How winning companies go digital

Whether it is creating a winning online experience or enabling mobile commerce, digital marketing is a hot topic, with most companies either revamping or implementing new strategies.

Through consulting experience and research, Quanta has uncovered some industry and technology-wide learnings that can improve your odds of market and financial success. Consider the following best practices in your digital design and planning:

Power to the people

“In the next five years, traditional marketing will shift to digital channels to capitalize on the ‘power of the people’ phenomenon to displace brand-centric strategies in favour of buyer-driven everything,” research firm Gartner says. Buyers can control the marketing messages they receive and are only a click away from a competitive product.

That means the onus is on companies to provide a digital experience that powerfully delivers on their customer’s needs. All technology choices must be driven by customer needs and their desired experience as opposed to organizational or IT considerations.

This buyer-driven world requires personalization and location-based services. Consumers want to be treated as an individual with bespoke interactions and services based on their past experiences with the firm, the device or platform they are on, and the information they require at the moment.

Social not transactional

The buying journey is no longer linear — i.e. build awareness, generate interest and trigger purchase. Now, consumers rely more on peer recommendations, are less iterative and more information-driven.

Knowing that, companies should carefully consider what information, tools and functionality are needed. For example, to leverage the power of word-of-mouth endorsements, marketers need to understand how and when their customers are using social media and target them differently by platform at each stage of the customer life cycle — from awareness building and information gathering to seeking out peer recommendations and finding timely support.

One brand, many channels

Market researcher Forrester reports that companies in 2014 “overwhelmingly plan to continue investing in DX [digital experience] technologies, with a clear emphasis on multichannel delivery and analytics.”

New technologies, applications and platforms have dramatically increased the number of channels between customers and firms, and the potential for misaligned strategies and programs. Marketers are challenged to offer a compelling omni-channel experience that delivers a consistent and competitive brand message, price and service experience. This requires management to view their businesses in non-traditional ways, master new skills sets and define new organizational structures.

Structure follows strategy

From the outset, senior leaders will need to acknowledge the traditional marketing model may no longer be ideal for a digitally driven organization. Where the function is going is difficult to say. IDC, a research firm, contends that “by 2020, marketing organizations will be radically reshaped into three organizational systems — content, channels, and consumption [data]. The core fabric of marketing execution will be ripped up and rewoven by data and marketing technology.”

The best practice marketers we see are: team-focused incorporating a variety of skill sets including data analytics; tightly integrated with other functions including IT and operations and; are intrapreneurial in nature with free-flowing data, flat decision-making and rapid experimentation.

One common barrier to going digital is the need to satisfy the traditional business case. It is often difficult to generate sufficient return on investment when quality market and costing data is unavailable, revenue and usage is unpredictable and senior managers lack the technical confidence to place important bets.

In a recent survey, roughly one-quarter of respondents named “inability to prove ROI” the top barrier to budget increases, outpacing other concerns such as lack of overall revenue (18%), lack of buy-in from management (15%), and lack of clear strategy (15%),” web research firm Marketing Charts said. Digital pacesetters, on the other hand, make greater use of lower-risk market experiments, as well as employ more advanced approaches to evaluating strategic, time-sensitive investments.

Get it right and fast

In high-stakes industries such as banking, airlines and retail, the days of introducing beta-level technology and fixing it on the fly is quickly coming to an end. Most consumers will not tolerate shoddy products or a confusing online experience; product alternatives are often well-known and immediately available and; serious threats such as cyber crime are no longer rare. To cope, firms are adopting a variety of methods to improving digital quality, performance and agility including co-creating products with customers, integrating development and testing activities and; bringing in-house strategic parts of the value chain.

There is no magic bullet to digitally enabling marketing. Successful firms are choosing their technologies and channels based on consumer needs and habits, leveraging the power of social influence, developing the right organizational alchemy and learning from their pilots and other’s experiences.

For more information on our services and work, please visit the Quanta Consulting Inc. web site

The dangers of outsourcing

Conventional wisdom says companies should outsource manufacturing and operations to take advantage of lower wages and faster operational scalability. Aside from the question of whether this strategy (particularly when it involves offshoring) always delivers the promised benefits, you may also wonder whether outsourcing makes long-term strategic sense. The demise of Kodak, the iconic U.S. photography company, suggests organizations need to be wary of outsourcing strategic business activities. Outsourcing has been occurring for decades, based on the idea that moving labour-intensive work offshore would significantly reduce cost, without jeopardizing a firm’s competitiveness.

Kodak’s fall shows this is a dangerous assumption. Companies can unknowingly reduce their competitiveness when strategic work such as manufacturing and product design is outsourced. In other words, they stand a good chance of loosing the secret sauce that drives meaningful differentiation. Moreover, outsourcing accelerates the diffusion of knowledge and talent to outsiders thereby lowering barriers to entry. The result is higher levels of competition and a lower return on invested capital.In addition, many operations that were once performed more economically offshore can now be in-sourced at a similar cost and much lower risk.

