center. You have access to trends and you see things across businesses. So, as you said, it’s a lot of disparate businesses, how do they make sense? You start to see things.
You know, there are trends that are happening at NBC, with their customers, that are sometimes very relevant with another business and you start to put those dots together and that’s what led us to the Ecomagination effort. We saw too many businesses coming in saying, “We’ve got to develop more clean tech solutions. Our customers want it; they don’t want to go broke doing it, so we’ve got to figure it out.” And after you hear three businesses saying that, you think we’re onto something.
Right now we’re incubating our next kind of big cross-company commercial platform and that’s going to be focused around healthcare and we’re going to launch that later in the year and I’m very excited about that as well.
But again, once you start pulling the pieces together it’s amazing what new space opens up. So, that’s the way we look at it.
Francois: Now, what kind of processes did you need to put in place in order to foster cross-business unit innovation like that? I say that because by definition innovation is much more chaotic, much more messy. GE comes from a very process-centric background. There must have been some tension there in order to make something work that accommodates both.
Beth: Sure. And I actually think that tension is good. It’s frustrating, no one likes it, but it’s healthy and if you have no tension, I think maybe you don’t have passion.
So, the couple things we’ve done, some of it’s just GE operating system that has worked in other parts and we were able to copy, but we’re big on creating councils at GE and I would say they are action councils; it’s not just people getting together and sharing ideas, which we do, but it’s very specifically with an agenda and let’s create some shared momentum around that.
So, we’ve got a marketing council where all of our CMO’s from across the businesses get together once a quarter. I would say one of the most effective efforts we set up was what we call our commercial council, which is chaired by Jeff Immelt. The commercial council is about five years old. It’s made up of the top marketing, sales, a handful of business leaders and a couple of vice chairmen. We get together every month and we have definitive assignments and we go through real specific areas of innovation, areas of opportunity. So, it tends to be a lot of cross-selling, a lot of innovation, but people have assignments.
I’ll give you an example. We signed on as a sponsor for the Olympics. For a company like ours what’s in it for GE? You can understand if you’re going to have pouring rights for Coke or you want to use your credit if you’re Visa. And we really thought we saw there was an opportunity to use the Olympics to package ourselves differently.
So, we had our eye on Beijing and we used this commercial council to create a team that was a cross-selling team, saying how do we build stadiums better? How do we – in Beijing, how do we get the healthcare systems built around the Olympics? How do we do clean water? How do we – everything from light bulbs to energy turbines.
We use these councils as a way to assign a target. We said we’re going to go after our target which, I think was $500 million in sales in and around the Beijing Olympics over four years. We exceeded that target, but you needed this council, this group of people who come in and Jeff says, “You’ve got to target, you got to work together to get it and I’m making you accountable.”
So, I think that’s what worked for us is, one, just getting people together, learning from each other, but also holding them accountable and saying, “You’ve got targets you have to go after.”
Francois: Yes, now do you have ways for innovation to bubble from the bottom up?
Beth: Yeah, we do. So, I’ll talk about our innovation effort. Similar to these – you know, it’s an initiative across the company. We kicked this off in about 2003 as well, we kicked off what we called an Imagination Breakthrough Process and, frankly, it was just simple. It’s not easy to do, but it was simple. It was just a way to create a protected class of ideas and it could be technology, it could be commercial innovation.
So, we were very clear they didn’t all have to originate in the R&D lab and we were very specific in saying this isn’t just a new product for your core; we want these to be getting you into adjacent markets, getting you into adjacent business models or, in a few selected cases, we want you to think really big and go into totally new spaces.
So we found the need for an initiative that you would drive across GE, meaning every GE business had to participate; every GE business had to have a pipeline of ideas that they were incubating and developing. And so, we set that up and I think that’s worked pretty well for us. And the businesses have very independently come up with different models of what works in terms of how you get that grassroots support.
I think most of our businesses have gravitated to a – sort of a growth board process, almost like a group of venture capitalists where every month an operating group says, “How are the projects doing? Fund/not fund.”
And to do that, most of our businesses have had to have some kind of idea generation process, so that anyone who has an idea knows where to take it and there’s a formal vetting and there’s a team that puts a business plan together. So, I think that most of our businesses now have those processes in place.
For us what’s interesting, it wasn’t the ideas that were the challenge, it was the resources. It was keeping things focused. We had too many ideas. That wasn’t our challenge; it was how do we actually pick the right ones and how do we get them done? How do we get them over the finish line? So, that’s where we ended up finding more of our time was spent.
Francois: It’s interesting. You know, oftentimes companies have a bigger challenge with killing ideas faster than they do in generating ideas.
Francois: You know, keeping too many ideas under-funded for too long is just as bad as not having enough of them. You need to kill them way up front.
So, is the process by which ideas get vetted and by which they get funded and all that, is that very similar across all business units?
Beth: I mean, it’s similar to say that they all have a process and they’re generally the same. There are certain things that we expect companywide. Everybody has a portfolio. We’ve come up with a templates approach for us. It’s very much we look at box one, box two, and box three, in terms of how we define it.
Where we worked really hard was to say what kind of metrics goes in each box. Some of our early learning’s were that many times, especially in some of the real operationally-focused businesses, they were holding some very out-there ideas to box one expectations. Meaning, things like, “What’s your out profit next year?” And you’re like, “I don’t even know if I have a business model next year. I’m trying to validate the market exists, trying to test a few business models and maybe get a pilot customer. That’s the benchmark I need. I can’t tell you what my out profit’s going to be.”
So, those were some of the early, early debates that we had and, you know, that’s kind of how we looked at it. So, there’s certain key metrics that everyone has to adhere to. Everyone has to have a portfolio, we have a series of reviews across the company, some that involve our Chairman, but most of them involve the Head of Technology, our Research Head and myself.
So, those kinds of things every business has to participate in and then the businesses are very creative in how they do it. But generally they fall into similar buckets. You know, they may call them different things, they may incorporate just a leadership team or they may have a broader team.
Some of our businesses have been very successful. We created centrally an imagination market. We worked with our global research lab and basically, it’s just an online tool where you can have the collective employees basically fund what they think are – in a stock market kind of environment, what they think are the best ideas. Those have been really fun ways to engage all of the people in making the decision and really kind of doing the whole – you know, with some of the crowd’s methodology at the same time.
Francois: And how does that tie in with your form of vetting, your VC-like process? I mean, do the best ideas then automatically get put in front of that board and who decides on funding it?
Beth; Yes, yes. That’s the way it works that generally you would – I mean, there are a number of ways you would look at them. You wouldn’t depend just on that innovation market, that imagination market. But it’s an interesting exercise because sometimes there’s a lot of knowledge in your company and if you just have one small group then maybe it’s the same people always looking at everything, and you can’t challenge yourself. So, yeah, you would use that as a vetting process. Maybe you’d use it just as a validation process.
The other thing we’ve done, and we’re doing this more now, is we’ve brought in innovation coaches and this has been very helpful. And we do it across the company and then we have coaches very deep into a certain business or a certain area.
One of our most successful coaches is Vijay Govindarajan who’s out of Dartmouth. He’s at the Tuck School. He is a Professor of Innovation and we hired him as our kind of innovator, academic-in-residence and he has helped us, one, coach different teams when they’re struggling or when they’re starting out, asking the right questions. We even involve him in sort of troubleshooting and then there’s a certain amount of innovation that Jeff Immelt oversees. And so he gets involved in those.
That’s been very successful. Now we’re expanding it. We’re starting to get different kinds of coaches, innovation experts like an IDEO, different kinds of people who bring different perspectives into the mix. That’s been very effective to help us – there your problem you’re trying to fight is too inwardly focused; you need an outside view, someone who can rise above to help you think through things.
Francois: Now, through that marketplace or through that more formal VC vetting process for innovation, do you also look at teams that are going to be in charge of taking that innovation to the next level or can they self-form?
Beth: Sure. So, that would be part of the process. So, basically there’s an idea that you think has some promise; you know, all the kinds of questions, market analysis you’d expect then there’s generally a team that’s assigned to it that does a business plan. And assuming that it passes and it looks like a legitimate business plan, they make a decision to fund or not fund and part of that are, what are the resources?
I would say one of the lessons learned is originally we just sort of tracked money and revenue projections, and basic market trends, sort of investment money. But it was really clear that we needed to track resources in terms of people commitment and what were the people doing besides this?
So, many times you’d find – you know, you mentioned earlier one of the problems is under-funding. You know, you have five projects and you really only have money for three, but you want to do all five so they all starve?
We found it was really that with intact and the right teams and the right level of commitment. So, pretty quickly we started to drill down and this would be another thing the sort of VC boards look at: Who’s running it? Do they have the kind of capability? Do you have enough people? And what all – and is this their full-time job or is this like their third job? As a way of, one, testing the commitment of the leadership to this idea, but two, the success and viability that this project’s going to be seen through it.
I can remember one instance – we do a monthly set of review, Jeff Immelt does, on a certain number of these ideas in the pipeline because they’re usually cross-company ideas or they’re big bets and he wants some visibility and also to make some funding commitments.
But I remember we had a team that came in and they – I think they might have had five people on the team and they needed 15. And Jeff said, “Okay, look. You go back to your business leader and you tell him that until you have 15 people doing this, I think you’re not serious about this and I think you’re wasting your money.”
So, those kinds of messages have been very important; I would say even maybe more important than sometimes the just dollar funding because if you don’t have the right people and the right commitment, it’s not worth it.
Francois: Now, in your online imagination marketplace, do you have dynamics whereby teams are forming online? Something that we’ve done, we do a study with Deloitte every year where we look at how companies are leveraging communities and social media and stuff like that as part of their business. And in one case we looked at – I don’t know if you’re familiar with the iPrize process at Cisco.
Beth: Yes, I am.
Francois: It was fascinating to hear how teams would form on line as the business plans would go from quarter finals to half semi-finals, et cetera. I think it was, like, half of the teams that formed by the semi-finals were people that had never met outside of the online environment.
Beth: That’s a great idea. We haven’t taken it to that level yet, but I certainly hope we do and one of the things we’re trying to do right now is much more what you mentioned, sort of creating the opportunity for these communities of interest.
We’re calling them communities of interest, but we’re giving them the right tools and a way to find each other and sort of incubate. We’ve just started that process. We’re not as far along as the example you just mentioned, but I love that as a concept and I hope, if we talk a year from now, I can give you some examples of how we’re doing that.
Francois: They had some fascinating dynamics happening in that online environment, for example, they had posses forming to vote and blog on certain ideas and then they had other people get together and send reports to Cisco saying, “This blog vote is illegal. It shouldn’t have happened. They are all friends and family and look at their IP address” – I mean, it’s a fascinating story when you listen.
Beth: Yeah, that is interesting.
Francois: So, we talked a lot about how you have ideas bubble up and how imagination happens within the company. And you touched a little bit on the external coaches, which are bringing, obviously, some outside perspective into the process. But do you have any other process whereby you bring in customer insights into those imagination processes?
Beth: Oh, we sure do. I would say pretty much every one of our businesses has processes. I’d say on a more formalized process across the company we do what we call discovery sessions with customers. We have a whole research lab that’s set up to bring customers to incubate and innovate and brainstorm together.
What we try to do at our research lab is to bring different functions together along with the customer so it’s not just the technology team, you’ll have marketing, you’ll have different parts of the business that get together—the operating team, engineering—to work with the customer. That’s worked out quite well.
The discovery sessions we do, I think, are invaluable and what we found is we want to peer out, five-plus years with our customers to sort of paint the picture of what might be needed, what investments, what kind of products they’re looking for. We found that if you peer too far out in the future with your customers it’s just hard to make it real and if you’re too close, it’s just too tactical. We’ve even had luck in bringing competitive customers together, but if we peer out far enough, so looking at areas around clean tech and clean energy, we’ve brought competing customers together because it was important that we get some industry alignment. Is it going to be wind; is it going to be clean coal? If we’re going to make these investments what do you think the opportunities are going to be here? So, those are the kind of things we’ve done at trend macro levels and then we go, very deep and we have, as I said, this lab where we bring customers and cross-functional teams together.
Francois: Now, sometimes if you have innovation happen from within or with customers, it leads to a kind of incremental innovations; it’s not the breakthrough innovations as you sometimes find at the edges or at the intersection of different disciplines.
How do you foster that kind of innovation at the intersections of disciplines, which are the ones that oftentimes lead to breakthrough innovations?
Beth: It is a challenge. I think there are a couple of things to talk about here. We’ve always had innovation in our company but when we started looking at different kinds of innovation, it didn’t just have to come out of the lab; it could be commercial innovation or it could be cross-business innovation.
When we first started looking at that, I guess I was maybe a bit academic in the perspective feeling like there should be no impediment; it’s resources and focus.
I think it is hard to incubate something inside a traditional operating company because all the systems are organized to leverage the cost and leverage the intellectual property. There are some really good things in that, but I do think it’s hard. I think – and we’ve found this time and again, when you incubate within the sort of normal operating rhythm of the company, you start to go to near-term metrics, you start to operationalize when maybe those are the wrong things.
Sure you need goals, you need toll gates even if your idea is 15 years ahead and that’s what you’ve got to understand, but they’re different. And I think sometimes just the operating rhythm of the business challenges that and it makes it hard to incubate.
It is especially hard when it is as you mentioned, the cross-functional. Where I’ve seen the best work we’ve done largely is picking a group of people who have different levels of expertise and creating sort of a walled-off unit. I mean, it can still be in the same building, but that they’re seen as discrete.
Many times for us we’ve done that through partnerships, so a good example would be one of our aviation businesses. They were sort of incubating a new kind of small jet engine to go on smaller, very light jets. Pretty quickly in the opportunity they walled themselves off, but they realized they couldn’t do it all their own. So, they understood Honda was working on a small engine and we’ve done a joint venture partnership.
