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It's not in Digital Advertising alone: the knowledge vs. data +execution dilemma

It's not in advertising (as Tim Williams says) or digital advertising alone, but with globalization organizations of all types need to re-look at their business models to deal with the Data+ Execution vs. Knowledge+ Strategy dilemma. Todays' organizations need to be great at the data+execution piece and call in that expert knowledge when required. Ideally, they should have a handle on data+execution as they deploy knowledge as we illustrate from the US healthcare later in this post.

As mentioned in the previous post about Google AdWords, there are a plethora of what Williams calls "factories" who will dutifully churn out PPC ads and generate traffic to the client’s website. However, you find that the traffic does not result in sales or conversions or at least you cannot tell for sure. This because software like Google Analytics is not properly set up. Also the "factory" is not able to say whether the traffic generated or even the sales generated is the type of target market the client really wants to attract.

To illustrate the knowledge vs. data+ execution dilemma, consider US healthcare.In the US there is a great shortage of primary care physicians apparently because primary care attracts less pay for doctors. However, most of the preventive action can happen at the primary care point and reduce healthcare costs drastically. Think about the last time you met a nurse practitioner or physician's assistant for a routine ailment.... and you begin to realize how effective they tend to be. If it might be serious, they'll get you to the MD /specialist otherwise you tend to get excellent care and advise. The point is, the doctor's assistant does a great job of data+execution and knows when to refer "up". They know what they do not know, in part because of the highly structured US medical profession. And the MD personally repeats measurements herself/himself although the data is available in the charts.

The trouble with advertising agencies and marketing research agencies at the factory outsourced end is that they tend not to really understand the client organization and its marketing goals. Not entirely their fault, because they are treated like the factory, just follow client instructions without asking too many questions. As a result from the client's point of view things do tend to be done much cheaper. Whether the client’s marketing is getting the bang for the marketing buck, is another question. Contact StratoServe.

Why "plugging away" with useful content is so important to digital marketing success

"Plugging away" or just routinely updating your organization's web presence with useful content is critical to digital marketing success. Because once created, digital content is forever!

It does not matter whether it is your website that is being constantly updated, or blog posts are coming up, new YouTube, Instagram, Pinterest, Facebook, LinkedIn or Twitter content is being generated. Just adding stuff that makes life easier for your customers, suppliers, employees and all stakeholders and the general public is appreciated and rewarded. That reward shows in better search engine rankings (SEO), other folks referring to your site and best of all it gives you that warm  feeling of lighting up the understanding of your field for the world at large.

Considering that in many organizations only the marketing folks seem to be interested in putting out content here are some thoughts on how to get more useful content up. And the lead for this type of work has to come from the marketing department:

• To start with identify your outside facing departments like Customer Service, Supply Chain, Investor relations, Quality and Safety folks whose work immediately impacts the world outside your firm. Meet each department head and identify an individual who will be the liaison for top 3 key issues that are important for that department to communicate with the outside world. Consider Customer Service:
  • For example, customer service calls may be related to some recurring problems that customers seem to face with your product. Can you create a You Tube help video to help folks along? 
  • Traditionalists might feel really uptight about confessing that there are some endemic customer service questions that come up. But guess what.... before the customer really goes through your annoying IVR phone call system they would have tried searching online for the problem. Invariably, there would be good folks who have already posted discussion threads and Youtube videos to deal with the problem.
  • It is very likely that you are hearing at customer service from (a) non Internet users (b) Internet users who are not able to resolve their issue based on the content available elsewhere to them. The question to ask is:
  • Why would you entirely abdicate solutions relating to your product to the outside world? If internal folks do the FAQ's for the world ... the chances of really innovating on the next version/model of your product will zoom.
• Next take up internal facing departments like Production, Accounting, Finance, HR and try to facilitate stuff that they can share on the open web. Your HR folks might be quite ready to share a whole bunch of forms online making life so much easier for employees, prospective employees and themselves. HR can take one more step of putting out good advice on their section of their website or on the company Facebook page. 

