Creating shared value.

The current issue of the Harvard Business Review carries a compelling piece by Michael Porter (my favorite author on business strategy) on how businesses can do well by doing good.

Porter and his co-author, Mark Kramer, make the case that companies that create shared value – i.e., value for the corporation as well as for the communities and customers it serves – to unlock new opportunities to innovate and grow.

The authors note that capitalism has come under siege as business has been blamed for a range of social, environmental and economic issues.  Much of this blame is well deserved – the result of companies off-shoring jobs and shuttering plants (and communities) in pursuit of better quarterly earnings.

Porter argues that companies such as Wal-Mart, GE, IBM, etc are creating high returns from activities that create social value.  According to their research:

• "There are three distinct ways to do this: by reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters at the company's locations."
• "By better connecting companies' success with societal improvement, it opens up many ways to serve new needs, gain efficiency, create differentiation, and expand markets."

We see this theory in action in Wal-Mart's efforts to decrease its carbon footprint throughout its supply chain, Sun Chips' support of solar energy and recycling, the Toyota Prius (a former client of mine), Johnson & Johnson's employee wellness programs.

Porter and Kramer draw an important distinction between corporate social responsibility and creating shared value – the former is largely a strategy to improve a company's reputation and is often divorced from business strategy, while the latter is integral to a company's profitability and competitive position.

Dell selects BD'M.

We received the best news this week when Dell selected Barrie D'Rozario Murphy as its global agency of record for its Public Sector business unit.

This is a huge win for BD'M on many levels.

First and foremost, we are inspired by Dell's mission to help people grow and thrive.  Working with the Public business unit puts us in the business of connecting Dell with customers who share that mission – healthcare, K-12 educators, higher education and government.

This win also allowed us to forge very strong partnerships (and friendships) with the folks at Tag, SolutionSet and Naked.  We're looking forward to a long and happy relationship as we team up around the world for Dell.

Lastly, adding Dell to our client roster extends the momentum we gained in 2010 when BD'M was named "Best Small Agency in the U.S." by the 4As and won AOR assignments from Bissell and Dell Webb.

Growing and thriving, indeed.

Winning the future.

I sat down to write my point of view on last night's State of the Union address when I remembered that I had written it two and a half years ago during the 2008 primaries.

It is indeed time to "win the future" through a better educated workforce; through a more intelligent information-based healthcare system; through a clean energy policy that is less dependent on OPEC; and through a 21st century infrastructure that boosts productivity and employment.  These investments are not abstract issues for policy wonks, these are kitchen table issues.  (If you have kids, think about these issues relative to their future and you'll know why I believe this.)

But, similar to what I expressed in 2008, I think the message needs to be clearer and more motivating (and without a slogan that can be shortened to "WTF.")

While "winning the future" attempts to inspire, we see time and again that messages tend to be more motivating when contrasted with the perils of inaction.  Compelling stories need both a protagonist and an antagonist .  Is essential to the Hero's Journey.  It is essential to brands.  It is essential to winning the future.

The "Sputnik moment of a previous generation was a direct reaction to the Soviet Union's sudden superiority in space.  The American people had no doubt who we were trying to surpass and why.  To that same end, I thought President Obama should have made clearer the level of investment China is making to win the future in alternative energy, high-speed rail and education.  As a people, we tend to pull together when we have a clear sense of purpose.

Marketing during a recovery.

Over the past two years I've offered points of view on ways marketers can tailor message, media and product strategies to win share during the Great Recession.

Recent economic indicators – namely steadying home prices, declining unemployment claims and increasing consumer spending – point toward a slow but steady recovery.

Now we must summon the power of optimism and begin thinking about marketing strategies for the Great Recovery. An article in this month's Harvard Business Review offers two good starting points:

1. Withdraw recession-pricing tactics. It's time to phase out those lower-margin price-leaders and promotions (two-for-one, 18oz size for the price of 12oz, kids eat free).  If your brand cannot command a marginal price increase, then you must question if you really have a brand.  After all, the role of branding is to be able to charge a slight premium in exchange for intangible emotional values or a tangible point of difference.
2. Introduce new premium products.  I've written about the fallacy of the "new normal."  It always sounds dreamy, yet always gets trumped by the "pleasure revenge."  As paychecks become more secure and 401k plans once again conjur a sense of wealth, consumers will likely seek their hard-earned reward.

It would be wise to not abandon all strategies that worked during the recession.  For example, in earlier posts I wrote about marketers investing more in product innovation to increase differentiation and demand; developing programs to listen to and serve their best customers; or rethinking old rules and using interactive for branding, not just transactions.  These are sounds strategies during good times  as well.

The media mashup.

I enjoyed this article in yesterday's NY Times on the great media mashup.

I entered the advertising business last century as an assistant account executive at Ogilvy & Mather New York. In this millennium, I'd enter as an assistant media planner. The reason is simple:  media is no longer a channel through which we beam cool ideas, media is the cool idea.  Today, media creates content; media creates brand experiences; media creates social relevance.  In other words, media forges many of the dynamics that help create vibrant brands.

I hope 2011 is the year we banish the vocabulary that continues to shackle innovative thinking – offline vs online; traditional vs. nontraditional.  After all, is a print ad with an embedded QR code traditional?  Is the web really "new" media?

It's all media.  It's all nontraditional (if we're doing our job right).  And it all must lead back to online interactions.

More consumers are phoning it in.