And so it is GE Honda and they are a separate entity and they sort of are able to take the best from both companies, but also kind of create the new energy that they need and the new focus they need.
I was fortunate to work at NBC in the start-up and development of Hulu which is another great example of NBC getting together with Fox and creating a sort of new child together. Hulu was very separate and it was very successful, I think, because we had the ability to tap into the mother ship for the key things, but not to have to take the legacy issues that come with it.
Francois: That’s very interesting. Now, you talked earlier about boxes in which you put the different types of innovations. Do they all have the same kind of gates to go through as you’re deciding on funding them?
Beth: Yes, there is a central process. I mean, again, businesses may give it a different name, but everyone has a pretty standard set of toll gates that everyone has to go through and we use the same framework of box one, box two, box three. Every business has to align their portfolio that way. What we did is we said in our framework it’s product or space or market versus business model. And for us it was really important to get our people to think about business model innovation.
So what we ask every business is to align what’s in their pipeline, basically it’s a one-page nine-block chart and it maps space versus business model. What we’re looking for is some kind of healthy distribution, so when the new product introductions in the core, you’d think that would be about 50% of what people are investing their resources in.
In the adjacent market we have a general guideline that says about 35-40% of your resources should be focused here and then about 10-15% in that sort of new space, kind of box three, you know, very new business model, very new product or space.
So, it’s not an exact science. We don’t measure everybody to the nth – it’s probably the only thing we don’t measure to the nth degree, but it’s a general set of guidelines. I think almost all of our businesses are using that nine-blocker to sort of plot their innovations and their pipeline and are generally using it as a guideline for resource deployment.
Francois: Now, I’m sure that in some cases you have proposals for innovation that are really, really good, but they just don’t have a big enough addressable market for a company like GE to make a difference.
What happens with some of those innovations? Do they die or do you find ways to kind of spin them out or resell them?
Beth: Yeah, that’s an excellent question. I would say that’s one of our biggest challenges. You know, when we set up our Imagination Breakthrough effort, we originally said, “We want these to target $50 to $100 million of incremental revenue and in three to five years.” It was just a way to get started; some are much bigger than that.
That just felt to us like a good kind of scale that would make it worthwhile. And so, there are those kind of general guidelines, but some things, they’re not going to be there for a while and you have to have them – they have to have room to breathe and incubate. But you’re right, maybe unfortunately it’s sometimes they’re just ideas that just aren’t worth the investment and the resources needed because they don’t match up. If you’re looking at something that’s going to generate $25 million versus $100 million, it’s a pretty easy discussion.
Where we found success is in trying to aggregate some of those smaller ideas around a platform and that’s worked out quite well for us. So, if you look at Ecomagination as a platform, there are a number of small, clean tech innovations or commercial opportunities in there that are on their own, but now that they’re attached to a larger effort they can be scaled a lot more quickly.
So, that’s worked for us. But, yes, we cut things that probably a small start-up company would not cut. And what it’s increasingly leading us to do and you’re going to hear me say a lot about partnerships, but increasingly it’s leading us to partnerships with companies that are really good at that.
We’re good at the scale part and they’re good at sort of seeing some of those smaller ideas through to a good place where then we can help them scale. Those tend to be really good alignments for us.
Francois: Yeah, I can see, possibly the formation of some kind of marketplace for some of those ideas, especially if you have enough of them,
Beth: Exactly, and that’s exactly how we’re looking at some of our new opportunities in the clean tech space. You know, maybe the benefit we bring is nothing more than a channel or the ability to scale it in a way that the tech company can’t.
Francois: Now, you’ve talked a little bit about how you measure progress and success. How do you decide or how do you deal when you have failures?
Beth: That’s another big issue especially with the Imagination Breakthrough effort, because they get a lot of scrutiny. Jeff Immelt does it, he talks to the analysts about it, and their business leaders and the vice-chairmen all have a certain degree of involvement. So, no one wants to sign up and say that, “Oh, I failed.” You know, it’s hard to raise your hand.
A couple of things: I’d say over the past 12 months we’ve been spending a lot of time being more focused just because you have to, right? In this environment what we’re trying to fight for is you have to have a pipeline, you have to. You’ve got to make your numbers in 2009, but you also have to make them in 2012. So, how are you going to get there?
So, that’s been a very focused effort to make sure that our pipelines are still there. Now, they aren’t as full, but they are there and they’re important. And I think it’s actually been a good discipline to sort of force us to really say, “How do we feel about some of these?” And I think that making those tough calls is not easy. And, frankly, this kind of economy is helping us be a lot better at making some of those decisions.
Francois: Now, you’ve had an innovation culture all along, but the innovation process and the innovation culture has changed over the years. And speed is important and all of that. Have you had to change the culture of the company in order to accommodate the changes that you’ve gone through with your innovation processes?
Beth: Yeah, we sure have. I think a couple things: one, and I’ve mentioned this a couple times, this notion of commercial innovation. So, you don’t necessarily just have to be an engineer or in the R&D labs to innovate. So, I think that concept that innovation has a couple of different dimensions and business model innovation, those are things we’ve emphasized.
And I’d say we’ve spent a lot of time trying to make sure that people understand that innovation is everyone’s job. I think where we’ve been most successful is using some of GE’s core tools and one would be our training and development at our Crotonville Learning Institute.
A couple years ago we created a program that’s called “Learning, Innovation and Growth”—LIG for short—and what’s so good about LIG is it gives innovation tools to leadership teams. So, we’ll have an intact team, say it’s the CEO of the business and their key folks, they come together and they’ll use this to build their growth strategy or to focus on a particular series of new products or markets they want to go after.
And then we’ve got outsiders and insiders who sort of have them think through the tools. And then culturally what we do is we have an assessment test where we ask people to individually rate themselves on risk taking, focus, clear thinking, some key traits. The individuals rate themselves and then the team on these traits.
So, you might come out and say, “The team is not very imaginative, so maybe we’re going to need some outside help in pushing ourselves to differentiate or to a newer space.” I think that has been the most effective thing we’ve done. We’ve really quickly moved it into the culture by bringing intact teams together, giving them tools and diagnostics so that they understand, “Oh, this is what you mean by being innovative. Oh, this is what you mean by risk-taking and courage.” That’s been very helpful for us.
Francois: In preparing for this interview, I spoke with some people on your team and they were talking to me about the product platform that you’re building across all businesses in battery space. Is that something you can talk and explain what that’s about?
Beth: Well that would speak to the heart of what we’re trying to do from our Imagination Breakthrough effort, especially at the central level, we’ve got to incubate cross-business innovation. So batteries is a great space where we’ve got some good technology; we’ve got partnerships and it’s sort of borne out of technology with our hybrid locomotives built on a sodium technology battery.
Suddenly, you start to say, “Well, hybrid locomotives aren’t the only ones that need batteries.” We need it as power backup for some of our energy clients; there are battery needs for aviation in terms of powering jet engines and other things on aircrafts and on planes. You start to say, “Hey, this might take us into other space such as auto.” That led us to do an investment in a battery company that we’re now incubating the technology together; it’s a different technology.
So, it’s allowed us to think much more broadly and see a much bigger opportunity than if we had just looked at what we needed to do to build a locomotive capability. We’re doing a similar process right now with Smart Grid. The Smart Grid is a lot out of our energy business: it’s smart metering; it’s basically much more efficient transmission of electricity. The system was built in 1890 and it’s still much alive today and we have all kinds of technology that needs different kinds of power.
So, Smart Grid for us, it’s an energy need for our utility clients. It also starts to affect our sensing business. Even our appliances’ business is developing a lot of smart appliances that are going to tap into the grid in a different way. So, if you just looked at it as an energy possibility, you wouldn’t nearly go after what could be. So, we’re having some success by taking a much broader company view in big areas.
Another space and this is a commercial innovation, we said we want to provide better solutions in the mining industry and so we set up a cross-company effort that pulls together five different businesses to better serve mining partners.
So, it’s technology and it’s how we sell and those cross-business ones and we just have a real rhythm to make sure that on a – often on a quarterly basis, what do you benchmark? What are your toll gates? How are you tracking? And so we’ve put some rigor behind that as well.
Francois: That’s fascinating. So, you’re now going to start to have privacy issues in the metering business too at some point.
Beth: Oh, well, we’ll let those guys take care of that. One of the things we’re –focusing on is trying to do much more consumer awareness because what’s exciting is it puts the utilities and the consumer on sort of the same side in terms of better, more efficient use and, you can choose to do your laundry at the right time of night so you’re electricity will be cheaper. So, there are some really good benefits that come out of that.
Francois: But the company that is providing electricity will now also know a whole lot more about the customers.
Beth: Yeah. Well the utilities will for sure, as the ones who provide it but a lot of opportunity and I think, if done well, a lot of good consumer benefits.
Francois: Oh, I totally agree. I find it interesting that some of the issues that we’re familiar with in certain spaces are now making it into spaces that nobody would have thought about it say ten years ago.
Beth: Yeah, absolutely.
Francois: So, I want to move back a little bit to more general marketing and get your sense for the changes that are happening and how you deal with that.
You know, in this marketplace I think you must see it too across all your businesses, lets say with social media and all that. Your customers have increasingly a larger share of voice in the marketplace and they increasingly base their buying decisions on information that doesn’t necessarily come from the company, but that comes from peers and friends and all of that.
Have you seen that in your business and how do you do you market differently in the face of that change?
Beth: In the face of the change in terms…
Francois: In the face of the change where the customer is increasingly making buying decisions based on information that they get from friends and peers as opposed to information that comes from the company.
Beth: Exactly. I mean, there’s just so many changes being led by just behavior changes; a lot of it’s driven obviously by, digital technologies. And when you look at GE, one thing that is interesting is we are a kind of interesting marketing laboratory. We have businesses where we have huge sales to a small group of customers – think of aircraft engines – it’s a pretty small group of customers and they’re buying big, big expensive jet engines, to our consumer finance business where we have millions of customers, and a lot of transactions.
And so, what we’re finding is they may have very different needs, but the level of technology seems to be a differentiator for us and I would say what they all share is the ability to better harvest information. I think that is where we’re going to succeed.
I think marketers’ next hurdle is this kind of knowledge management one. One where we have to figure out how do you start to harness the data that exists, so that you know your customer better than they know themselves and that you can understand and intuit and feed them data back that’s going to make them even smarter. There are some things we do now in healthcare and in aviation, remote monitoring of engines or remote monitoring of healthcare.
So, I think it’s an opportunity for marketers to say, “How do we then increase that knowledge and help our customers make smart decisions and help them go after their performance.” So, I think that’s the way we’re seeing customers starting to change, that they have more of an appetite for data and we have access to more data connected to what we offer. And so, how do we create the experience? How do we put it together in a way that’s seamless? That tends to be where our marketers are spending a lot of time.
Francois: Now, I like this concept that you’re talking about providing customers with data that makes them smarter. In this day and age, the conversations that are happening between your customers are in some cases, more important than the conversations that you are having with your customer.
Francois: And so, how do you inject branded content into those conversations that are happening between those customers?
Beth: That’s a great question and, again, given the variety of different businesses, I’m going to use the healthcare business because I think it’s a really interesting one. I mean, there’s lot of conversations. There are all sorts of websites now where doctors can talk to one another.
It is our belief that they don’t necessarily want to see GE in the middle of their conversation, but if GE can play a role in convening a kind of conversation, if we can be the enabler, if we can create the right kind of tools that makes that conversation between physicians richer, gives them something to work with, we think that’s the role we can play.
I don’t think content is going to be the answer. In some cases it will. I mean, we’ve done some interesting things with some customers where we’ve aggregated content and it’s kind of brought to you by GE, but I think for us to be effective, it’s much more enabling and I think for us, mostly it’s going to be tools-driven, maybe tools as content for the kind of businesses that we’re involved in.
Francois: Very interesting. Now, I think you touched a little bit on this in the beginning, but in regards to staffing up your marketing team, do you see the need for new types of people in marketing and do you see, perhaps, also new career paths in marketing?
Beth: I sure do. I mean, we’re sort of on this tear right now about what we’re calling new world skills. Sort of what do we need, how are we going to get it? And there’s a whole bunch of things that we’ve put in there. I mean, the big one is just digital capabilities and understanding how we move more quickly.
I would say two others that are kind of non-technology-related is this notion of simplicity, of trying to, if you will, curate an experience for a customer, help them sort of take away all the extraneous and deliver what’s most valuable. That is so hard and marketers want to put everything in and I think our new challenge is, how do you focus and simplify? And that is hard for marketers.
And I think the other thing we talk a lot about is just this notion of sort of – well, there’s two others: networks, communities and understanding how do you better mine those for insights? How do you better create more participatory marketing?
And I think that leads to the last thing we’re focused a lot on. It just sounds so silly, but it’s this idea of letting go. I feel like I really learned this at my NBC experience. Your customers have a lot more access to things that you don’t have control over and you’re never going to get that control back, so how do you make it work for you? How do you use your customers as your extended sales force?
People talk about it, but really how do you do that? How do you use your employees to do that, to be sales reps? And – so those are the things we’re starting to think about. I think a lot of where our traditional marketing skills are, they’re great – I mean, you still have the same kind of process, but maybe how we execute now is so different. So, it’s not enough to just do an ad and it’s not even enough anymore to say, “I’m going to build a community.” Well, you probably aren’t going to build a community, but where are communities happening where you can add some value, where you can take some learning?
And so, it’s just kind of orienting marketing people’s brains around some of the new world skills, the new world order, much more digitally savvy, much more flexible and nimble. It’s not necessarily the old formula and even the mix that you have to go though.
So, that’s how we’re looking at it. I think it’s some of those softer skills we’re focusing on and going really heavy in digital capabilities, community building and building networks as partners. Those tend to be the skills, the harder skills that we’re focusing on.