Founded in 1893, Kodak was the dominant player in the camera, film and processing business with a strong reputation for product and manufacturing innovation. Ironically, Kodak developed the world’s first digital camera in 1975, yet was never able to leverage that early success to take advantage of the market shift to digital photography. Instead, the way Kodak expanded its digital business sowed the seeds of its demise. In 2013 the firm declared bankruptcy.

Harvard Business School Professor Willy Shih had a front row seat, having served as president of Kodak’s Digital & Applied Imaging business through the turn of the 21st century. “Much of the camera technology was invented in the United States, but U.S. companies gave it all up,” Shih said. He contends that when Kodak moved pieces of their operations overseas many years before, they lost technical expertise, product innovation and manufacturing skills. When digital cameras became the rage, Kodak had lost the ability to put together a compelling digital camera solution. As a result, they were unable to compete in this rapidly growing market. Coincidentally or not, other companies such as Dell, Blackberry/RIM and HP saw their fortunes decline during the same time they aggressively offshored major parts of their value chain.

From a strategic perspective, manufacturing a product can trigger new ideas that lead to improved operational efficiencies and product innovation, especially when there is close contact between users and designers at the production level. Maintaining key operations also allows companies to retain vital research and development, support and manufacturing knowledge, which are key to producing next-generation products. These long-term spillover effects can explain why successful consumer technology companies such as Apple and Google limit outsourcing to manufacturing, and keep product design, branding and customer support in-house.

Outsourcing need not be a risky strategy. The following are three things leaders should consider in deciding which activities are performed internally and which can be left to others:

Focus on what’s important

Many of the managers we speak with do not know what makes their organizations tick. Leaders need to know the key capabilities (e.g., assets, brands, people, knowledge, and resources) that deliver their unique value proposition so they can safeguard them.

They also need to understand what new capabilities (e.g., digital competencies) are required to generate growth three to five years out.

Double down on the core

Continue or increase investment in your differentiating, core capabilities that drive your market position and return on assets. These areas would include innovation, brand building, customer service or employee training.

Take steps to in-source strategic activities (those that are needed for growth) from external vendors.

Optimize existing relationships

For the foreseeable future, outsourcing is here to stay. It is unrealistic for companies to do everything in-house. In other cases, it is essential to unwind outsourcing arrangements or build up internal capabilities.

For these ‘sticky’ deals, managers should review and optimize their existing relationships to: Insist on and enable providers to deliver continuous improvement in terms of innovation, service levels or cost savings; ensure the company has mechanisms to capture the same learnings in areas such as product manufacturability and process efficiencies as their outsourcer; consider a dual outsourcing and in-house strategy for some activities to maintain flexibility and knowledge accumulation.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Optimizing the insurance broker’s channel

Gone are the salad days for many P&C (property and casualty) insurers, the companies that insure our cars, homes and belongings. The sector is facing many headwinds including rapidly changing consumer needs, increased risk (particularly around climate change) and rising costs. One vital component of the P&C insurer value chain, the independent insurance broker, is at the centre of change. Insurers that can deftly navigate this transformation will deliver higher consumer value, increased revenues and enjoy better relationships with their broker partners.

Historically, most insurance carriers distributed their products through local insurance agents or brokers. However, times have changed as new distribution channels emerged. Web-based technologies now allow customers to quickly and directly deal with insurance companies and get around-the-clock peer feedback. Insurers now have better predictive tools, advanced pricing algorithms and straight-through underwriting data that allow them to offer quotes instantly while minimizing risk and cost. Finally, providing a differentiated customer experience has become more challenging when consumers can deal either with brokers or with insurance companies that offer their products directly to consumers and influencers. These changes have important implications for the provider-broker partnership.

Contrary to the hype of a decade ago, the Internet is not dis-intermediating channels like insurance brokers even when consumers have a direct-provider option. To wit, a 2012 McKinsey study of the U.S. auto insurance sector found 59% of consumers dealt with a broker and directly with an insurance provider through their customer journey. For the foreseeable future, good brokers will continue to play an important role in the marketing, selling and servicing insurance products by providing choice and advice to consumers.

While marketing through this multi-channel world can complicate an insurer’s business model, it also presents opportunities to outflank competitors and deliver more consumer value. How can insurance companies work better with their brokers and deliver on joint goals?

In our client work and research we have found that P&C insurers share similar channel issues as other sectors including banking, travel and industrial goods. Leaders in these markets have thrived in a multi-channel environment by using strong, intermediary relationships to deliver an omni-channel brand experience — a compelling value proposition consistently delivered through every online and offline channel. Some best practices to enhance the broker relationship include:

1. Align around the consumer

Many factors — social media, mobile computing and a continuing recessionary mindset — are affecting the way most consumers research products and want to deal with brokers and insurers. Successful providers and brokers are embracing these trends through: an integrated, customer-centric model; the capture and utilization of partner knowledge of local markets and sub-segments, and; sophisticated, qualitative Big Data analytics that enable insurers to better understand customer needs wherever they are in the purchase or support journey so they can provide the brokers with the right products, tools and information. Failure to stay abreast of consumer needs can result in a compromised value proposition and lower market share.

