Kaizen in action

There are varying points of views on how to bring more innovation to marketing communications. Too often the discussion languishes in empty exhortations to be more nontraditional, viral, guerrilla, etc.

I met the other day with a friend and former client, Kim McCullough, the head of marketing communications for Toyota, who gave me a clear and actionable user's guide for managing innovation in marketing communications. Kim refers to it as the 70/20/10 plan.

In the 70/20/10 plan a marketer would invest 70% of its budget in proven, effective communications strategies, another 20% in rolling out new strategies that have been tested and vetted in the previous year, and use the remaining 10% as seed money for new test and learn opportunities.

The brilliance in this strategy is its clarity and simplicity. First, it recognizes that marketers should not run away from things that work simply to pursue the latest buzz marketing strategy d'jour. Second, it dedicates resources to mainstream recent tests that have proven their worth. (Too many times we see marketers test new strategies only to do nothing with the results.) Lastly, it continues to fuel tomorrow's innovations and ideas, which, if successful, will become part of the 20% investment the following year.

This 70/20/10 model creates a virtuous cycle for innovation. It is also an example of Toyota's commitment to the principle of kaizen, or continuous improvement.

The sun speaks again.

During the Democratic National Convention, the Sun decided it was time to address planet earth, speaking through its friends at Applied Materials (and one of colleagues at BD'M, copywriter Phil Calvit, a.k.a., the voice of the sun).

The Sun spoke again in today's Wall Street Journal, this time expressing its appreciation for the Congress' decision to extend the Investment Tax Credit which will continue to provide much needed relief to those companies investing in new alternative energy technologies, such as renewable solar energy.

BD'M also created this site to show how Applied Materials is making good on the Sun's promise.

What great marketers do well.

I’m giving a talk next week to the MBA students at the University of California, Irvine. I’m posting this outline to to invite readers to share their ideas and improve this list.

My goal is to give these MBA candidates the type of marketing insights that grad schools tend to overlook – mainly that all marketing challenges cannot be solved through statistical analysis and analytics. Many of us would agree that after spending a few years in brand marketing we learned that it is often the softer skills that define great brand leaders.

I’m not going to spend time going on about quality, integrated marketing, interactive media, etc. Price of entry ideas like these are more suited for a speech entitled “How to avoid being a mediocre marketer.”

When I think of the hallmarks that define great marketers I come up with this list.

Brand literacy: They understand that not all products are brands and that branding is not solely the responsibility of advertising. They understand how brand equity is built through experiences, emotions, design, pricing, distribution and the entire marketing mix.

Customer intimacy: They go beyond focus groups and one-size-fits-all quantitative studies. They know there is no such thing as a monolithic customer definition, rather the customer is a portfolio of segments and needs. They behave as commercial anthropologists, observing customers 24/7. They show empathy towards customers and try to see the market through their eyes. They are transparent, knowing that the internet has vanquished secrets and that customers will destroy brands they cannot fully trust.

Relevant differentiation: They know that underneath all the slick marketing must exist a product with a meaningful and unique proposition. To them, having a USP is not old school, it is how you win. They also know that differentiation for the sake of being unique is the fast track to irrelevance. We need to differentiate on things that matter to customers.

Storytelling: They understand the power of a compelling brand narrative. Great brands tell great stories. They understand the power of archetypes. They are the protagonist in an ever unfolding story. They understand the need to define what they stand for by being clear about what they oppose, because every protagonist seeks to overcome some challenge or foe. It is this journey toward a noble cause that makes them human and interesting.

Innovation: They know that markets and trends move at lightning speed. Innovations create an aura of infectious momentum for a brand. They innovate in brand appropriate ways because they have taken the time to understand the true essence of their brand and find new expressions of that core idea.

Test and learn: The great marketers know that many new ideas are doomed to fail. But instead of being paralyzed, they build learning cultures to improve their odds of success. They invest in learning opportunities – test markets, new designs, pricing, extensions. If something doesn’t work they celebrate the insights gleaned on how to do better next time. They are tenacious, they indeed do it better next time.

Design: They subscribe to the great quote (used by designer Yves Behar), “Advertising is the price companies pay for being unoriginal.” They know that we live in an increasingly visual age and that great design can not only better serve the customer’s spoken and unspoken needs, it can also convey powerful brand meaning.