I've posted frequently about the huge role that mobile will play in engaging customers and continue to hold the view that mobile is not an advertising medium; rather, it is best viewed as a customer service app or as an opt-in response device.

Yesterday's report in the WSJ documents the rapid increase in the number of consumers using smart phones not only for comparison shopping, but also to make the purchase.  We're heading to Wal-Mart to shop, then, while standing in the aisle, buying the product for less on Amazon.  According to the article, "on the Friday after Thanksgiving a year ago, consumers using mobile devices accounted for just 0.1% of visits to retail websites...this Black Friday, they accounted for 5.6%." 

Essentially, mobile phones have transformed Wal-mart's, Target's and Best Buy's stores into one massive showroom for Amazon. 

I believe a brick and mortar retailer's best response is to reimagine their stores, more as customer service centers that create a tangible value for buying there, not just shopping.  For example, whereas currently Best Buy charges a premium for its Geek Squad service, I can imagine a day when this added value is offered free of charge.  Amazon would have a hard time matching this.  I can also imagine a day when Best Buy takes a page from Apple's playbook and turns its Blue Shirts into an in-store genius bar.  I'm less likely to buy from Amazon if I know I can make an appointment at Best Buy to get a tutorial on my new gizmo.

Mobile's other big value is as an opt-in response device.  By replacing generic calls-to-action with a mobile invitation (e.g., SMS to learn more, QR code to view product demo), mobile has the ability to make moot the silly distinctions between online and offline.  To wit, is a magazine ad with an SMS call-to-action traditional or nontraditional? You get the point.

 

Don't discount natural demand.

Yet more evidence that discounts seldom build incremental sales.  Instead, they tend to pull forward demand and reduce profitability.

According to a study out of the University of California, Berkeley, the government's "Cash For Clunkers" incentive increased car and truck sales by 360,000 units.  Sounds great until you read that sales for the next seven months were down by 360,000 units.  That was a $1.4B investment in discounting natural demand  (360k units x $4k/unit).

My purpose here isn't to criticize this specific program.  As economic and social policy, it put more money back into the consumer's wallet and helped remove less fuel-efficient cars from the road.

But this does reinforce what we see time after time in marketing – straight cash incentives (coupons, cash back) tend to discount sales marketers are likely to get anyway.  The best promotions tend to be those designed to change preference and long-term demand – e.g., discounts targeted at competitive customers (register-generated coupons targeting competitive users, online retargeting to reach competitive customers with a trial offer, member-get-a-member referral offers) or incentives to stimulate sales during off-peak periods (fly this summer, get a discount next winter).

What is leadership?

I gave an address yesterday to the Executive MBA program at the University of California Irvine's Merage School of Business.

My goal was to share with these executives what I've learned about leadership through observation, trial and error.  Core to my beliefs is the idea that leaders create more leaders to achieve things that matter.  The attached presentation outlines my point of view on the traits of effective leaders.

Creating great leaders.

View more presentations from wikimurph.

The power of local intimacy.

I've long believed that empathy is an essential building block in any successful brand strategy.

Empathy is how we bond with one another; it is also how brands bond with customers.  We gravitate toward brands that get us; that share our sense of humor; that share our values; that make us feel good about ourselves.  Define the basis of your brand's empathy with its customers and you'll get to the essential truth of your brand.


SABMiller has reached the same conclusion, and has done so on a global scale.  Rather than follow the siren song of global efficiencies – i.e., one message worldwide – the brewer realized that local marketing can be more effective in creating a tight bond with the emotions, values and culture of its customers, which, particularly in the case of beer, can vary widely from market to market.  SABMiller calls this "local intimacy."

This doesn't mean a marketer must sacrifice global efficiencies.  To be sure, a blue collar worker in Krakow likely shares many of the same values as his or her peer in Kalamazoo.  Hard-earned rewards for a hard day's work can be a universal appeal.  Many creative assets can be shared to enable local markets to invest less on production and more on media. However, in a "glocal" model, markets should use these assets flexibly to cast their message within the local zeitgeist (sports, humor, pop culture).

This flexibility can help make your brand feel like a good friend sitting on the next bar stool versus a passing stranger who tries to strike up a conversation.

Is anybody listening?

Three years ago while speaking on an Ad:Tech panel, I coined the term wikibranding to convey an observation that brands are in fact wikis, entities that are increasingly defined by the crowd and less so by the manufacturer.

Given the disruptive forces in social media that have taken hold since then – YouTube and Facebook weren't yet the mass forces they are today, and Twitter hadn't yet tweeted – I believe this to be even more true today.

So the question is not whether customers are talking, it's whether marketers are listening.  What are marketers doing with the flood of peer-to-peer likes and dislikes that travel around the world at light speed?

I've grown tired of traditional dashboards.  They provide heat but little light.  They report but don't inspire ideas.  That's because most analytics are a dizzying blur of data that are disconnected from the building blocks of brand equity; disconnected from product innovation; disconnected from the CEO's line-of-sight on what's actually happening in the marketplace.

Infographics is a start.  Sure to get more senior management attention on what the data are saying.

The chatter about the emerging role of Chief Listening Officers is another step, but one that will add value only if the CLO is given a mandate to make things happen.  (Shouldn't the CMO be the CLO?)

Another way is to begin aligning analytics with the key principles of how brands build equity and value. (A project that's already underway at BD'M.)

Whatever the solution turns out to be, it's sure to require an equal balance of lateral thinking to find insights within disparate data points, as well as patience to make sure we don't react to every opinion that passes as fact on the Internet.