2. Get closer to the channel

Smart providers understand that partnership is the foundation of a high performance broker channel. The way to achieve this is through multi-level communication, common goals and ongoing collaboration — not conflict. This partnership mindset includes understanding its entrepreneurial brokers, aligning everyone’s business interests and giving the broker a differentiated reason to favour them over other providers. Market leaders seek to embed this cooperation into their cultures as well as management practices.

“Insurance companies who rely on brokers for the sale of their products will succeed only if brokers are successful,” said Monika Federau, chief strategy officer for Intact Financial Corporation. “This is why we aim to be the insurer that is the most conducive to their growth by providing them with financial, technological, and marketing support.”

3. Enabling the broker’s business

Making significant investment in technology, innovative products, joint marketing and capabilities are needed to reinforce verbal commitments. For example, Intact has invested millions of dollars in technologies that make it easier for brokers to deal with it and allow them to focus their efforts in better serving their own customers. Furthermore, Intact provides differentiated products and services that meet the bespoke needs of its 2,800 brokers and their customers.

Intact’s strategy has paid off. Today, the company is the leading P&C insurer in Canada with a market share that is nearly double its nearest competitor. Furthermore, Intact has consistently outperformed the industry in terms of revenue growth and profitability. Clearly, working with — not against your channel — can pay significant dividends.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Iron Dome innovation lessons

The old ditty ‘when Mother Nature gives you lemons you make lemonade’ tells us a lot about about being creative, particularly when innovation is critical to your corporate strategy — and survival. In the current conflict between Israel and Hamas, the lemons in questions are the hundreds of rockets being fired into Israel on a daily basis. Israel’s ‘lemonade’ was the development of the Iron Dome anti-missile system, which has quickly become one of the most impressive weapon-defence systems of the past 20 years. What lessons can businesses glean from the development of this world-class technology?

The Iron Dome was developed by Israeli defence contractor Rafael Advanced Defense Systems. Its development from ideation to deployment took about seven years, hundreds of workers, dozens of suppliers and more than $200M in investment (much of it supplied by the U.S.). The Dome’s purpose is straightforward and exceedingly difficult; the system is designed to track and intercept incoming short-range missiles with its own missiles before the attacking missiles strike their targets. Missiles that would have hit an unpopulated area are ignored, in order not to waste munitions. To date, the system has been very successful, intercepting approximately of 90% of the threats it faces. Rafael is currently looking to sell the system to a variety of countries.

Aside from its military success, the Iron Dome is a model of innovation commercialization under tight constraints. Below are seven lessons gleaned from a variety of public sources. The quotes below are from project team members and were anonymously cited (for security reasons) in the Times of Israel newspaper.

1. Create urgency

Contributing to the protection of your nation can be motivating. However, Rafael’s leaders put wood behind the arrow by making the Dome a strategic priority. The project’s constraints — tight timelines, technical challenges, and cost limitations — were clearly articulated so there were no role misalignments or executional misunderstandings.

2. Assemble the best people

Having the right mix of capable people is vital. Rafeal’s management assembled a technical dream team. According to one engineer, “The best people in the field came together for this project.” Patriotism was not the only motivator: “Many engineers were inspired by the technological challenges and … fought to participate in the project.” As it turned out, much of the team was, through design or chance, made up of very curious and creative individuals able to sustain a high workload and quickly solve problems.

3. Optimize the team size

Given the constraints, management decided that using a “lean, mean” team of motivated experts was the right tack. The modestly sized core development team — numbering in the dozens — was much smaller than what you would typically see on major initiatives in bigger organizations. The payoff was faster project speed, less politicking and reduced management complexity.

4. Quickly evaluate issues

One pressing issue was how to collate and evaluate the numerous conceptual and technical ideas, and technology fixes. The team developed excellent screening tools to help analyze options and decide when to let go of an idea and move on. These methodologies avoided analysis paralysis, and accelerated the pace of experimentation and prototype development.

5. Experiment regularly

A culture of risk taking and continuous learning permeated the project team. Part of this culture involved running many experiments to test ideas and technology. Successful experiments were studied to distill technical shortcuts and share best practices. Failures were also systematically analyzed to avoid repetition. These practices minimized technical risk, avoided duplication and maximized speed.

6. Collaborate closely

The Iron Dome was developed in close collaboration with the users and other stakeholders to reflect real-world needs. One team member said, “Our relationship with the people in the field was unprecedented; this was essential for adapting the system to all the constraints in the field.” Given the need to quickly deploy the system, the Dome was designed with simplicity in mind so as to improve manufacturability and ease of transport.