Thoughtful interactions: They know that every interaction matters. The website. The packaging. The events. And the performance of the product itself. Customer interactions form the basis of the brand relationship and, increasingly, are a catalyst for positive creds in social media. Strategy sets a direction, execution determines success. Details matter.

Context: They know that brand meaning is not an absolute concept. Customers often form opinions in a relative manner. Where a brand shows up and the company it keeps can be powerful influencers. Media can shape meaning. Distribution choices can shape meaning. Associations and alliances can shape meaning.

Alignment: They know that a USP is most powerful when it is aligned and reinforced through every aspect of a company’s value chain. Pricing. Distribution. Sales force incentives. Training. Recruiting. A USP is not an advertising idea…it’s why the company exists. It shapes their corporate culture, and vice versa.

I have examples in mind for each of these, but would love to hear your candidates.

Deja vu all over again

Yogi Berra allegedly said “this is like déjà vu all over again.” I was reminded of Yogi’s wisdom while thinking about what marketers can learn from the way in which consumers reacted during previous economic meltdowns.

Our economy is a mess. Jobs are fragile. Real net income for working Americans is stagnant. We knew this for a while but chose to ignore it while buying our McMansions with zero money down. It takes the evaporation of trillions in personal wealth to get our full attention.

Now that we’re duly panicked, how will we respond? One clue is to examine how consumers reacted the first few times we saw this movie.

Let’s go in the way-back machine. No, not 1929, let’s start in 1987. Conspicuous consumption was in vogue. Michael Milken was peddling junk bonds. Yuppies drove “beemers.” Wall Street’s ficitonal Gordon Gekko preached how “greed is good.”

Then came Black Monday, the day the Dow plummeted over 20%. (To put this in context, this past Monday’s 777-point free fall was a 7% decline.)

The consumer response was best defined by trend guru Faith Popcorn who coined the term “cocooning” to describe our desire to seek shelter from the storm by embracing simple pleasures and honest, back-to-basic comforts.

Out went the “beemers” and in came SUVs. The Ford Explorer and the Jeep Cherokee took off because SUVs provided a sense of security, strength and escape from a dangerous world.

Pop culture captured the zeitgeist in movies like Baby Boom and TV shows like Thirtysomething. “Nesting” gave rise to enjoying movies and board games at home with friends as well as the over-hyped trend of women leaving the career track for the so-called mommy track. New brands like Lexus capitalized on our desire for luxury without the premium price and the stigma of conspicuous consumption.

Soon enough the stock market bounced back. BMW sales went up. Martinis and cigars were rediscovered. Michael Milken was replaced by sock puppets. We believed the new economy would spare us from ever again having to eat meatloaf.

By 2001, Greenspan’s warning of our “irrational exuberance” caught up with us when the early dot.com companies proved worthless and the tragic events of 9/11 shook our country to its foundations. The market plunged southward, wiping out retirement nest eggs, diluting 401k accounts and creating a pervasive feeling of vulnerability. Setting aside the impact of 9/11, we learned the “new economy” was as irrational and cyclical as the old one.

But the way in which consumers responded this time was different. Consumers didn’t “cocoon” and “nest” or get all warm and fuzzy about staying at home with kids. We got smarter. Unlike 1987, we had the Internet to help us save money without having to give up the brands we enjoy. We still bought BMWs, but we found the best deal on autobytel.com before going to the dealership. Off-line, we witnessed the advent of strategic shopping – i.e., shop at Wal-Mart for daily necessities to be able to indulge at Nordstroms for those things we truly desired.

What now? Is this credit crisis (and war and failure of leadership and…) jarring enough to send us back to home and hearth? If so, does this provide growth opportunities for brands such as Mattel (games), Volvo (security), Best Buy (stay at home entertainment) and Kohler (remodel instead of move)? Has the Internet fundamentally changed how we respond as consumers because we are better informed and empowered? Or will we seek what Faith Popcorn describes as the “pleasure revenge”?

Predicting the future is a fool’s game. But being unprepared could be even more foolish. Marketers should immediately connect with customers. Listen to what they're saying, but really listen to how they're feeling.

Begin taking steps to be well-positioned for what’s ahead. Find a clear and honest value proposition. Reinforce emotional connections and a sense of community. Invest in service and warranties to replace risk with reassurance. And use the web to help consumers make smart and informed choices.