With good HR content employees will be happier and a "best place to work" rating can't hurt your reputation with customers, suppliers or investors. It may not happen immediately but consistent "plugging away" will ensure that you have the most relevant and useful industry content whether it relates to customer service, HR or finance best practices. Since the content is forever.... you can be sure of rich dividends for your organization. Contact StratoServe.

Knowledge Economy: Connecticut snow removal to Boeing 787 batteries

Southern Connecticut has been hammered by the Blizzard of 2013 and the last weekend has been spent at home at the request of the Connecticut Governor Dannel Malloy because the roads need to be without any vehicles to help snow removal by trucks. A friend in Hamden, Connecticut reports that his neighbors on both sides have their driveways up to 40 inches of snow. This happened because the contractor who removes snow in his driveway has been requested by the Hamden Town officials to first help with town streets. And this is the 4th day of seclusion at home. Luckily there are very few power outages in Connecticut, unlike the rather beleaguered friends in neighboring Massachusetts.

The intriguing question is that the Connecticut snow removal community is very comfortable upto 24 inches of snow while 36-40 inches seems to be a completely stressed out situation for all concerned. On the other hand the snow removal community in Massachusetts are more confident in dealing with the 36-40" snow. By the same logic towns in warm Texas are highly alarmed with just one inch of snow!

So the question arises what has this got to do with the Knowledge Economy? Well, let me explain what exactly happened on our driveway yesterday. We had a car completely buried in snow that took several hours to dig out (see photo alongside). A nice neighbor came in with his snow blower and at about 8 pm, kindly removed the snow behind this car. Our harassed snow removal contractor arrived finally at 9.30 pm and called me to request to remove the car on the driveway (pictured with snow behind above). And after I did so, the snow removal truck reversed itself into the   part of ther driveway that was vacant. This was the first time that the contractor had reversed into the driveway. An innovation spurred by the 36+ inches of snow and the opportunity of accessing half the driveway. I wonder if the snow contractor will be able to adopt this wonderful approach of reversing into the driveway at lower snowfalls in the future. When someone pushes snow toward your lawn... it gets damaged so reversing and pushing the snow outwards seems like a better idea. It seems innovative when there is an emergency of 36+ inches of snow.

The Boeing 787 is still grounded because of batteries that get hot and are alleged to have caught fire. Right from the start the batteries have been outsourced. In doing so the knowledge associated with lithium batteries does not exist in-house at Boeing. Reasons that the whole issue is still unresolved are because:

• Boeing folks perhaps do not understand the battery situation because they were never involved in the manufacture.
• Just as a snow removal specialist in Texas finds 1" snow a challenge, the Connecticut snow removal person finds 36 " snow removal daunting. On the other hand the Boston snow removal entrepreneur seems far more relaxed, despite the significant power shortages.

To the credit of the intrepid snow removers of Connecticut, by the time Sunday evening arrived... they had figured out that it is really effective to reverse into the driveway if there is a lot of snow to move around. This knowledge accumulation over the day on Sunday is an aspect of the knowledge economy that we don't realize. It's knowledge that you gather when you do it.... pretty much like the Boeing batteries ....if you make them. Contact StratoServe.

Obama win: big data plus local insight about how people and technology actually work

The Obama win is being hailed as a victory for Big Data by Time magazine while Marc Thiessen at Washington Post wonders why the highly competent Romney team with equal if not more high quality analytics resources had 30,000 Republican volunteers in Colorado confused because of glitches in forwarding the https directions to an http address which is what mobile phones do by default. The Obama team was on the ground and had local insights about how people and technology actually work. And here is what businesses can learn:

1. People first: This is the old qualitative research, get a ground feel for the problem first. Don't assume that you know the big data questions before you start lining up databases undertake factor analysis or come up with sophisticated regression models. An example is missing a qualitative understanding of customer behavior around stopping JCPenney Coupons.
2. Technology and Big Data second: Technology and Big Data is easily and simply available. And it should be second on your marketing list. How is data so available? One might ask. Just take your website and your Google AdWords campaign where you have set up Google Analytics. You know exactly how your web traffic arrives on your website, how long visitors stay, where they navigate and what seems to drive them away from your "buy" page. Looking at your "buy page" data you will also know exactly the previous steps each buyer took, where exactly they came from and on. All this sounds pretty cool provided the rest of your people processes are in place and work. So people are last too!
3. People last: Sounds like a cliché but people both first and last if technology and big data is to work. For example, you have an effective i.e. low cost high clicks Google AdWords local campaign that brings visitors to your contact page and a phone number. If someone calls, you must have people to take that call, convert it into a lead and populate your CRM/Sales Force Automation (SFA) database. Amazingly, businesses including some very big ones seem to just miss this simple people process. You call and you might get into a long "press 1, press 2" routine, at which point- you just call someone else. After all, it's just a few seconds of Internet search that gives you other options.