7. Be entrepreneurial

For a prolonged period, the Iron Dome faced criticism from many circles — vested institutional interests, the media and military experts — around cost, potential effectiveness etc. The team used these concerns as a personal challenge, and to further refine their plans. According to one engineer, “Maybe we should thank the media, because when you read a cynical article, you say to yourself, ‘Let’s show them’ and you tackle the project, invigorated.” Another said, “In retrospect, it was the constraints, which seemed almost insurmountable, that led us to develop creative and successful solutions,” including engineering lower-cost parts from scratch and using components that were discovered in a toy car sold at Toys ‘R’ Us.

The development and effectiveness of the Iron Dome teaches companies that innovation success can be more about attitude, common sense and collaboration — the intangibles — than investment and size of R&D teams. Managers would be wise to consider these lessons.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

3 ways to maximize sponsorship ROI

If you followed the World Cup, you would have noticed the many corporate sponsors of the event, the teams and players (i.e. the properties). Sponsoring the right property can give a brand a major boost in awareness and appeal. However, having the wrong approach or property could waste the investment and compromise the firm’s brand image. Fortunately, there are some best practices to follow to maximize a sponsorship’s potential.

Corporate sponsorship is big business. Annual global investment exceeds $25-billion, growing at almost 10% each year. Sports — teams, events and athletes — make up the majority of spend. Growth is being driven by an increase in the number of new properties like rock bands, festivals and charities, the rising value of some properties as well as the growing practice of tiering sponsorship support (think platinum, gold, silver levels).

Sponsorships are an important way for many companies to get their brands in front of elusive, skeptical and mobile consumers who are regularly bombarded by numerous marketing messages. Opportunities can range from naming rights on a stadium and client relationship events to limited edition products and custom advertising programs. Sponsorships can significantly build a business (think Michael Jordan and Nike) or hurt a brand image, as was the case when Kate Moss’ personal issues led to major problems for Chanel and H&M. How do you ensure you get the most value from this powerful but risky marketing tool?

The best programs get three things right:

1.  Align the opportunity to business objectives

Given the range of properties, you need to use a thorough process to filter and analyze the sponsorships to find strategic congruence between the property, brand and target audience. When affinities are lacking, the opportunity and investment could be wasted. In a high-profile program we studied, a mismatch between the firm’s customer base (women, 18-49) and the properties’ core audience (men 18-24) led to a lower than expected ROI.

2.  Promote the sponsorship

Companies often spend a lot of money acquiring sponsorship rights but very little on the promotional support that would magnify its impact. Various studies suggest that underperforming programs spend less than $1 on promotion for every $1 spent on sponsorship rights. The lack of marketing support may trace back to management neglect or the need to limit spending after paying for the rights. In one case, a client of ours believed that becoming a concert sponsor alone would drive their business. Though the sponsorship was deemed a success, management acknowledged that a lack of promotional support resulted in the firm missing out on millions of dollars in merchandise sales. Conversely, higher performing companies spend more than $1.50 in promotion for every $1 in sponsorship. Not only do these firms magnify their sponsorship investment but they also integrate their properties within their marketing mix.

3.  Evaluate performance

Despite the importance of sponsorships, many firms do not effectively quantify the impact of their expenditures. This is not surprising given the difficulty of linking sales directly to sponsorships. Successful companies use a variety of approaches. The simplest way is to survey customers, partners and employees on program impact and lessons learned. Firms can also tie total program spending to key metrics such as unaided awareness or purchase intent, and then link them to sales using regression analysis. The most sophisticated approach uses econometrics to ascertain links between programs, awareness and sales, and then isolate the impact of sponsorships from other marketing and sales activities.

Maximizing sponsorship value can be a challenge, especially when firms have multiple properties, customer segments and marketing tactics. BMO Financial Group is a major sponsor that has figured this out. The bank successfully operates a North American-wide program with dozens of properties and partners including: NBA Basketball (Toronto, Chicago), NHL Hockey (St. Louis, Chicago) Major League Soccer (Toronto, Montreal), amateur sports and the Calgary Stampede.

The Bank looks at sponsorships strategically, with a proven approach to identifying, evaluating and managing sponsorship deals. Each property — whether it is in sports, arts or regional events — aims to reach diverse customer segments within local communities as well as appeal to broader national audiences. The bank magnifies the impact of its sponsorships by integrating its elements with other marketing activities. For example, BMO was able to quickly maximize its sponsorship of the Toronto Raptors during their 2014 playoff run by increasing media advertising and launching a new Twitter campaign.

Finally, BMO sees a deal signing as the beginning of an iterative win-win relationship between the parties and not an end in itself. Justine Fedak, senior vice-president and head of brand, advertising and sponsorships for BMO, emphasizes the importance of long-term partnership. “Similar to marriage, a sponsorship begins with a mutual understanding of shared values and then evolves over time. Gone are the days when you slap a logo on something and walk away.”