Francois: It’s really interesting how you look at communities and I think, you know I wish more people were looking at it the way you do because you’re absolutely right. I mean, the communities will form, period, whether you like it or not and in a lot of cases they are already congregating somewhere. You need to engage with them where they are as opposed to try to build your own and isolate people like we used to do in the old marketing framework.
Do you enable your people to engage already as it is or are you just thinking about how you’re going to let them engage in some of those networks and communities?
Beth: Oh, no. We encourage them to engage directly and I think one, you just have to engage to understand how and then you turn around and use it yourself. So, I think we are encouraging our people to engage in those.
You made me think of another effort that we’re pushing which I love. We sort of have a little skunkworks team and it’s made up of marketers from across different businesses and we were calling them our rogue marketers and we’ve asked them to come up with a set of rogue marketing tactics that need to be part of everybody’s toolkit.
And so, I’m excited to see what they come back with. I mean, it’s some of the more traditional guerilla buzz marketing kinds of things, but just taking us to a whole new place in terms of tools and what we can do, how we can interact with customers.
And I’m really liking some of the early ideas coming back from this group. So, we have empowered a certain group of people to say, “You, especially, you have to go live in these worlds. You, especially, you have to go and do some of these things so you can translate it for the rest of the marketing function.”
Francois: Are they publishing any of that information publicly by any chance? It would be so fascinating to see that.
Beth: Well, at this point we’re a sponge, so we’re just soaking up what everybody else is publishing, inviting big thinkers and crazy thinkers in. So, I’d say at this point we’re taking more than we’re giving in terms of publishing; we’re in a big learning mode.
Francois: Very interesting. Now, do you select the people that become rogue marketers?
Beth: Yes, yes.
Francois: Oh, you do. Okay.
Beth: I’d say there are two ways to look at communities of marketers for us: there are kind of centers of excellence and then there are kind of centers of practice, if you will. The centers of excellence tend to be ones that we pick and we fund. The centers of practice increasingly are centers of interest.
I mean, so you might sort of give the tools to people, but you have maybe all the marketers who are really big on segmentation. There are going to be some that are centers of excellence and then there are just going to be others that have other parts of the segmentation process and they just want to share knowledge.
So, we specifically do have a certain core set of centers of excellence where we’ve tapped the people to be part of it, we’ve put extra resources against it, budget and tools. I believe we have about six. We’re still formulating exactly the list, but it’s about six centers of excellence that we’ve created. And then a lot of different practice groups have shared interest.
Francois: Now, when you have those people that engage and you’re encouraging them to engage in the networks and communities and all that, are those people that have to be approved to do that as well or do you encourage everybody to do it within certain guidelines?
Beth: Well, I guess we’d encourage everybody to do it, but we have, if you will, a board of advisors or a board of people that we’re asking to be experts for the company. So, we’re expecting them to dig deeper, to bring what they find and then kind of translate it for everyone else who’s interested.
Francois: Now, in some of this new space, I’m sure you must have had your legal department that had big objections like we’re seeing in a lot of other big companies. How do you work with your legal department to make sure that they’re okay with liability issues, with, labor law issues and things like that as it relates to engaging in online communities, being on 24-by-7?
Beth: I mean, you just have got to bring them into the process. It’s back to what we were talking about earlier in these development teams: you have to have different functions; it can’t just be a group of marketers.
And so, I think generally where we, I mean, look, I’m sure marketing drives the legal people crazy and legal drives marketing crazy in any company, but we in marketing try to spend a lot of time saying, “Here’s the vision of what we want to do and what we need. Legal, how can you help us get there?” So, the job isn’t “No, you can’t do it,” but “How can you help us get there?” That tends to frame the conversation.
I will tell you I’d say, I don’t think we’re expert at it yet, but we’ve done a pretty good job. You know, for us it’s also issues in terms of risk. Think of financial services where you have really deep, strong risk teams and they can be at odds with marketing.
Where we’ve had great success is putting marketers with a risk team. We have this rotational MBA grad program and especially in financial services and some of our technology businesses, we will have this rotation. One of the rotations is that they go to risk or they go engineer. And it does two things: it trains the marketer on some of the realities of what those people have to go through and then it changes those functions to say, “Oh, I get it. I get why they’re asking this.”
So, it’s kind of like they train each other and that’s been very successful for us especially in financial services and connecting marketing with risk. Some of it’s just understanding why these are issues and that’s gone a long way for us in alleviating some of those problems. We’re not done with them by any means; we still have tension.
Francois: Yes, I can imagine. I don’t think those will ever go away.
Beth: No, and as I said earlier, I actually if you consider how to harness them they’re good for you. I think what I’ve learned through this process is try to bring detractors in, you know, people within your company now who you know are critics.
And that’s just like a workout. It’s like a really good challenge to have a debate and to understand where the detractor’s coming from and to see how it might change your thinking. And I’d say the best success I’ve seen is when you bring a detractor into the process and they then feel like they’re part of the effort and they come out the other end as your biggest supporter. And probably there’s no bigger advocate that way, no bigger sales person because of where they came from.
Francois: I so agree with you. And I’m so amazed that there are so few companies that are willing to bring their detractors into the innovation process and into any marketing process. Because, you’re right, if you can bring them in, even if you can’t turn them over as champions afterwards, the value of the information that they bring in is unbelievable.
Beth: Yes. I mean, I think from a marketing perspective one of the, if you will, softer skills is just this issue of diversity. I’m not talking about racial or global diversity, which is important, but this diversity of thought and diversity of experience. I mean, there’s nothing worse than a bunch of marketers sitting around and solving the world’s problems, but they haven’t’ connected other points of view.
So, that’s something I try to focus on and always try to make sure we have the right diversity of thought and experience on our teams, as well as in sort of the development of products or efforts.
Francois: Yes. Now, we’re getting up to the end of the hour. I was wondering if there was any other interesting experiment that you wanted to call attention to that you’re working on that you think might be particularly useful for other marketers?
Beth: Well, I think I’ll just summarize some of what I said earlier. I think this idea of the rogue marketing would be one and the second would be much more focused on how do we use data to get more intimate with our customers and sort of get ahead of them. So, deliver information before they even realize they need it.
Those are two. We’ve got some marketers that have just really gone gangbusters. I’m really excited about some of the dynamic knowledge tools that we’re developing. So, I’d say those are probably the two areas where I get most excited.
Francois: Very nice. Well, Beth, I wanted to thank you again for making the time to talk to me. I think that was a really interesting conversation and, again, I want to thank you for your time.
Beth: Well, Francois, thanks for the opportunity and hopefully you gleaned a few insights from this. I’m a big talker.
Francois: I definitely did. I mean, for me, these are fascinating conversations. I learn a lot and I hope the audience gets a lot out of it. But I know they do. I actually have spoken with some other CMOs that are sending all of their marketing team to listen to the CMO Conversations because they say, “You know, you get to hear all of those guys in one place as opposed to only seeing one of them at a conference every now and then.”
So, I want to thank you again. I also wanted to thank the audience for taking the time to come to listen to this session and I wanted to remind everybody that we will be posting this podcast later today or tomorrow on the CMO 2.0 site which is www.cmotwo.com.
Thank you very much.
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CMO 2.0 Conversation with Kodak’s Jeff Hayzlett
This interview was held on January 30, 2009. To listen to the podcast click here
Excerpts from the Interview:
On Social Media: “I would not even call it social media; I’d just call it scalable media…Social media is those things where people gather. The Internet’s just given it a huge scale. Before you had some geeky guys who always wanted to get together and dress up like a Klingon, you know from Star Trek, Where there might be one or two of those in the local high school, now they can find thousands or millions of those guys all around the world with these new tools.”
On Branded Content and Product Placement: “I do not like the old product placement where I pay someone, $100,000 or a million or two or three depending on what it is and they hold up my camera in the movie or a TV show. I do not like that kind of product placement, well I mean I like it, but I do not think I should have to pay for it. And so what we try and do is to make Kodak part of the story.”
On Second Life: “We saw people rushing over to Second Life and I am saying to myself where is the business application for you? Is it truly there?”
On Branding and Buzz Marketing: “A lot of people say marketing well it’s to build brand - blah, blah, blah, blah, blah. That’s the outcome, not the purpose, okay? When I first stepped into the job, people said, “Well we’ve got to do some buzz marketing.” What the heck’s ‘buzz marketing’? I mean I know what it is, but I said, “Guys, you’re here to sell product, okay?””
On How to Treat Customers: “CRM data today tells me about you; I can treat you like a special customer. And that’s what you deserve. That is the way we as humans want to be treated.”
On Trying Things Out: “You know, I have a saying inside the company with the marketing team. When they say, “Jeff we’re going to try this and we’re a little scared,” or whatever it might be, I say – well my question to them is, “Is anyone going to die?” And if no one’s going to die then I say “give it a shot.””
On Measurements: “You know there are some tools that you can use along those lines but I’m not a huge, huge believer. I think you know, Francois. I mean in your gut, you know… all marketing does exist to drive sales.”
On Kodak cameras: “They actually make you look thinner. That is what I tell everybody. You know other cameras, other non-Kodak brands add 10, 15 pounds to you right off the bat.”
CMO 2.0 Conversations – an Interview with BestBuy CMO Barry Judge
The following is an edited transcript of the CMO 2.0 conversation between Francois Gossieaux and Kodak’s CMO Jeff Hayzlett. We periodically run those CMO 2.0 conversations for the Marketing 2.0 group. Check there for updates on upcoming CMO 2.0 Conversations. This interview was held on 01/31/09. To Download a PDF version of the transcript, please
Francois: Today’s conversation is with Jeff Hayzlett, CMO at Kodak. Jeff has been with Kodak just about three years now and was named marketer of the year in 2008 by BtoB Magazine.
Jeff, the first area of discussion that I thought would be interesting surrounds the transformation that Kodak has gone through over the past few years. Clay Christensen, architect of and the world’s foremost authority on disruptive innovation, often talks about Kodak in his discussions. He has said that for a company to go through a transformation like Kodak has over the last few years that company has to basically have a near death experience. Can you talk about just how close Kodak came to near death and maybe help the audience understand the process?
Jeff: I have talked with Clay on a number of occasions but to better understand where we as a company were in this transformative path, the reality of the situation came to light through a session with Jim Collins, author of Good to Great. Jim had a new book coming out which talks about the six stages of decline. I was one of many marketers asked to review portions of the book and some of the concepts. I reviewed his list of the six stages of decline and then he asked what do you think is the furthest the companies that you know could go in these stages and still come back. Jim felt that most companies could get to stage five or five and a half. When I reviewed the examples he provided I put Kodak at five, five and a half. We really went to that level. So, to answer the initial question we were very close to it in terms of that turnaround, which is amazing.
Kodak has been described by the Financial Times as the biggest turnaround in American business history. Obviously with the recession and the economy today, we just like most companies have issues that we are facing but we are very well positioned. If we had not gone through the transformation of the last five years, it would be much more difficult for us. One of our employees actually recognized this at an employee meeting just yesterday. He said, “we’re so glad that we actually went through the transformation that we did because now we are well suited.” The reality is that Kodak is a new company. We became a total new company.
Francois: Yes, I can definitely see that you are a new company. In my previous positions I had Kodak as both a competitor and a customer. Today there really is no comparison. It is an unbelievable brand. It no longer stands for what we believed it did years ago. Was the brand an asset or a liability?
Jeff: you could look at the brand in both ways, an asset and a liability. We saw an asset that, quite frankly, could have been sold. That is one of the things you could look at because sometimes the actual brand value of the company is worth more than the company itself. But saying that, we are still Kodak, and at the roots of Kodak is imaging science and materials science. So that is where we play.
The heart of the brand is trust. In both the consumer and BtoB business today it is all about that trust and using the celebratory aspect of the brand. Celebrations, events and activities encompass our graphics business. When we print the materials or help printers print their materials, we hold people’s visions in our hands.
I would like to give you a couple of facts about some the transformation because I think it might help drive some of the audience questions. We describe it as a new Kodak. I refer to it as Kodak 2.0. We have 11 digital product lines, which now account for two thirds of our revenue. More than half of those did not exist in Kodak four years ago.
Four years ago we were primarily called a film or traditional media company. Today, 19 products account for all our revenue. Each of those products is number one, two or three in the marketplace. And once again, 11 of those products are digital, which did not exist and those digital products account for two thirds of our revenue.
Sixty percent of our business is now BtoB. Four years ago that was thirty percent. Sixty percent of our sales are outside of the United States. Most companies are trying to get into other emerging markets. We are already there. To give you an example, Kodak has been in China since 1982.
So there have been a lot of different changes. Let me tell you a bit about the number of people. Sixty five percent of the people that work for us today were not here four years ago.
Francois: Wow, interesting point of reference.
Jeff: So the pendulum completely swung from one side way over to the other side. Most companies do not survive the transformations we have made. Switching their product line around, from traditional to digital; switching from a primarily BtoC company to a BtoB company; and finally having 65% of their people be new. These are the hurdles that we went through. It was horrendous change and we called it “transformation fatigue”. But we did it.
Francois: And you were not the first. You were relatively late getting into the digital market.
Jeff: We were relatively late but that goes to the strength of the brand. A good example of that is the fact that we are number one in cameras, digital cameras, right now in U.S. Kodak invented the digital camera back in 1975/1976. We just did not think it was going to catch on.
Francois: I did not know that.
Jeff: We were so rooted in our film background that we did not push those things out. Today, we are a much faster company and that is a theme for us internally. Everybody talks about being FAST, which is Focus, Accountability, Simplicity and Trust. And then that really means, “Hey even if we screw up let’s do it faster or quicker.” Because you have to bring speed to the market and for a long time Kodak was not known for speed to market.
Francois: I know, I see that you are bringing products to market in months where it used to take years.
Jeff: Exactly, a good example is our new Zi6, which is a pretty hot seller. It is our HD pocket video cam, which shoots HD 60 VGA in still. It was five months to market.