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Improve your sales close rates

Selling excellence has never been so important as it is in this low-growth world. In our experience, high performing sales representatives employ simple but powerful techniques to overcome buyer reticence and differentiate their offering. Some of these methods have been the subject of academic research, recently published in the Harvard Business Review, and summarized below.

Ask for advice

High performers pursue two important objectives in a sales relationship: 1) gain vital information on the customer’s business and personal needs, target price and decision criteria. Securing this information allows sales reps to link their products with high value and justify their price points and; 2) build trust with the buyer, especially when the seller has no previous sales relationship with the organization. Satisfying these objectives is not easy when buyers are reluctant to share information or are not accessible.

Successful sales people secure key information and develop trust using a simple approach: they ask the buyer for advice on how to overcome barriers or solve problems. Some sellers may be reluctant to do this; they may perceive this as pandering or displaying a lack of skill. In reality, the opposite is true. In their research, professors Katie Liljenquist and Adam Galinsky found that asking an opponent for advice made the seller appear more warm, humble and cooperative, improving the chance of closing the deal at a desirable price.

Asking for advice provides three key advantages (in addition to getting valuable information). First, it makes a sales rep appear more likeable, warm and cooperative. Furthermore, the buyer may be flattered because the request is an implicit endorsement of their expertise and status. Second, through conversation buyers will be able to see things from the rep’s perspective leading to more creative problem-solving and solution alignment. Finally, asking for advice could turn the buyer into an internal advocate. Providing advice is an investment of their time and effort making them more likely to follow through on their recommendations and become the seller’s champion.

The beauty of asking for advice is that it is simple, low-cost and works with most people. Sometimes, however, sales reps face a head-to-head selling situation where they need to stand out from the competition.

Give the buyer something extra

Most large organizations employ skilled buyers and rigid procurement processes to minimize purchase costs, eliminate rogue buying and qualify vendors. This creates special challenges for companies who have little or no previous selling history at the company or offer a relatively undifferentiated product. Often, at the end of the process buyers will go back to the finalists and tell them the bids are equivalent, asking them to provide “something more” to break the tie.

The typical seller will respond with the well-worn tactic of stressing the bells and whistles in their product that may be lacking in the competitors’. When that doesn’t work, sellers will usually default to price concessions, added features or better terms. According to research by professors Anderson, Narus and Wouters, most buyers are not looking for these things. Our experience is that offering late-stage price concessions can signal desperation, reduce trust (since the best price was supposed to have been submitted earlier), or introduce concerns that quality and service will be shortchanged with lower prices. The researchers assert that when buyers ask for additional value, “they are actually looking for a justifier: an element of an offering that would make a noteworthy difference to their company’s business.”

A “justifier” helps buyers visibly demonstrate to management that they are making a contribution to the overall business — without sacrificing quality, service or delivery — helping enhance their status and providing psychological validation for their choice. Providing justifiers delivers many benefits for suppliers. Firms are better able to differentiate their product, powerfully link it with the prospect’s strategic goals, and price their offerings at or near the upper end of each customer’s acceptable range.

Identifying and leveraging justifiers comes from deeply understanding how a company really uses the product and what their larger business priorities are. These differentiators could improve ease of use (and lower overall cost) through the use of special sizes, bespoke logistic services or seamless integration with complementary products. As an example, a real estate-developer client used the tactic of paying a prospective tenant’s moving costs to fill buildings. In another case, a robotics company we worked with secured a major project with this justifier – integrating two different components (one of them from another vendor) into a sub assembly, reducing the customer’s labour and inventory costs, and ensuring seamless interoperability.

In many cases, the best product, service or price will not secure the business. A skilled sales representative can still provide the edge in a competitive situation through employing proven relationship-management techniques, as well as other successful practices while creatively addressing fundamental client needs.

For more information on our services or work, please visit the Quanta Consulting Inc. web site.

Social business replaces social media

Busy managers should be excused if they are not current on every development in the social media world. In discussions around digital transformation, one question regularly comes up: “Where is social media heading?” Based on our research and project work, we have identified four emerging social media trends. Overall, social media is morphing from a communication tool to a larger social business enabler.

1.  It is not just for the marketers

Marketing no longer has a monopoly on social media programs. Other groups like HR (for external recruiting), product development (for innovation) and customer services (for product support) are increasingly driving usage on these platforms and delivering business value.

2.  Content strategies are evolving

Most marketing efforts “push” content out more than 90% of the time. Marketers (and other departments) will progressively become more social, seeking a balance between pushing information and engaging their customers in dialogue around the content. Moreover, visual content will likely become more prominent in these social and collaborative conversations. Expect new social apps to better support the embedding of visual content (including live video) into conversations to better deliver sales demos or technical support.

3.  Resetting the community button

Many attempts at community cultivation are failing due to a lack of resources and mismanagement. Equally important is the dearth of dialogue-fostering social elements in the content, such as relevance and uniqueness that cater to specific interests. “At its core, social media is about being social. Your social strategy should be designed to deliver an interesting core message that wants to be shared,” says Marilyn Sinclair, president of communications company All About Words. Companies are steadily getting serious about building focused communities that emphasize social sharing.

4.  The rise of social analytics

To better target business problems, understand customers and generate enterprise-wide ROI, firms are beginning to analyze, listen and learn from customer experiences, and tap into the social pulse of customers, advocates, influencers and their collective networks. These learnings will improve the quality and quantity of social media interactions.

Social business initiatives are all about enabling workers to collaborate with customers through social media to solve problems or capitalize on opportunities. To do this, participant conversations will need to cross functions, locations and devices, blurring the barriers between the internal and external roles. This transition won’t be easy for every firm. Gartner, an IT research firm, predicts, “Through 2015, 80% of social business efforts will not achieve the intended benefits due to inadequate leadership and an overemphasis on technology.”

The following success factors can help a firm exploit the trend towards social business:

  • Make strong leadership and expert change management a priority

When it comes to leveraging IT, the corporate Achilles Heel is often internal adoption. All senior leaders — and not just the CIO — should prioritize social business initiatives, model the right behaviours and deploy the right change resources and tools to drive employee acceptance. For example, some CEOs are appointing Chief Digital Officers to drive digital adoption across the organization. In other cases, companies have created senior, cross-functional steering committees to secure alignment, focus and investment. Technology is merely the delivery system

  • Establish a clear and compelling purpose for social business from the outset

Most organizations look at collaboration as a technology platform issue not as a solution to a specific business problem. Having a platform view isn’t necessarily wrong from an enterprise perspective but it frequently leads to band-aid approaches that don’t get to the root cause of problems and typically get bogged down in organizational inertia.

“Organizations fall in love with the newest ‘thing’ and they want to be cool, but they forget that their objective is to compel an audience to do something specific. Clear, consistent and compelling messaging that address social business needs across all platforms is key,” says Sinclair. “Technology is merely the delivery system.” Social business is best enabled when the business problem drives all key decisions including technology choice.

  • Consider systems and cultural tweaks to support social business

Many companies today are not well organized to conduct social business. For example, community management and customer-service efforts often lack sufficient capabilities including tools, people and skills to deliver credible programs that address customer needs. In other cases, a firm’s organizational dynamics (e.g., siloed structures, and oblique processes), performance measurement tools and culture norms do not promote free flow communication let alone collaboration.

Companies can maximize the value of their social media investments and efforts when they shift from a marketing-centered, “push” approach to an organization-wide, problem-solving strategy that engages both the community and firm. The first step in leveraging social business comes from exploring how a company can meaningfully talk and listen to their customers and stakeholders to collaboratively address their needs through the right business solution.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Organizing for global growth

Management guru Alfred Chandler asserted that business excellence comes about when “structure follows strategy.” Unfortunately, many Canadian firms with global ambitions fail to heed this axiom. In their drive to tackle international markets, they often pay insufficient attention to how certain groups, like marketing, end up being organized and perform their functions. This neglect can kibosh even the boldest plans. Fortunately, managers can fall back on a rich trove of best practices.

Companies go global as part of an organic growth strategy or because of an acquisition. The potential returns are great but so are the risks. Given the high stakes, leaders should tread carefully but not too hesitantly.

Managers need to address three key questions up front:

1. Which organizational model — centralized at the home base or decentralized at the local office — can best deliver the growth plan?

2. What are the tradeoffs between a single, global message/program and more tailored, local campaigns?

3. How do you foster integration, collaboration and sharing of best practices between the different offices and teams?

Addressing these questions will expose latent tensions and implementation issues (and new synergies) between various approaches and groups. The story of how two firms addressed the challenge of going global differently illuminates some best practices and key pitfalls. Lets start with a company that has done it right — Manulife Asset Management, the investment arm of insurance giant, Manulife Financial.

Though a global business, it was not leveraging its international marketing and distribution capabilities to market as a local one. The leadership was looking to drive more cross-pollination of best practices and tools, better servicing of local client needs and more efficient processes and practices. A senior Manulife executive, Anthony Ostler, was brought in to reorganize the entire marketing structure. Some of the major changes included: establishing a centralized CMO office; retuning roles and responsibilities, as well as workflows; and promoting richer communication. After 12 months of transformation, the results were impressive. Lead generation and RFP success rates soared and margins widened while overall marketing spend fell.

What they did right:

  • Collaboratively redefined success and the marketing and change strategy that would deliver it, aligning all teams and offices to that single vision
  • Looked at the business holistically but did not shy away from getting the details right, like refining employee career paths, adjusting metrics and optimizing workflows
  • Adopted a “hub and spoke” model that centralized key activities like strategy and RFP creation and decentralized others like product development and local marketing support.