Francois: Just five months to market! Incredible.
Jeff: Yes and in the past, it probably would have taken us five years. I joke with our team about that but it is a major change.
Francois: Let’s talk a bit about your team and some other changes. How do you handle your staff being leaner, your budgets being leaner and yet your products are now coming to market in five months instead of five years? How do you deal with the changes in terms of being ready for launch and having everything lined up so that you will have a high chance of a successful product introduction?
Jeff: That sounds like the outline of my next staff meeting! It is exactly what we discuss. Francois, it is a mindset. It is about a mood inside the company. You can sit around and think, “Oh my gosh, I wish it was like it used to be”. I mean, I’d like to look like I used to when I was 20, but I’m not 20 anymore.
Francois: You still look good, though!
Jeff: Well I appreciate that but you know with Kodak there is no such thing as a bad picture. Unfortunately, I am not the best looking guy; I make our batteries look sexy. Again, it is really based around a mood or a mindset. That is what has been really great for us in this whole notion of FAST. Really saying to everybody, you know, you are in power to make a difference. You are in power to move things with great speed.
That is what FAST shows. Whether it is our Focus around what we do; our Accountability where we are delivering on our promise. Our “S” stands for simplicity in terms of challenging the status quo, ask questions, make it simpler. If it looks difficult, change it; make it easier. And then, “T” is trust. You did not know this person because they are brand new but Trust them, that is the position they are supposed to be playing. And then have a healthy debate around it, which has been great for our company because it has led to a much leaner, meaner company.
We have had to make changes. We have reduced. I am one of the first CMO’s in this company that has ever stepped in and started cutting budgets and saying look, we can get by with less. We can do things. We can shift with different kinds of techniques, which I am sure we will talk about later, changing. All of this was happening and as you know, we were also going through a marketing transformation.
Francois: That is a good segue for the next set of questions. I would like to dig deeper into your opinions on how marketing has changed. Because I think it must have changed tremendously for you, not just for everybody else. Not only has Kodak become digital, your customers have gone digital, they take recommendations from one another and they don’ t necessarily listen to the company as much. How is that affecting the ways you are making decisions around your marketing mix and how has it changed?
Jeff: It has been tough. I mean, without any question, I think, it has been tough for all of us. At the same time we were making the transformation, marketing has also had an upheaval. You talk about Marketing 2.0. A number of people have pegged that in the last three/four years. So you know the shift has occurred from what I would call broadcast to a narrowcast model with the advent of most digital tools that we have out there today. Whether it is social media, direct mail, or email and you know Perls and everything else that is out there.
So it has moved from what has been a traditional broadcast model. I use to know businesses, at least small businesses, where most of their money was spent with Yellow Page adds. That is where they spent a majority of their budget. And that is now changed. Even a small business has to look at search engines and Perl campaigns and emails and spam filter and everything else that goes into it.
So a lot of that has also changed for Kodak - the way in which we market. We used to be one of the biggest supporters of NASCAR; one of the biggest supporters of the Olympics. And we’ve made the changes in that and are saying, “Look, no, these are not the tools that really give us the return for where we want to be as a business.” And so we have had to alter a lot of that activity.
Francois: So you still do a lot of product placement, and you probably should as neuroscientists have found that product placement actually works. But how important is that – or how has that changed in terms of importance to your marketing mix? And then maybe could you elaborate on branded content and how you wanted branded content to become part of other people’s story?
Jeff: Kodak has been touted as a real pioneer in this area and in doing it differently. I do not like the old product placement where I pay someone, $100,000 or a million or two or three depending on what it is and they hold up my camera in the movie or a TV show. I do not like that kind of product placement, well I mean I like it, but I do not think I should have to pay for it. And so what we try and do is to make Kodak part of the story. We have done that successfully and now we have a balance.
A good example in the U.S. is Celebrity Apprentice with Donald Trump. It has been a good franchise. He had about six years of that franchise with just regular contestants and then in his seventh season he switched over to a celebrity version. Kodak participated with our new consumer inkjet printer, which is a value proposition around “pricey ink stinks.”
The way the market works today is that in the inkjet market they sell you a printer very inexpensively and then they get you with the ink. That is what the big ink companies do. In our model we say, I think you will pay a fair price for the printer and yet we will sell you the ink at a much more reduced price. A competitor’s ink cartridge might cost you $60; ours will cost you $9.99 for black and $14.99 for color; it saves the customers up to $150 per year.
So we went to Trump and the Celebrity Apprentice and said, “look, we think the value proposition’s so simple even celebrities will understand it.” You know the type of people who have their assistants to dial the phone for them and take their dogs of a walk. So, we made that part of the Celebrity Apprentice story and it became such a hit that they actually asked us back on for the finale. During that show they mentioned our name, or the name of our product, every 14 seconds. Now it was a dream come true from a marketing perspective. It was great for Kodak and it doubled our sales. People got it.
What we did was we made the ink story around “pricey ink stinks” or “firing pricey ink.” And so it became part of the lexicon. People are still talking about that particular branded content experience.
And the story had legs. We did an online version; we did print versions; we used it in the stores, showing the show on the televisions as you walked into a Best Buy for instance. So it had more legs than just a day. It was more than just holding up the product and smiling. We made it part of the story. So we look for things like that.
We have other shows that we are doing. Trading Spaces is one. We integrated as part of five different shows. And then, we made our products, whether it was our cameras or printers part of the story. We made Kodak the center and it became a very, very, very positive thing for Kodak and something we really like. So it is a different way of doing it.
Francois: Yes, very interesting. Earlier you talked about social media and how that has impacted the changes. And of course, I totally agree. I think that social media is what changed, you know, the nature of marketing in many ways. But you are also a big social media user yourself; you Twitter, you’re on Facebook and you have a chief blogger.
How does that play into your marketing mix? Also, could you talk a little about whether or not you think there are scalability issues with social media marketing?
Jeff: Well, I think that’s the real thing. I would not even call it social media; I’d just call it scalable media. Social media has always been around. Social media is the Kiwanis club; it is the local Chamber of Commerce mixers; it is those things where people gather. The Internet’s just given it a huge scale. Before you had some geeky guys who always wanted to get together and dress up like a Klingon, you know from Star Trek, where there might be one or two of those in the local high school, now they can find thousands or millions of those guys all around the world with these new tools. So this is to me, just no different than a fax machine. Now I am not diminishing its importance. I’m just telling you it’s given it scale and that is what social media is about.
So how do you use those tools? Because you can still go out with a social media tool like Facebook, put something up and only get 200 or 300 people to follow you. I mean, you have to work at it. You have to make it a value. It has to have real teeth to it or it is not going to work.
But you know, we’ve embraced that and we’ve had to teach a lot of our people how to use that.
We have one of the biggest social networks in the world, which is the Kodak Gallery. We have over 92 million users on that gallery that share photos. So we have a little bit of history in this. And then we have over 5 billion photographs – high-resolution photographs – more than all of the other ones combined. We store and save and the people use and share on the Kodak Gallery.
We have a lot of experience but let’s use Facebook as an example because it is a great place. We have roughly 27,000 employees at Kodak and about 10% of those employees are on Facebook. Now you can go and you can search and find them. And I have about 900, I think, or 1,000 employees who now follow me on Facebook, which is great because it gives me an unfettered way to be able to get to those guys on a regular basis, and they get it. And then other people follow us.
Now we’ve also asked all of our marketing employees to get on Facebook; to learn it, know it, use it. Twitter is another example where we do that. We have a chief blogger that I appointed about a year ago, Jenny Cisney, a young, very talented professional. I think she’s the first female chief blogger ever appointed. So we’ve led the way. And you know Kodak’s got some pretty good blogs. We have, A Thousand Words. We used to have A Thousand Nerds, which was for our technology community. And then also our Plugged In, which is a more product oriented blog. We use those tools pretty effectively and our employees are learning all the time. It is something that you just need to engage in. I mean, there are some pitfalls with using some of these tools, but there is also a lot of good benefits.
Francois: I totally agree with you that social media is not something new. It’s just the technology platform that has enabled us to behave the way that we were hardwired to behave for generations and generations.
Jeff: Yes, it’s great. I get on Facebook. It’s almost addictive. I have my friends list. I have a friends list for my family. So I click on that and I get to see what my son’s doing because he lives in another state. I get to see what my cousins, nephews, things like that are doing. I can check up on them. I can see if everything’s going okay. And then I have other friend’s lists that I monitor, which are important for me to monitor because I want to stay connected. I don’t think I would stay connected in today’s society like I would without that kind of tool. So I’m just hoping that Facebook and other companies like them can monetize themselves so that they can, you know, keep their scale going.
Francois: I agree. We do a big study every year with Deloitte and the Society for New Communication Research on how companies are leveraging communities and social networks as part of their businesses. We are just about to launch the second version of it. In the first version we interviewed about 140 companies. It didn’t take us long to come up with the conclusion that, ‘Wait, this is nothing new,’ and so we called the report the Tribalization of Business.
Jeff: Oh yes. I understand but at the same time, I watch companies that make big mistakes. We saw people rushing over to Second Life and I am saying to myself where is the business application for you? Is it truly there? Now for some people I can see that it would work. The W hotel, part of the Starwood Hotels uses it fairly effectively. They setup lobbies and then they actually move the fireplace and the couches around based on people’s usage. SO you might go to a hotel and link up in a bar or something along those lines.
But by and large you have to look at these tools and ask, “Are they really worth it for you?” Some of them I say, yes and others I say no. For Kodak I don’t see the value for us, offering fake products in a fake world for fake people. But for many people, if you like Second Life, then knock yourself out.
I just don’t see us rushing to that. Although I did have a group of people saying, “We have to get on there. We have to get on there.” I said, “Well when my mother gets on it, or whoever the customer set might be, then I’ll be interested.”
Jeff: My mother’s on Facebook and I get that. Here is a – well I don’t want to give her age away – but she’s retired and she’s on Facebook. So something is catching on there. My daughter, her granddaughter is on there and so now you’ve got something cross-generational and that makes sense for me.
Francois: What you just described is when people are looking at social media as potential new channels. I feel that is not the best way to look at it. I think you are looking at it the right way, which is, this behavior has been around forever. You know, it’s the social – I talk about the social messiness that is invading all of our business processes and it’s a matter of embracing it when it makes sense.
Jeff: Yes, exactly. And it’s a tool. It’s not the destination. It’s a way in which you reach people. I think a lot of companies make big mistakes on what I like to call the ‘all in’ syndrome. You know, like they’re playing Texas Hold‘em poker and they go all in when they shouldn’t be going all in. What I mean by that is that they use one tool or another and that’s all they do. You can’t do that today. You’ve got to use blended campaigns.
I was criticized one time on YouTube. I was asked to give a speech on the power of printing. Not the power of the Internet, not the power of the fax machine, not the power of laser technology, but the power of print. This guy went on to criticize me about the speech and he did not have all the facts. I was asked to talk about the power of printing and that is what I talked about.
The point I am making is that I need all of these tools. I need print; I need online; I need social networks; I need broadcasts; I need radio; I need newspaper inserts; and I need direct mail. You have got to use all tools.
As a marketer I’ve got to blend the campaigns and find different ways to reach different people based on them, because I believe in segments of one today, not segments of this group or that group. CRM data today tells me about you; I can treat you like a special customer. And that’s what you deserve. That is the way we as humans want to be treated. When someone picks up an Apple iPod or an iPhone, they think that product’s been made just for them. They have a personal attachment to that product. That is what a marketer really has to do – make it a personal attachment.
Francois: Yes. I agree. You talked a little bit about the fact that you had to train people and I think a lot of companies are struggling with how best to train in social media. Companies like Microsoft, Sun, Cisco and IBM, put out guidelines for what the employees should do when they get into the social media space. Some company guidelines are liberal; they say, behave well, don’t embarrass us, and everybody can respond. But in a lot of industries the culture is just not like that. So what do people do?
You talked about the fact that you had to train your people. Did you identify the people that would be your first responders? Did you let people raise their hand and become part of it? How do you decide who responds, or do you even get involved in controlling who engages in a social media space?
Jeff : I don’t think you can control who engages in that – and you don’t want to. I think that’s the cool nature of social media. I mean you basically want those who are zealots and free thinkers because that’s the way that is; the space evolves. It is like people who put their brand out on the Internet and try to control every aspect. Guess what, you can’t. There’s no way you can control that.
But for your own teams, you can at least start to build some rules. And we are certainly having some challenges that we didn’t think about. So when you do have an employee who is, say, in the marketing team and lives in China and all of a sudden they start putting, Kodak as part of their name and their blog you have to be aware of it. I had someone here in the United States who used Kodak as part of their name and all of a sudden they started writing negative comments about the Presidential candidates, well you have to step in and say “do you realize what you’re doing? If you’re going to use the company name or brand, if you’re going to have that as part of it here are some things we want you to know about.” But outside of that, can you really do much?
I’ve also reached out to employees who are on Facebook and some have written me back saying, “Jeff,” you know, “thank you. I like you, but I don’t want to be your friend. I want to use this for my own personal use and not for my business.” Well that’s cool. So you have that side of it as well. You just have to recognize that.
Francois: Yes, it’s like my 13-year old son kicking me off of his Facebook friends.
Jeff : Well you’re going to have to come up with a fake name, then, and get back on. So you can watch what he’s doing. As a parent it’s tough sometimes to let go. And that’s a good example. As a marketer I have to do the same thing. I have to treat it like my children. How do I know when to let go, right?
Francois: Yes, exactly.
Jeff: And I guess that’s kind of the way you can approach social media. People are going to make mistakes. You know, I have a saying inside the company with the marketing team. When they say, “Jeff we’re going to try this and we’re a little scared,” or whatever it might be, I say – well my question to them is, “Is anyone going to die?” And if no one’s going to die then I say give it a shot.