Ostler believes “Focusing on the client experience helped to guide all the decisions and was critical to success. At the same time, efficiencies could be recognized by globalizing certain aspects and we moved aggressively to do this. This client focus coupled with efficiencies helps the business to grow.”

At the other end of the spectrum is a professional services firm that acquired a successful overseas competitor in order to get a foothold in a market it deemed vital for growth, and to ensure retention of its multinational clients. This was not a hostile takeover and the clients viewed it favourably. However, after 18 months the forecasted revenues were not materializing despite significant marketing investment and considerable head office attention.

What they did wrong:

The new firm was managed in a controlling, overly formal fashion that was at odds with the professional services firm’s more entrepreneurial culture and practices. For example, local marketing programs were abruptly cancelled in order to capture early cost savings. Since both offices shared many of the same clients (often on the same project), the acquiring firm assumed the habits and needs of these clients were similar across geographies. In reality, each client subsidiary acted very differently leading to problems and gaps in service and delivery. Finally, the acquiring firm lacked the stamina to fully integrate many of the systems between the two companies. As a result, they were never able to leverage their important knowledge and human capital management systems and achieve the desired productivity and innovation gains.

Going forward:

Since every situation differs, a “one size fits all” approach in areas like organizational design and sales & marketing planning rarely works. Organizational, channel and program integration is not easy but must be relentlessly pursued in order to maximize program efficiency & effectiveness, minimize internal strife and drive collaboration. Using proven change management tools is critical. At its core, excelling as a global company is about dissimilar people working together. Ignoring the needs and aspirations of your teams will compromise organizational performance and business results.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

Tangerine repositions for growth

Market success, even one based on disruptive innovation, is often fleeting. Many new businesses burn bright but quickly fade away due to competitive moves, changing consumer tastes, or ill-fated acquisitions. This need not happen, as the story of web-based bank ING DIRECT, now rebranded as Tangerine, illustrates.

Dutch bank ING Group introduced ING DIRECT into Canada in 1997 as a phone and web-based retail bank with a unique brand proposition – no fees, higher savings rates, simplicity and approachability. The business was instantly popular, especially among educated and tech-friendly consumers. By 2010, ING had attracted 1.5 million customers and over $20B in deposits, primarily owing to its innovative high interest savings account, no-haggle mortgage, and low-fee mutual funds. The firm was also an early adopter of social media and mobile banking. Despite the success, storms clouds were appearing on the horizon.

ING began to lose market differentiation and was close to its market potential in its core segments. The Big 5 Canadian banks had taken notice and were picking up their game in terms of market competitiveness. Importantly, ING’s savings rate advantage was evaporating in a falling interest rate environment. Finally, ING’s consumers were evolving, looking for a greater variety of products and services. Clearly, the firm was at a strategic crossroads: continue to focus on its core market with a niche, largely “savings” offering, or evolve towards more of an everyday bank that was capable of truly meeting the needs of the emerging “direct” banking consumer.

In 2010, the Company decided to go for growth and reposition ING as a more full-service ‘everyday’ direct bank for individuals, families and small businesses. To do this properly, however, ING needed capital. Their Dutch parent was in no position to deliver, but Scotiabank was, and in 2012, they agreed to acquire ING DIRECT’s Canadian business. As part of the deal, the firm had to undergo a rebranding and name change – which culminated in the launch of the Tangerine brand in April 2014.

“Changing the name of a beloved Canadian brand that always delivered on its promises needed to be approached delicately. Our challenge was in how to leverage the equity of an iconic brand, while forging new ground and establishing leadership in everyday direct banking in Canada,” said Andrew Zimakas, Chief Marketing Officer at Tangerine. “We knew this change would be highly scrutinized by our employees, customers and the market overall.”

Research shows that upwards of 80% of all M&A deals fail to generate incremental shareholder value. Quite often, the acquired brands end up being scuttled. Yet, this did not happen with Tangerine. Management of both companies prudently followed four key principles:

Establish brand primacy
The repositioning has always been a Tangerine marketing-led initiative. This ensured equal attention was paid to crafting and communicating the right narrative and message to the overall market – as well as to each Tangerine employee or brand ambassador. Unlike many acquisitions, this was a growth-focused, value enhancing story, not one of cuts.

All parties understood the value of Tangerine’s unique brand, growth imperative and value proposition – and the importance of not compromising it for short term gain. Safeguarding Tangerine’s brand heritage, authenticity and differentiation were paramount before and after the deal was completed. Going forward, both Scotiabank and Tangerine’s management have remained true to this mission.

Enhance customer value
To remain relevant and ensure message clarity, Tangerine conducted extensive customer and employee research immediately after the deal was consummated. The Company learned that they had to enhance their value proposition to maintain loyalty and to improve their odds of successfully growing the number of customers and the number of products they purchased. To this end, a number of service enhancements were introduced concurrent with the rebranding, including new ATM distribution and a fully responsive web site.

Execute with excellence
Many acquisitions and strategic pivots give short shrift to execution, significantly increasing risk. From the outset, senior leaders understood it would take 12-18 months and sufficient resources to effectively re-brand the operations – which impacted over 3000 consumer touch points across digital properties, call centers, marketing materials etc.

Get the governance right
Having good governance is vital to making deals work. This acquisition featured clear roles & responsibilities around who was leading the Tangerine rebranding and how this effort was plugged into the Scotiabank governance structure. Even though the Tangerine team maintained autonomy, Scotiabank was part of the transformation team from the outset and provided important support for the rebranding strategy and execution.

The Tangerine story is a best practice for strategically repositioning a brand into new markets as well as how to prudently integrate a successful company without compromising its brand values. Many of the lessons include: getting the right people committed to the same goals; understanding and delivering on consumer & employee needs and; executing the transformation with excellence.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

6 steps to transformation

To everything, turn, turn, turn.

There is a season, turn, turn, turn.

And a time to every purpose under heaven.

The Byrds

In today’s dynamic business environment, it is axiomatic that firms must in some part reinvent themselves to compete at a high level. Yet, this is easier said than done. Transformation is hard and as economists say, ‘there is no such a thing as a free lunch’. Fortunately, change agents can fall back on some battle tested lessons to improve their chances of success.

Many Canadian companies such as Target, Blackberry and Rogers are dealing with industry, customer, or technology challenges. These issues can range from battling a disruptive competitor or adapting to a zero growth market to trying to leverage the potential of digital technology or adjusting to new consumer behavior. Should they rise to the occasion, firms can ramp up competitiveness, boost profitability and enhance their brand image.

Genuinely transforming an organization’s core strategy, key activities or operating model is part art and part science – and loaded with risk. The challenge is akin to converting a car into a bus during a road trip: The car needs to adroitly mutate without breaking down or running off the road. The driver must be mindful of picking the right destination, taking the right route, choosing the right passengers and maintaining a vigorous but safe speed.

I have witnessed many successful transformations over the past 25 years. Though each case is different, winning companies tended to have strong Boards that empowered current or incoming CEOs to:

1.  Unify cross functional leadership around a new vision and change rationale, both of which were turned into a compelling narrative and an ambitious change plan;

2.  Quickly engage employees, suppliers and partners to build support for the new vision and roadmap;

3.  Test ‘sacred cow’ assumptions about what drives revenues, brand image, customers and costs;

4.  Make tough decisions around priorities, funding and resourcing, as they fit within the new vision;

5.  Go for quick wins that build on early momentum;

6.  Course correct the plans and activities when necessary.

The recent shake-up at Rogers is a good example (so far) of how to kick off a transformation. It is no secret that Rogers has had issues with poor customer service and rapidly changing market dynamics. A new CEO, Guy Laurence, was brought onboard in December 2013 to turn things around. At the outset, he spent a few months analyzing the entire business. One of the first things Laurence did was travel the country listening to employees, customers and partners about what ailed the company, the root causes of problems and where were the sources of growth. These learnings served as the foundation for a new customer-centered strategic vision focused on two go-to-market pillars – consumer and business – versus wireless, cable and media. Next, Laurence designed a simpler two-division structure that could drive both these pillars. Tough choices were (and will be) made around strategic priorities, staffing key positions, as well as defining new roles and responsibilities. Finally, Laurence is spending time communicating this plan down and across the company. Time will tell if his efforts bear fruit.

Yet, leaders should be mindful of hidden or unintended consequences during transitional periods. While a successful transformation can rejuvenate an organization, it can also hamstring a firm over the long-term. Risks are embedded in the financial and personnel trade offs that need to be made early in the change process. In particular:

Loss of talent

Inevitably, significant talent and institutional knowledge will be lost, the value of which is difficult to estimate early in the process. Rogers’ new structure eliminated the CMO position and replaced it with three smaller jobs. This decision left CMO John Boynton without an appropriate role and no job. Losing a wireless industry pioneer and seasoned marketer (#28 on Forbes’ list of the World’s Most influential CMOs) is never a good thing, potentially compromising long-term management depth and expertise. Having said that, Roger’s structural change is another firm’s gain.

Things get worse before they get better

Changes in structure, people and practices always bring hiccups. It takes time and money (e.g., you may need to invest IT) to execute with excellence, which you may not have when you need to deliver strong quarterly numbers. Furthermore, the confusion, strife or uncertainty around change efforts can lead to drops in employee engagement and brand image scores not to mention unintended employee and customer turnover. Not surprisingly, Laurence has acknowledged the potential for challenges over the next couple of quarters.

Change is inevitable. Leaders will improve the odds of transformation success if they follow best practices, stay the course and not ignore the potential ramifications of the decisions they make early in the process.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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