Now the attorneys have asked me to add, “Are any laws being broken?” so I know to ask that one now, too. So as long as no one’s going to die and no laws are being broken, then give it a shot. When they say, “Well what happens when we mess up?” I say, “Well then you mess up but you know no one died. And we’ve made some mistakes; I’ve made them a lot but that’s what makes you better, making more mistakes.
I did something one time publicly. I did something I shouldn’t have done; said something in a way I shouldn’t have said because I get excited. And my boss pulls me in and says, “You shouldn’t have done that.” And I said, “Well you told me to push the edge,” you know, “push the edge, push the edge.” He goes, “Yes, but I didn’t say go over it.” And I said, “Well now we know where it’s at.”
Francois: That’s interesting. And you’re so right that you cannot control it. I mean that’s a fact. And you know, one of the reasons why you can’t control it is because people will do whatever they want. The other reason is people are going to increasingly bring their own tools to work. We have a client, and they have thousands of people in their IT department who cannot access Twitter or any of the social networking sites. And what are they doing? They’re looking to help one another on Twitter on their iPhone.
Jeff: Well but at the same time, employees have got to be careful too, because they can be stupid. I had, an employee who was out for a while and they said they couldn’t work at home, couldn’t do this and so forth, but yet I was reading that person’s Twitters about going to this function or that function. So, you catch people doing that or they badmouth it like, “So-and-so’s an idiot” and they are talking about the management team and so forth like that.
So you ask, what are they, stupid? Are they just not thinking? They think they have anonymity here? They don’t. So we monitor those things. Here’s another example I found on how you can use Twitter. We monitor Twitter all the time for complaints. And you know, we don’t pick up a lot because – I mean we do get complaints like every company. It’s just the nature of the game, you can’t please everybody. But we find people who are having problems, can’t get through to customer service, or they just get caught up because in a big company you can get caught up. And we’ll see those and we’ll get them personal attention and they love it. So you engage. And that’s what using social media tools is really about for marketers; engaging.
Francois: Yes. I have a question from the audience around social media. How do you measure success and impact?
Jeff : You know there’s some tools that you can use along those lines but I’m not a huge, huge believer. I think you know, Francois. I mean in your gut, you know. I spoke at DLB in Germany and went and my team searched and there were like 26 tweets about my speech as I was delivering it; they were tweeting from the audience and things like that. So is that getting across? Did it get picked up? You know, do things like that work?
A great example was our use of Malia, who is Obama’s daughter. She used a Kodak camera during the Inauguration. We caught it and within ten minutes, started Twittering about it. The Tweets and the story then got picked up by the New York Times and it also got picked up by numerous blogs. So you’ve got the First Lady, the First Daughter and now we’ve got the First Camera. So you know when it works. We know when it works.
Jeff : Now the key is – I always talk with my team about, “Alright, how many zeros has it got?” and at first they said, “What do you mean?” I said, “I like things that have lots of zeros behind the number.” So if it’s a one or it’s a nine, I just like to see lots of zeros behind it because that means I’ve got a greater impact on the impressions.
We did something with the Inauguration. We’ve got a brand new website, so if people haven’t seen it I encourage you to go to kodak.com. We’ve done this new language called black fade, and you’ll see it; it is very iconic because Kodak should be iconic. When you think about imaging, I mean, you should think about Kodak. When you think about picture, most people talk about Kodak moments and so forth.
And so I wanted to get back to that because our website over the last few years has really migrated to something – it was very loud and looked more like a yard sale or a bazaar, because we were just hawking products and using it as more of a retail tool. And I said, “No, no, no. We have to go stand for something.” And so when I stepped into this job I said I want the pages redesigned and I want this up within x many months. And we did it in a very short time.
There’s a gentleman by the name of Paul Porter who led that for us and set up our company. He passed away about a week and a half ago. And this week (January 2009) we actually have a tribute on the site of him and of some of his very special images. So I encourage people to go to the site. But during the Inauguration week, when we really were at the height of the launch of this product, we went to Bob McNeely who’s a White House photographer. He was the White House photographer for Clinton and he’s now doing the Obama photo book; the official Obama photo book, which Kodak is participating in.
Bob McNeely gave us some exclusive images of the Inauguration and the event and we posted those on the site. On the Monday before the Inauguration we also posted some old photos of Martin Luther King also from a well-known photographer. And these images are exclusive to kodak.com. Each week we’re changing those images, and hopefully every day as we go. You can click on it; find out more information about the photo, what’s special about it and everything there is to know about the photo. And that’s what I think Kodak’s about. It was really cool.
But during the Inauguration week, we had 174 million impressions; 174 million impressions. Now I don’t need any tool to tell me that worked. I mean that just tells me the number of impressions but I know it worked. And we know how many tweets were done on it, how many posts were done on it, how many blogs were done on it. And then how many hard newspaper stories were done on it. It’s pretty cool.
Francois: Yes, I like your pragmatic way of looking at measurement. I listened to some of your other speeches and podcasts before our conversation and I liked the way that you try to bring as much down to ‘how is it impacting sales?’ And again, it’s something that we found in the Tribalization of Business Study, too. That is, the companies that were most happy with how their community initiatives and all of the social media were working, were those that were measuring the impact of those things the exact same way as you would measure the impact of other programs on that same business process.
Jeff: Yes and it works. I mean make it simple. I know in the States and in the U.K. for instance, we ran infomercials. And when we put those infomercials into play, I saw the sales jump immediately. And then I started moving the infomercials or the spots. We did a long form and short form of those spots, and I moved them into various markets. And I actually could track the sales going up. So you know – all marketing does exist to drive sales.
Jeff : A lot of people say marketing well it’s to build brand - blah, blah, blah, blah, blah. That’s the outcome, not the purpose, okay? When I first stepped into the job, people said, “Well we’ve got to do some buzz marketing.” What the heck’s ‘buzz marketing’? I mean I know what it is, but I said, “Guys, you’re here to sell product, okay?”
Selling product creates the buzz about our brand. People will start talking.” I said, “You mention buzz marketing to me one more time, buzz yourself out the door.” We’re here to sell stuff and then you build the brand. The brand is nothing but a promise to the customer that’s delivered but you can’t deliver it until they buy it.
Jeff : Okay? So that’s what you have to start to do. And we just keep things simple, or at least try to keep things simple. I guess that’s part of our FAST that we talked about earlier.
Francois: That makes so much sense. I had another client, another retailer, and they were launching communities and they had a big get-together to look at how things were going. They were measuring the impact of their community by looking at page views and time spent on the site. Even though, by the way, if the community was working; people were communicating with one another via SMS and email, but that’s a side point. And I’m like, “Why do you measure it that way?” and the CMO said, “Well how else should you measure it?” and I said, “How about measuring it by increased traffic to your stores? Or increased sales or something?” And the VP of marketing got up and said, “That’s really interesting. We measure every single other marketing program that way and we never thought about doing it on this one.”
Jeff: Yes. That’s the only way we measure it because in the end, if I don’t sell something, make money, I can’t spend anything.
Francois: You have to. I had another question from the audience and then I want to move on from social media. The question is what application do you use to monitor Twitter and to ID Kodak complaints?
Jeff: I don’t, I think Twitter synergy. I know we do Twitter search. Sorry people are whispering in my ear as I’m sitting here, which will tell you the CMO doesn’t know everything, right? And I’m the first one to admit that I don’t know everything but I’ve got lots of great, great, talented people.
You can go on Twitter search, type in your name, and look in there. There’s another place where you can actually look at Twitter ratings. I saw that because I’m in, like, the top X number. I can’t remember the number. My staff told me. I don’t look for those things. It’s kind of cool to see them, but I do Twitter search and I’ll search ‘Kodak’ and, you know, somebody will mention a Kodak and you just look at it.
Francois: Well you’re pretty competitive in terms of your ranking aren’t you?
Jeff: Yes, I’m up there. I know in Rochester I’m in the top, and I think I’m in the top 50 or top 100. And we just got named as one of the top 40 Twitter brands by Advertising Age.
Francois: Oh that’s cool.
Jeff: Yes we’re pretty excited about that. I mean because most people were going, “Holy crap! Kodak’s up there.” So it gives you the indication of our newer company the way in which we operate. So to the listener out there who wrote in the question, just go to our blog and click on Jenny Cisney, our chief blogger. She’s the one that does it and she’s the expert. So she’s the one I’m going to call anyway to answer the question.
Francois: Thank you. So I want to shift gears a little bit. With product life cycles increasing and everything becoming faster and people hanging out in different places – how do you get your product insight? How do you get product ideas and stuff like that; how do you gain your market insights? And has that changed over the years?
Jeff: First of all, you get it from customers, right? We all know that but how do you actually do that? We do it a couple of different ways. We have what we call the Big Picture Panel. The Big Picture Panel has thousands and thousands of people who write in, tell us and talk to us, and we bring those people together. We’re constantly checking with them. That’s on the consumer side.
But the web and these kinds of tools has actually allowed us new ways in which we can reach out to people and get more information. So the ideas come from those customers themselves. They log onto our blog, and they send us suggestions. And we’re looking for better and better ways because if I can use the web or go to the web for that, it cuts my costs. We’ve also got research panels and I have product marketing managers and product managers who go out and make sure that they get that information. So if I can give them some better tools to collect and research that would be awesome. But most of it’s just by talking to the customer.
Francois: Yes, I agree. How tightly is this whole process integrated with your customer support or customer service area?
Jeff: It could always be better, but it’s actually pretty good. When you’re monitoring it say through Twitter or with our customer service team they are handing those things over and saying, “Hey, here’s a suggestion or, “Here’s the top 20,30 complaints.” Let me give you a good example of where we had some product innovation from customers.
It’s our Smart Capture tool that we now use on our cameras. You know, Francois, if you have one of our quick cameras, and I hope you have one of ours.
Francois: I do.
Jeff: Okay, good, because they actually make you look thinner. That is what I tell everybody. You know other cameras, other non-Kodak brands add 10, 15 pounds to you right off the bat. Just let your listeners know that and people will hopefully know I’m in jest. Well – sort of. Now the listeners will see that I like to have a lot of fun.
Francois: I actually still have one of the Kodak cameras with the instant film.
Jeff: Oh, wow! Hang on to that. It might be worth…
Francois: I know, I will.
Jeff: Now the other – Smart Capture. So today you have a digital camera and eight out of ten people take all of their pictures in default mode. You’ve got probably 20, 30 settings on your camera today, and most people take pictures in default mode.
But you know that if you were to move it to a different setting for different situations or concerns, like a birthday with lots of candles in front of you; or you’re in a room taking a picture and someone’s standing next to a window and it’s got more light coming from outside than in, you know, those are the kinds of things.
So what we did was we built the ten most common and ten most used features, and sometimes most difficult that would help you adjust, like there’s three people that align up differently, one’s forward, one’s back, one’s in the middle, and what it does is it evens all those out and picks them up individually so that one face isn’t fuzzy. They keep them all in focus.
We built all that into one button. And that came from our customers saying, “Hey, I have this situation,” or, “How do I do this?” And rather than have to move that manually, it’s like capture on steroids. One button and we, Kodak, do the rest.
That gets back to the simplicity of our company; back to the days of George Eastman when he founded the company in 1880. He said, “You press one button and we do the rest.” And that’s been a Kodak mantra.
Now we got away from that, and then as the digital age started coming we moved forward with what was called the Easy Share Brand because people didn’t know how to get into digital. So we made it easy and that’s how the Easy Share came about. So we built everything around ease of use. We have the Easy Share printers and the Easy Share Gallery. Push one button and we do the rest. And that is a great example of listening to our customers and bringing forth a functionality feature. The customer does not have to worry about it; it is one button.
Francois: Now lets talk about introducing products much faster into the marketplace. Obviously you still have products that are going to fail, especially in a time where the industry average is that eight out of ten products fail. I don’t know if that applies to you guys, but you will have failures. Are you failing faster, too? And how do you measure that?
Jeff: Yes, I can say that in the two years I’ve been here we haven’t had any products that have failed. They’ve actually been pretty good winners. And you know, we’re doing extremely well with our inkjet printer launch. I mean, that’s been a big success.
We reported on that yesterday in our quarterly call about how well that’s been doing. Growth in that area is in the hundreds of percent – growth because people get it. I mean we do a very good job of listening to our customers. I think more than a lot of companies. Our customers are very vocal. We hold their images, their pictures; their most cherished moments. We help you produce those things. So you as a customer are very vocal about that.
Our commercial print customers, they’re very vocal also because we help them build their companies. We are an integral part of their business and we help them print documents. Forty percent of all commercially printed documents in the world are done on Kodak technology. Over 75% of newspapers are printed with Kodak technology. Most of the magazines in the world are printed with Kodak technology. So, all we have to do is listen to the customer and put all that stuff in perspective and they really help us succeed.
So to go back to your question, we haven’t had a lot of failures. Of course there have been a couple that just didn’t do as well as we thought they would do. Or, you know, we spread ourselves a little too thin because we launched too many. Now we’re trying really hard to say, “No, no, let’s keep this a little bit more simpler.” And, “Let’s scale down the portfolio. Lets scale down the SKUs that we offer.” But that’s just good business sense.
Francois: Are you maybe killing more ideas up front?
Jeff: I think – well that’s a good way of saying it. We’re doing a better job of due diligence in what we’re going to put the money behind. Because you can’t do everything, right? And that’s difficult for a company who’s come through all this transition. The question is “Who are We?” What do we want to do?” and for Kodak we really said, “Look the crux of it is digital imaging and material science.” That’s where our strength lies. So, you know, we’re the soul and science of imaging is the way we describe that.
And for Kodak it’s around what I call M3I2 for the company: Make, Manage and Move Images and Information in your life and in your business. That’s what we do, okay? Whether it’s taking care of your personal images of photographs, those Kodak memories, or its helping you print documents in your business life and store, manage and make those documents. That’s what it’s about; Make, Manage and Move Images and Information. So, yes, I think that’s a great way of describing it, in that we just decide through our processes, these are the ones that we’re going to – you know, rationalize and say, “This is the best shot, the best chance, and lets put our money in.”
We’ve changed a lot of our marketing around. Let’s say you have 12 divisions of groupings or groups of products, or you know, we talk about 19, if you put those into 12 and each one’s got ten products under each of that, that’s almost like a product a day coming out and there are going to be updates. There are going to be two updates to a product per year and with software it could be more. It becomes horrendous. You just can’t manage that. Your sales force would basically have to be trained almost every day. And you can’t do those kinds of things and be effective. There’s just no way.
Francois: I agree. You know a lot of people think that you can increase your product introduction success ratios by increasing the number of ideas that go into your funnel. In reality, I think that a lot of products fail because they’re not being killed early enough in the process, and you end up having too many products that are all underfunded at the end of the day.
Jeff: I was at a conference earlier this week and somebody was saying, “Well can you put this in the camera?” I said, “Sure, give me the money.” And he said, “Well I want all this.” I go, “Well you know what? You’re the only one that wants it.” And I appreciated him, but I was having a good debate with this guy because he wanted the world. Well okay, unfortunately he’s the only guy that might pay for it. We’ve got to look at it with a lot of zeros and how do we make back our investment and that has tradeoffs.
Francois: It’s like Peter Drucker said, you have to market to the people who are not customers yet. You have to make your numbers from, the 80% of people who are not buying your product yet.
Francois: Yes. I have a detailed question from the audience. Somebody is asking whether you can give us an idea of what happened once you saw the Kodak camera at the Inauguration. He’s looking for basic steps that he could use to get the word out on something like that.
Jeff: Oh, yes, when we saw it on Inaugural – I mean I can’t remember where I was at the time. Oh, I remember now. I was heading to the Inaugural Ball when I saw it because I had been giving a speech in a kids’ marketing summit and then I was flying up to Washington D.C. My plane got canceled and I remember seeing the Tweet come across. Immediately I said, “Where are we at with it?” and they said, “Well we’ve got you covered.” We do a, what we call step and repeat program in the company, which is something we just instigated.
Let’s just take that one event. Something would happen and say, “Well are we going to put that up on the Internet site? Are we going to put this on the external site? Are we going to send this to the sales people?” So it would generate, then, 50, 60 emails. So I went to the team and said, “Stop this.” You know, first of all, create this program that says when we get something we’re going to do “A” “B” and “C”. And “A” is these 20 things. And then “B” becomes “A” plus these five things. And “C” is “A” plus “B” plus these three things. So that’s what we decided to do.
We got ready for it. I said, “Guys, get ready because it’s going to come. And when it comes, you hit the button and it goes out.” You know, it is kind of like George Eastman, push one button and we do the rest. I said, “Lets make it simple.” Which makes it fast, right? So what we did was then immediately we activated our PR team and our public relations firms and we started getting the picture referenced of her that was posted immediately with that camera. The caption just said – she was taking a picture of the Jonas Brothers, I think, at the time and she was holding a Kodak M8-93. So first thing, everybody was verifying that it was our camera. For sure it is our camera because now we’ve got a picture of her, the First Daughter, using the First Camera.
Next we started getting that out to a list of bloggers. And from the list of bloggers then we got it on gadget.com. We got it in the New York Times, and the L.A. Times. I then saw her in my issue of People Magazine; so – yes, I just want to tell people right now that I read People. But we advertise there, so I like to look at all publications. People might not be my normal publication and I’m usually not the demographic target mix for that.
But for your listener, that’s what we did. And so we got that out to a number of sites and that led it to getting into the papers. We made it in a lot of newspapers the next day, and its part of our overall impression list – it was just very, very successful.
Then you go through this huge debate because you’ve got to decide a number of things. Do we use it? And by that I mean, do you actually run an ad? Do you tout it? And so we then had that debate. And all this took place in hours. I said “no, we’re not going to use it. We can report on it.” We can get other people to report on it, but we’re not going to use it as an ad because, I think the First Family deserves some privacy but we’ll report on it. We’ll link to it and do those things, but we’re not going to run an ad. Plus the bigger issue is she’s a minor.
Employees immediately wanted to send her our newest camera. They say – Oh can we get them to use our wireless digital picture frames? Should we send them a Kodak Zi6? Jeff, should we send them a Kodak inkjet printer? You know, I said, “Whoa, whoa, settle down everybody. No, first of all it violates all the gift laws, and second, hey, she bought it. Okay? That’s even better. We didn’t have to give it away; she bought it. And she was using it.”
And just the other day, in fact I think it was Tuesday, or maybe even Wednesday, our CEO Antonio Perez was at the White House and met with Obama. He was there to give him some advice on the business community and what we at Kodak are facing along with a lot of other companies. He actually went up to Obama and thanked him for using, and having a Kodak camera. And I think Obama commented that his daughter loves it.And so Antonio says, “Yes, but can you buy two?” and he goes, you know, the president responded, “Hey Antonio, one at a time; one at a time.” Which is great. We’re glad he sees the value in a good buy.
Francois: I have so many more questions that I wanted to ask you but we are getting to the end of our conversation. I do want to ask you one more though. “Are you seeing generational differences in your marketplace? And what’s the impact of the mobile youth force?”
Jeff: Well you do see a lot of generational, but you know, just as you see generational you see it individual. So, don’t just look at segments as a marketer, think as segments of one because you will truly get them down to segments of one. So you want to know about that personal experience. You want that personal experience and you want that connection. The question is so how can I make an emotional connection to the customer? And then use all these tools at my disposal to get to that.
Everyone has their own differing in terms of differences in understanding. If I go back to my mother, she doesn’t understand technology. So I have to show her how to drag the photos onto a media card so she can put it in her picture frame. I don’t even want to buy her a wireless frame because that’s still going to freak her out but my daughter wouldn’t think of anything else but having it digital. And my daughter couldn’t understand why we’d do it any other way. And so, she’s teaching her grandmother how to do these kinds of things.
So there’s a huge generational gap and lots of challenges with the new generation on how to reach them and make it meaningful and make it last. Because they’re a little bit more inundated and a little bit more jaded than, say, my generation or my mother’s generation. So yes, it’s a big difference.
Francois: Very good. Well, Jeff, I want to thank you for this conversation. I think this was great. I truly think you are a CMO 2.0 working for Kodak 2.0.
Jeff: Well thanks a lot. You know I’m just a guy from Sioux Falls, South Dakota and I’ve made it to New York and I’m having a blast.
Francois: I can tell that. So thank you so much, I really enjoyed it. Maybe we can do this again. I had a lot of other questions regarding organizational changes and the roll of corporate marketing versus operational company marketing and stuff like that. But maybe – hopefully we can do that some other time.
Jeff: Any time. We love to visit with you and your audience.
Francois: Thank you, Jeff. I want to thank everybody for participating in the call. I want to remind you that there is a new site for those conversations. It is www.cmotwo.com.
Tags: CMO 2.0, Francois Gossieaux, Jeff Hayzlett, Kodak
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CMO 2.0 Conversation with Best Buy’s Barry Judge
This interview was held on October 23, 2008. To listen to the podcast click here
Excerpts from the Interview:
On Social Media and Marketing: I didn’t’ talk about that, the social technology changing marketing, because there’s so many ways I think it will change marketing. But ultimately broadcast messages are not going to be very successful in my opinion. It’s going to be those conversations and how you show up. And if you show up in a way that’s genuinely interesting and genuinely not trying to drive an agenda or a point of view, I think you can really turn consumers on because they’d love to be part of the creation, not just getting feedback on what you created. We have to figure out how to turn that on.
On PR: I think when you make yourself vulnerable which is what I think you have to do to be interesting in the social media space, you’ve got to be interesting, you’ve got to be vulnerable, you’ve got to be human. You’ve got to say things that a person would say. And I think that’s a very different sort of approach than companies have traditionally taken in the last 100 years.
On Branding and Social Media: I don’t know how brands show up yet. I don’t actually know what that means because social technology for me is personal, it’s human, and brands aren’t always a person… It isn’t any individual. I think that’s going to be the brand of the future. It’s not the customer care group that’s responsible for this – everybody is. And you can make a difference; everybody can make a difference in his or her own way. I think there’s some basic understanding of what the brand is about and there’s some basic understanding of policies and then you hire the right people, like Zappos does, and you let everybody participate and for the most part people will do the right thing. They won’t do the right thing every time. But if you hire the right people and they’re trained to some degree and have some knowledge, then in general they’ll do the right thing and the brand will be better off because it will be human. So I think that’s the opportunity. I think brands can become human.
On How to Treat Customers: So to the extent that we can basically be human with what we know and share it as freely as we possibly can, I think we’ll go a long way towards gaining a higher or stronger level of trust with the consumers.
On Metrics: It feels right and we need to participate. We’re not going to let that absence of metrics get in the way for now.
On Competitive Differentiators: Our people are the differentiator; they are the reason that you come to Best Buy.
On Finding the Best Ideas: I really believe in the concept of the best ideas don’t exist in any individual, but the best ideas exist in the ability to collaborate across multiple points of view both inside and outside the company.
CMO 2.0 Conversations – an Interview with BestBuy CMO Barry Judge
The following is an edited transcript of the CMO 2.0 conversation between Francois Gossieaux and Best Buy’s CMO Barry Judge. We periodically run those CMO 2.0 conversations for the Marketing 2.0 group. Check there for updates on upcoming CMO 2.0 Conversations. This interview was held on 10/23/08. To Download a PDF version of the transcript, please
Francois: Barry, tell us how you are evaluating what to do and what not to do at Best Buy and what changes you’ve seen in marketing in the last 10 months, or perhaps the last 10 years.
Barry: Well that’s a hard question to answer given how dynamic the environment is now and with the economy and retail in general. Prior to the last couple of months’ meltdown, our big focus at Best Buy was really building our brand, and building our brand in the sense of understanding what we do uniquely in the marketplace and what we do better than our key competitors, Wal-Mart, Target, Costco, and Amazon.
As the last 10 years have unfolded we’re the last specialty retailer that is left standing in the consumer electronics business. So we’ve done a nice job at being the preferred brand amongst our old competitor set, which would include Circuit City and others. But now as we move into the next 10 years, it’s really a different sort of strategy – with Amazon, about convenience and assortment, Wal-Mart and Costco about price. We have good prices and we have lots of assortment but our big focus is our people – Blue Shirts, our call center and our geek squad agents. Our people are the differentiator; they are the reason that you come to Best Buy. That has continued to be primary in our minds over the last couple of months. That has continued to be primary in our minds inn the last couple of months.
But what’s a close second now is fighting for that demand that exists out there. So really we are getting a lot more focused on tactically – week by week, day by day – trying to drive traffic into Best Buy. So things like interest free financing being more important, couponing activities against the right people, loyalty programs like Reward Zone, which is what we have, much more street fighting around demand.
When things settle down, it will be back to building the brand as the thing we’re really focused on but in the short term it’s tactically fighting for demand that’s drying up. Long answer but that’s my answer.
Francois: It makes a lot of sense to focus on the tactics with the Holiday Season coming up. But in general, do you believe that Social Media is going to completely transform marketing?
Barry: Well I’m not sure how it’s going to happen. I’ve been reading about social media for a long time, read and done all the things that you’re supposed to do, but I didn’t personally get involved until a few months ago. It completely changed my outlook on things. I’m still a little bit in the adoring phase of it all in seeing what the possibilities could be. The thing that’s real clear to me is that there’s a dramatic opportunity to improve the quality of the work that you do in marketing. By that I mean that I really believe in the concept of the best ideas don’t exist in any individual, but the best ideas exist in the ability to collaborate across multiple points of view both inside and outside the company.
A couple of years ago I met this guy named Joe Trippi who was the campaign manager for Howard Dean, I don’t know if you remember Howard Dean. Four years ago—and Trippi was I think the guy that figured out how to raise money on the Internet in a significant way. If you remember Howard Dean came out of nowhere in Iowa and I think it was really the power of the Internet. But anyway, after Howard Dean imploded he became a consultant like everyone does, and one day he was consulting with us about co-creation (that is what we were calling it at the time). He said to me, “Do you think the 5,000 smartest people work at Best Buy?” (We have 5,000 people at the corporate office). I said: “no.” He goes: “exactly - the 5,000 smartest people will never work at Best Buy.”
So really that idea of trying to be able to connect with others around the work product that you do really caught on with me. By using social technology personally, I can see the opportunity in how it could actually happen in a significant and scalable way. So with me it starts with that – and that’s kind of what I’m doing a lot on Twitter. And my blog is really about how the work that I do can be better; how the work that my group does can be better.
Twitter kind of exploded in Best Buy. We have a culture that’s relatively open. I think those technology tools can catch on when the culture is right. And that’s what’s starting to happen.
I don’t know how brands show up yet. I don’t actually know what that means because social technology for me is personal, it’s human, and brands aren’t always a person. I’m still working on getting my own point of view around how a brand shows up. Building trust and having trust with consumers is critically important for us to succeed and I think trust in a new age is going to come from being transparent and being almost completely open with all the information that you’ve got within your company.
We can really turn that into an advantage for the consumer because we’re the biggest retailer. We have a lot of information on a lot of things. And that stuff is going to get public anyway. So to the extent that we can basically be human with what we know and share it as freely as we possibly can, I think we’ll go a long way towards gaining a higher or stronger level of trust with the consumers. So there’s the personal around co-creation, and then there’s the business around it. We need to be a trusted brand in social technologies, and find a mechanism to do that.
Francois: Don’t you think that the brand is made up of the sum of all the touch points that the customer can have with your company – and therefore if you have much more people interacting directly with customers that is in fact affecting your brands?
Barry: Yes. I do absolutely. I think that’s good. And because we are a retailer that sells products that you can get in a lot of different places, and that the differentiator is that we have people that help you find the right things. So I do think it’s going to be a utilizing and an opening up of the channels to enable consumers to talk to more of our people and our people to talk to consumers I think is a good thing. I just don’t know what the strategy is around that yet. The concept of it is dead on.
Francois: It’s also interesting that as a marketing person you’re looking at what some of the lessons are that can be learned from politics which I think is a fascinating area for marketers to find new ideas.
Barry: The thing that I meant to mention in what we were just talking about is that the conversations are happening and as a marketing person hopefully you’ve got all your research and you’re doing a good job of listening, but there’s so much more opportunity to listen right now. You have to be careful because social technology – at least today, I don’t think this is going to be the case going forward, but at the moment – is not representative of entire population. But it still is conversation that is going on. It reminds me of the fact that we need to participate in this conversation.
We have one of the people who works for Best Buy that built this technology called Spy. Essentially it gives the ability to monitor social conversations on Friendfeed, Twitter, and 6 or 7 other sites that he links into. Essentially I have a computer in my office that— Best Buy is the key word that I’ve typed in on Spy – and that computer is open all day long. It just keeps running what people are saying about Best Buy – kind of like a ticker tape would for stocks. And so I’m able to just get a sense, some sense anyway of what’s going on out there, both good and bad in terms of opportunity around Best Buy. Again it reminds me that conversations are happening. We can choose to be part of them or not.
Francois: That’s right. Now do you engage with some of them or do you have a team of people that do that?
Barry: We do—I think that’s what I was trying to suggest. I don’t have the answers here; I’m just participating like everybody else to try to figure out what my point of view is. We do have people that are in our customer care area whose job it is to monitor the conversations and respond as appropriate. But because I’m publicly out there – if people ask me a question or make me aware of something as a person, I need to do something about that. If I ignore it then I think I’m not participating in a genuine way. I wouldn’t ignore somebody that I was talking to, so I do get involved.
Somebody on one of the blog posts when I was talking about social technology did ask me: “it’s great that you’re doing that and it makes sense but is that actually scalable? Have you got enough traffic to your website?” Which got me thinking – how do I drive traffic to my website now? It’s probably true; I might not have enough time. I’m not worried about that right now because it’s not an issue, but certainly it is a question to start thinking about as you move forward.
Francois: The scalability issue is the big elephant in the room when it comes to social media. You must be getting thousands of unique visitors to every store in the world every single week. If you’re trying to reach the same goals as you are with other marketing programs in terms of driving more traffic to BestBuy.com and your stores, how do you build something that scales to the point where it makes a difference?
Barry: Yes, I just did this math before and I never would say this to somebody who was complaining about something that we did wrong, but we have 600,000,000 visits to our stores every year and we have more than that in terms of visits to our websites. So that’s difficult to figure out how you’d scale on that. The numbers are just so massive.
Francois: You need a heck of a lot of additional conversations to even move the needle on that thing.
Barry: Yes, and that’s to your point from before – how as a company do we show up? It isn’t any individual. I think that’s going to be the brand of the future. It’s not the customer care group that’s responsible for this – everybody is. And you can make a difference; everybody can make a difference in his or her own way. I think there’s some basic understanding of what the brand is about and there’s some basic understanding of policies and then you hire the right people, like Zappos does, and you let everybody participate and for the most part people will do the right thing. They won’t do the right thing every time. But if you hire the right people and they’re trained to some degree and have some knowledge, then in general they’ll do the right thing and the brand will be better off because it will be human. So I think that’s the opportunity. I think brands can become human. Especially as a retailer I think that’s a critical idea.
Francois: I agree. It’s leveraging the 160,000 people that work for Best Buy and engaging with the customer instead of the few thousand that might be in your customer care departments right now.
Barry: Yes and getting back to your question about fascination, I’m also personally fascinated because I can make a real difference – which is not the reason why I got into it. But as I’ve gotten into it and I’ve seen the increased awareness and interest amongst people, Twitter is an example, and the increase in participation from somebody who I sort of know and who will say,” I read your blog.”
To me it’s an interesting sort of social experiment that I’m seeing tangible results that humanize me, that enable the way I think about things to be more aware of it so they get a better sense of the work that I and my team are trying to get accomplished, and that are able to weigh in on that basis. They’re not necessarily looking at something and have no context for it, so that the actual input you get isn’t that good because there’s no context. But as they get the context you get better questions and better feedback.
The other cool thing is that you find people that work or don’t work with you but who are passionate about the topics that you’re passionate about, and those are the people you want to talk to. So the brand is an example. I met this guy who was asking me this really hard question in this public town hall thing I was doing. I worked in dot.com and he basically didn’t like the tag line that we got “You’re Happy” is what we were trying to land as the emotional response for going to Best Buy. And it was a really respectful, thoughtful question but it was a hard question. He basically didn’t like it and he had a lot of reasons why it didn’t make sense. I took the question head on and then I really encouraged him to reach out to me and let’s talk about it, because I knew I had found someone who didn’t work in my organization that was more passionate about the product than almost anyone who did. And those are the kinds of people you can have really good conversations with, because they’ve thought about this topic – whatever it happens to be. So it kind of breaks down the silos or it can break down the silo, that’s why I’m really intrigued in it. I don’t know how to do it yet, but I can see that there are small examples of it happening. I think it can make the company boundary-less both internally and external.
You know there’s a real cool thing too around if you’re human about whatever it is you’re working on, which means you’re admitting you don’t know the answers all the time (and this is a half baked idea), you’re letting people in and they just cut you a lot more slack too. They want to empathize with you because you’re being vulnerable about whatever it is.
Francois: I know that’s so true. We have a question from the audience. Somebody is asking: was the recent Napster acquisition about having more conversations?
Barry: You know I think it wasn’t primarily driven. I mean our point of view is emerging quickly on social technology and the opportunity for us to strengthen our brand is sort of emerging in the last 60 days, 90 days, 4 months.
The Napster acquisition has been in the works for a long time. The real crux of that is the fact that we sell a ton of computers – we sell 30% of the computers in the United States right now. So we have a platform and then our consumers are heavily into all forms of entertainment, movies, and music games. A few years ago they were buying those physically and now they’re starting to more and more buy those digitally. So we’re in that business already. We’re just not heavily in the digital part of that business. So our consumers want it – they want the product.
We have a mechanism we think through our selling of so many PC’s, and being a leader in technology products, as an avenue in. We need to figure out a business model around the content and Napster is a platform to help us learn. We don’t have the business model.
We believe it gives us - the platform and gives us an interesting brand opportunity if we choose to take it around disruption. The deal is not done yet, so we can’t be aggressive yet on what we might do. But one of the ideas that we threw out, I think it’s in that post I wrote up on Napster, I show that we can use the community, passionate people in digital music, to help us figure out what the right business model is – because clearly people aren’t happy. So because we own the asset and because we have the platform, be it PC’s, could we develop this in a different way than it’s been developed before? So that’s kind of our going in premise.
Francois: Going back to harnessing the power of your employees and having all of them reaching your customers better, you guys I think did a pretty good job at setting up the Blue Shirt Nation community. At least I haven’t been able to go into it obviously, since it’s an employee community but I’ve read a lot about it. Do you mind telling us a little bit? I know it started as skunkworks. It kind of overcame obstacles that nobody ever imagined. Maybe it might be good for you to take a few minutes to talk about what the goals are and where you see it going and all of that?
Barry: Yes. So I think Best Buy and its focus on transparency and collaboration, I mentioned this earlier in conversation – it’s very cultural. It starts with the desire of our company to be that way. And our CEO Brad Anderson has been very vocal about the fact that good ideas can come from anywhere and they can come often. We have 150,000 in the field; the best ideas are going to come from people close to the customer. So we’ve been working hard at moving from a tops-down hierarchical organization to an organization that’s much flatter, an organization that plans their bottoms up and tops down. So that’s in the soup.
On my blog on social media I do have a video that talks about the different tools that we have within the company that can encourage collaboration. So I’ll get to the Blue Shirt Nation in a second, that’s one of our tools.
We also have a tool called the Water Cooler, which enables conversations on topics around the company to happen organically. Those talks are more business related because it’s called the Water Cooler – and it’s business focused and there can be chats, our COO has chats all the time on the Water Cooler.
We have something called The Loop, which is, I don’t know if you’re familiar with Red Dragon, but it’s a Red Dragon like capability where people put ideas on The Loop and other people can vote on the ideas and improve the idea. People can also invest in the ideas and then the best ideas essentially are highlighted and emerge and move forward.
Another tool we have is called Prediction Markets which is sort of a stock market for ideas, everybody is given fictitious money when they participate and they trade stocks that are about ideas – how many gift cards are we selling a month, will our Geek Squad warranty product be successful, will we open a store in China by a certain date. And what that’s intended to do is flush information out that may be in the system that people don’t know about. So somebody who is working on the China opening at a mid level of the company might have a good insight to this. If the stock starts trading down and you’re running the China project you might say, “Hey what’s going on…the stock is running down?” So it’s a way to get information to flow.
And then lastly, as you pointed out, something called Blue Shirt Nation, which was formed; it was the first of our tools. Two guys in the company, Gary Koelling and Steve Bent, who both worked in the Advertising Group, had a Fast Nation with social technology several years ago. Essentially they built this in their basements, a social website kind of like My Space I guess, where Blue Shirts, any employee, could go and talk about whatever they want to talk about.
And that was not company sponsored. Over time they were able to get additional funding and add features and essentially lots of different kinds of topics are out there but they don’t have to be business related. That is the difference from the Water Cooler tool, which is very Business related. This is sort of the Blue Shirt lifestyle website, kind of like My Space. So I think Blue Shirt Nation kicked it off.
So you see we have a number of different tools. And now we’re trying to get into Twitter. We’re trying to figure that out and blogging and all of this stuff. Really again back to the idea that collaboration and transparency are key elements of creating better work and part of how we think we’ll build better trust both with employees and with consumers.
Francois: Yes. Now Blue Shirt Nation, I know is run by people in your department. How about some of the other tools like The Loop and stuff like that? Is that also in the marketing?
Barry: No. I don’t know who runs them. I mean the guy that thought up Prediction Markets, he runs it, he happens to be running Geek Squad, but he has the passion around it so he runs it. The Loop is run by retail operations. They have the passion for it so they run it. So there’s probably an opportunity to connect these things, but typically at Best Buy one of the ideas is if you’ve got passion then you may be best suited to take it on regardless of what organization you’re in because you have point of view.
Francois: Yes, yes. I think I told you that before, we did a big research project with Deloitte on how companies are leveraging social media communities as part of their business processes and in a lot of the successful cases what we found is that the most successful programs are indeed exactly what you’ve described. They’re sponsored by somebody who is really passionate, and there is a manager that will provide some cover for awhile until they can at least get some traction and then it takes off from there.
Barry: Right. And I can see this just personally around my passion right now around openness and transparency and I’m seeing all kinds of ideas that I didn’t see before. So it could have been something that I was responsible for but I wouldn’t have done a great job sponsoring. Now, you just get more involved, you’re instead and you’re talking about you see applications. So that is a key tenet I think for any company is connecting passion and strengths not just strengths.
Francois: I just saw that you started an open SWOT analysis with input from other people. How is that going?
Barry: It was great. I mean again, one of the things that people—they’re kind of fascinated with my fascination but also sometimes there’s some concern that I’m being too open. But the stuff that I do, and I think if you look through what I’ve done, it’s very obvious you’d know that. In regards to the SWOT analysis, I don’t think I put out my personal SWOT, Strengths, Weaknesses, Opportunities, Threats, I know that I didn’t publish all of my thoughts because I thought some of them might be proprietary in terms of what the head of marketing might be thinking about that but the ones I put out are true. And then from there, to see what people would build on.
It was great hearing from both employees what they think about things that typically wouldn’t be part of the process. We had some Blue Shirts weighing in what they thought and then just people that are outside of the company. You just get these different perspectives.
As an example, one of the external things was on Twitter. Another thing we did was a 7 day surge, we call it these little surge projects - where people that are passionate or are interested in working on something we say to them, next week when you can find some time, here’s the assignment. Only people that raise their hands are people that are passionate and can figure out how to create some time. There’s no commitment to participating. We got about 150 people in the company that spent some number of hours last week working on those slots just in dialogue and meeting people they never met before. And our content is better than it was using the traditional lenses and the traditional people that you talk to. It had other ideas that we never would have thought of because people got together to do it and I think that’s also a lesson in passion. If you’re passionate about something you can find time for it.
Francois: Is the idea to externalize some of those communities and some of those processes like The Loop for example to include outsiders?
Barry: I think it needs to, because I think the concept that Trippi gave me is the 5,000 smartest people, and we have 150,000 in the field, so that’s better than 5,000 but there’s how many billions of people that don’t work there. So I think that’s our opportunity to figure out how to elicit, encourage, incite and stoke the passion of people because they’re open to consumers and I think that we’re on the cusp of that. I didn’t’ talk about that, the social technology changing marketing, because there’s so many ways I think it will change marketing. But ultimately broadcast messages are not going to be very successful in my opinion. It’s going to be those conversations and how you show up. And if you show up in a way that’s genuinely interesting and genuinely not trying to drive an agenda or a point of view, I think you can really turn consumers on because they’d love to be part of the creation, not just getting feedback on what you created. We have to figure out how to turn that on.
Francois: Now as you were building some of those programs, especially Blue Shirt Nation, the social media program where the line between personal stuff and work stuff gets blended and also where you’re dealing with labor laws and things of that nature. Do you run into quite a bit of objections from your legal department?
Barry: Yes. This is all new ground for everyone. I think one of the things social technology challenges is vested interests. So groups that have a certain kind of role and any kind of transformation change does this, or transformational thing can do this, this challenge like the very work people do, so examples are public relations, right? We had this problem with one of our Reward Zone programs and we inadvertently sent out an email to people that we shouldn’t have sent it out to. Well typically the PR group would be responsible for presenting the fake release to the public that nobody reads because it’s obviously from a corporation and not from a person. And we’d have certain kind of recommendations around what to do.
Well we used social technology tools to actually talk about what happened. And that was very threatening and I guess there’s risk because it’s new. I think legal is the same way. Legal is about eliminating risk and I think when you make yourself vulnerable which is what I think you have to do to be interesting in the social media space, you’ve got to be interesting, you’ve got to be vulnerable, you’ve got to be human. You’ve got to say things that a person would say. And I think that’s a very different sort of approach than companies have traditionally taken in the last 100 years. So I think there’s the message that’s more external because there are external competitive things and the press could pick something up or it’s on a blog or something. I think internally on Blue Shirt Nation we are learning some things about labor laws, as you mentioned. We have hourly people who work on an hourly basis, and we have found that sometimes the best intentions can actually break the law because it’s asking people to do things when they’re clocked out and that kind of thing. So we’re learning all that stuff.
Francois: That’s interesting. We have a couple of questions from the audience. The first one asks, is your management asking about a business case for social media? How do you know that the strategy is working and when it will be working?
Barry: Right now management is not asking for a business case because the investment is relatively small. I think that it will be asking for one going forward very quickly. As we put more and more resources into that activity. One of the things that we’re doing that we think is going to reap huge dividends is open API. Have you heard about that, that we’re doing that here at Best Buy Francois?
Francois: No I haven’t heard that one.
Barry: So we’re opening up our code on Best Buy.com to developers. So the idea is the same idea as the 5,000 smartest people don’t work at Best Buy. We’re hopefully going to encourage the development community to help us build better utilities and applications for shopping at Best Buy. So for a small amount of money and there was some money involved there, we think we’re now one of the few large companies that have completely opened up their architecture for developers. So with small amounts of money it doesn’t take a lot to make those things pay out. And I think as we get more into the advertising space we’ll be trying to develop metrics—I mean the communication space—we’ll be trying to develop metrics that help us rationalize the amount of time we’re putting into this stuff. But it’s still too early. That’s a big criteria at the moment. It feels right and we need to participate. We’re not going to let that absence of metrics get in the way for now.
Francois: But do you think at some point in time that there is a correlation between scale and investments?
Barry: I think there will be but we’re not there yet. We’re not worried about it right now. We’re still experimenting as to what we’ll get. As I said, we think it’s hard to quantify this but inherently in our brand being more open and transparent is a fundamental building block of building trust. So because we want our brand to be vibrant and strong, we’ve got a lot of low cost investments that we can make that don’t require us to get an ROI yet. But I think we’ve got some time.
Francois: Yes. Another question from the audience, somebody is asking, how do you deal with the perception that you should be able to help a customer that should really be dealing with the makers of one of the products you sell, for example Dell?
Barry: Well I think in that specific example that is the bane of a retailer. You have to stand behind the products that you sell and sometimes the products that you sell have nothing to do with the way you sold them but the manufacturers who have some issues with what they’re doing. I think in the case of Dell, I don’t know what the exact issue is, but we’ve got the best service organization in retail, which is the Geek Squad. And we’ve got great products that Geek Squad has developed in terms of warranties and protection plans and even the ability just to bring your Dell computer in to us. You don’t even have to have bought it from us. We’ll still fix it. And most of the manufacturers have actually talked to us about us taking on the ability to fix the things that are manufacturer warranty. So I think we’re well positioned.
We got into this investment 5-6 years ago with Geek Squad and we’re well positioned. Service is a big element of our brand and how we want to differentiate ourselves from Wal-Mart, Target, Costco, etc. So I don’t think we have an issue with that as something we want to do as a company.
Francois: Another question from the audience, which is something I also wanted to ask you because you’ve been writing about it, and that’s kind of veering back to more traditional marketing challenges. You’ve been talking about the fungability of the brand when you go from your brick and mortar stores to your Best Buy.com site and how this may not not the best solution and how you might want to go and buy another brand to build on top of. Do you want to talk a little bit about that and how you’re thinking about that?
Barry: We’re a growth company and we hope our aspirations are to double the size of our business in the next 5 years, so we’re sort of investigating different ways we can grow our business. We know that there’s opportunity internationally which we’re exploring and there are still opportunities to put more Best Buy stores up in the United States. So that’s obviously not another brand but there’s an opportunity as we get better, as our brand gets better at supporting consumers from thinking about the products they want to buy to servicing them to them wanting to add on to whatever it is they’re interested in, there’s an opportunity to get into a new category that we’re not currently in. Categories that have something to do with technology but aren’t necessarily at Best Buy.
One opportunity there is where we are getting much more heavily into is the musical instrument space. We’ve got 80 stores that will be open this year that are really good at that. So that’s an example of what is called a bigger world. So getting into more categories, those offer more opportunity to grow. There’s an opportunity with formats. We are launching something we call Best Buy Mobile, which is a mall-based store, 3,000 square foot, Best Buy typically is about 30,000 square foot. So it’s a much smaller store, kind of Apple-esque in size but it’s around the mobile lifestyle. So we certainly can do that, especially with our Geek Squad capability and the fact that we sell all these mobile products including mobile phones, which we’re doing a much better job in mobile phones these days. So formats is a way we can grow and then the last—not the last way from a prioritization but an additional way would be how do we get much more prominent online.
So Best Buy.com does a big business and it serves primarily consumers that like Best Buy the store; the people that are multi-channel shoppers are the sweet spot for Best Buy.com. There are another set of consumers that don’t care so much about whether they have a physical store or not and are looking for value propositions that are different than what the Best Buy brand can bring. So that’s kind of the exploration around whether we would want to invent or buy a second brand for online. To go after those online only shoppers who have different requirements than what a Best Buy.com could provide because the brand means something in a store and has to do something online that connects to what the store does. So part of the thought there is those are all very interesting opportunities—not to mention digital right, so that’s Napster and other ways of getting involved in digital content that we talked about earlier in the conversation.
Those are all very viable ways to grow. Now it’s up to us to pick and prioritize which ones because you probably can’t do all of those. All of them are interesting and somewhat take resources to do.
Francois: I misunderstood that. Yes, that makes a lot of sense. It’s not in replacement of Best Buy.com it’s an addition to Best Buy.com for a total different audience that is online only that doesn’t care — never walks in your store.
Barry: So Best Buy.com will continue to thrive and we think can grow very aggressively in the next 5 years and be a big, big dot com business. There’s still a bunch of people that aren’t interested or less interested in a multi-channel value proposition. They’re more interested in an online only, like the Tiger Directs and the New Eggs, they have different value propositions than Best Buy. Best Buy is really good at what it does. It does something different. And the question is would we be interested in thinking about that business. The only reason I layout all the other things is we have a number of things to think about in term of growth and you probably can’t do everything.
Francois: That’s right. That makes a lot of sense. I would like to switch tacks a little bit again. I just saw that you guys launched this initiative @15, which I thought was pretty cool. I think it’s pretty obvious what the motivation behind it is but do you want to tell us a little bit more about it?
Barry: Yes. Part of the awakening for Best Buy and why social technology is helpful is at Best Buy we’ve got to get clear about what we believe in, what we’re passionate about, what we care about, you know just like a person. The brand has to get in my opinion much more out loud about those things. And I don’t know if you saw Fortune Magazine last week, they had some sort of rating or ranking and Best Buy was actually ranked as the 4th most generous company in America. That’s probably news to people, right? We’ve got to tell that story that we’re actually quite generous with giving across the country. We have a number of programs, because we have a thousand stores in the United States and essentially we’re in a thousand communities then across the United States and a lot of our giving is locally. Each store giving and participating as they need to, as they want to, giving to what they have passion for in those local areas. So that’s a big part of our giving strategy.
The other part is thinking about the future of our company, the future of our business and recognizing that young people are obviously critical to that. And when you peruse the landscape of giving you’ll find that there’s a lot of money given to young kids in terms of dollars, there’s a decent amount of money given to people trying to figure out college and what jobs to get into and those kind of things.
There’s kind of a gap with that sort of 12-16 year old group. And that’s an important group when you look at it and think about it hard, because they’re sort of getting ready for high school and a lot of what happens to you is how you take on those years, how you approach those years. @15 the sweet spot 15 year olds, but @15 is a program that’s not just about enabling better schools; it’s also about helping teach how to participate in society. So participate would be we did a poll on the election, what are the issues that the 15 year olds care about? And we had a whole bunch of information back and we put an ad out yesterday releasing the results about what 15 year olds care about and what they’re concerned about and who’d they’d rather have over for pizza, McCain or Obama. They’d rather have Obama over. We found that they’re very concerned and the number one issue they’re concerned about is the economy. So we took that and raised those issues up and Obama and McCain both responded to it. So that’s in the pubic environment.
Another thing we’re doing is enabling 15 year olds to figure out, or help us target our dollars. What causes should we invest in? So there’s ability for them to vote on different kinds of activities that we could be contributing to and based upon the voting we’re going to direct dollars to it. So it’s not just getting money to that group, it’s also enabling participation in the political process, helping them figure out how to participate in charitable giving and that kind thing. And it’s just starting. So this is what we’re going to move forward with over time and @15 is the name of the program and we hope it builds from where it is.
Francois: I think it’s brilliant personally. Of course I have a 13 year old, and I shop at Best Buy, so I’m a little biased, but are you also planning on having a hyper local component to it so that it might tie to some physical activities with maybe some of your stores?
Barry: I think that’s a great idea. Many of the things that we can develop that have a hyper local component to them I think are good. A big part of our strategy is how do we enable people who live in communities to develop plans that make the most sense for them and do less top down and more bottoms up because whatever is going on in Boston is different than what’s going on in Minneapolis and different parts of Boston have different things are going on.
So if you think about a centralized plan, it could never meet the mark of what needs to happen locally. So I think as we get @15 out as an umbrella idea, we’re able to get credit as a brand for that idea and I think it will only strengthen and become a vibrant program if there are local components to it. If people can tap in with their own passions, and make it come to life for them in their local areas, I think that’s the only way it’s really sustainable and it’s real. Otherwise it’s a corporate program.
Francois: I agree. Having a physical hyper local component in something like that provides some sort of heartbeat to the overall community when you think about it.
Barry: Yes, and it’s real. When you can see it its real, versus some website somewhere.
Francois: One more question from the audience and I know you’ve written about that, so that should be easy. Social technology is fundamentally about creating and building relationships. For a relationship to be sustainable there must be perceived value on both sides. Do you think about and identify the value customers get or just assume that they must be getting value if they’re participating?
Barry: That’s interesting. I look at value — right now I look at participation. So if I write something on my blog as an example and people comment on it then I’m learning because I’ve only been doing blogs for 2 months and I’m learning what people are interested in hearing about which goes into what I might write next time. So I’m using comments both the number of comments, as well as, the quality of the comments as my gauge as to whether that was interesting to my readers. I also have an editorial point of view, so it’s what do I want to write about? So that’s a component of what I’m thinking about. And I know it’s kind of like a magazine or something, I know that if I write better and better things that people get more and more out of then I’ll get more and more traffic and that becomes a much more vibrant channel for me to make my work better. So there’s incentive for me to try to figure out what’s interesting. It is the same thing with Twitter. I actually do look at the grading systems for Twitter to see – and I don’t know how to calculate it, but to see if people are finding me interesting and I think about the tweaks that I do and I’ve changed over time. And I’m looking to get responses, I’m looking for people to be interested in what I’m saying, because if I’m not interesting over time I’ll not have the ability to tap into the network. So I’m using response as the way I think about whether I’m interesting or not. Is there another way? I’d be interested in other ways but I don’t know what they are.
Francois: No I think those are good ways. I think you’ve written about it which is the other thing that you’re thinking about in all your programs is you are putting the customer at the center and so that’s often times what companies are not thinking. I mean they are thinking about it but then they’re actually not doing it. They’re so stuck in their organizational organization of their company that they eventually put the company first anyway even though they realize that you have to put the member or the user, the reader at the center.
Barry: Well I only write about things—there’s a lot of things going on at Best Buy, I only do write about things that I’m passionate about, that I have a point of view about that I’m not schilling for because I know that that will come through and then I’ll lose. People need to believe what I write here is real. So far that’s true and that’s going to be what I continue to think about.
I’m real excited—I know you responded to this, I put the casting tapes out for a new advertising on here, and they’re almost done and I can’t wait to put them out because it’s going to be interesting to see now that there’s some readership what people think of these commercials. I think they’re fabulous. And they’ve come a long way since the casting tapes.
Francois: That golf one was really great.
Barry: Yes, he made the final cut. So I’m very excited because that also gives me the ability to lay out our strategy a little bit more, what we’re trying to get done as a brand and with some video it helps people to understand what you’re really talking about, otherwise it’s a bunch of words. So I’m excited to get those out and unadulterated and see what people have to say. And even as I said before, this is as much for the company because Blue Shirts read the blog and people within the company, anybody who is interested knows I’ve got one now well not everyone, but a lot of people do. So if they want to look at the advertising and hear my point of view, I don’t need a presentation, here it is. And to me, in marketing especially where there’s no right answer to anything, here’s my point of view, here’s what we’re doing and it requires you then if you want to participate or talk about it to me. You can’t say I didn’t give you the opportunity because I did. Here’s the opportunity. Let’s get everything out in the open.
Francois: Well Barry, it’s almost 3 o’clock. We call these CMO 2.0 conversations and I think you really qualify for the CMO 2.0. It was great talking to you. I really enjoyed this conversation and like I said before we’ll put it up online and I’ll send you a link as soon as we have it.
Barry: That would be great and I enjoyed it as well. Helped me sharpen my point of view.
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