Just as the Moneyball analyst Peter Brand understood baseball before analyzing data and brought victory to Billy Beane's Oakland Athletics, campaigns need to understand the game first. In political campaigns you have voters to convince and staffers including large numbers of volunteer folks who must be mobilized for the ground game. The same with business that involves understanding your own people, processes and understanding your customers and those who might be your advocates in social media, the equivalent of political campaign volunteers. Contact StratoServe.

"Unwatering" New York subway tunnels within days: US Army Core of Engineers

Imagine the New York subways with 300-400 million gallons of water after Hurricane Sandy. Well, the US Army Core of Engineers "Unwatering" team  are at  New York and expect to get all this water out in a matter of days pumping through about a mile of  subway at a time. 

The Unwatering team gets its rather unusual name from its function and purpose i.e. remove water from where it is not supposed to be, like inside a subway tunnel. Apparently the more traditional "dewatering" is about removing water from a place where the water could be like a swimming pool that you might want to dewater before winter. The Unwatering team of the US Army Core of Engineers developed the unwatering expertise from the 2005 Katrina flooding in New Orleans. 

There has been speculation in 2011 about events like Hurricane Sandy becoming more common perhaps due to climate change. In any case, many more cities in the world have to contend with subways that might get flooded for one reason or another.

In 2010 -11 here are some world cities that got flooded:

• Brisbane, Australia the third largest city in Australia got flooded in January 2011 and became a ghost town.
• Bangkok, Thailand had to evacuate jailed prisoners due to flooding in October 2011. 
• Oklahoma City, USA had people on rooftops due to flash floods in June 2010.
• Dangdong, China and other parts of China had the worst floods in a decade in August 2010.
• Manila, Philippines saw typhoon and flooding in  September 2011.

Given that many city authorities across the world struggle with the dewatering problem and go out of action for weeks here may be an opportunity for the Unwatering team of the US Army Core of Engineers to help flood relief personnel in other countries with the expertise they have developed in this kind of work.While unwatering  does not seem like an innovation in the global knowledge economy,  the knowledge and expertise that the  unwatering team is developing is extremely valuable to civic authorities across the world.

For most cities of the world would take significantly more time than New York to clear water from subway tunnels. Contact StratoServe.

B2B marketing opportunity appears when the Buying Center members face Buy Task challenges

That B2B marketing opportunity appears when the Buying Center members face Buy Task challenges is a concept that is simple and obvious to the buying firm buying center and strangely only to the more perceptive B2B marketer.

Here is how the Buy Task challenge plays out for the Buying Center and spells B2B marketing opportunity for the marketer:

• Big problems with repeat buy tasks. This is rare and at the core of the thinking about B2B buyer-seller relationships. One reason that repeat buys go well is because these are familiar products or services that suppliers have fine-tuned and the buying company is able to absorb and use. It has developed internal people and processes to handle whatever these mid-tech suppliers might supply. Note that the supplier might have started as an innovative pioneering supplier and over time the buying organization got familiar with the offering and improved their ability to use them. Thus, there is no reason to change this type of high volume supplier. On the other hand, consider a product or service that the buying center buys typically is high tech/high knowledge (e.g. software development) and the supplier fails to deliver. Or it is low tech/low knowledge (e.g.  Facilities maintenance) and the current supplier has become unreliable. In both these scenarios the buying center scrambles to find alternative suppliers because the rest of the receiving processes are in place. The user department is waiting for software that system analysts had clearly defined and the building has to be cleaned anyway!
• Problems with modified re-buy: The buying center might look for new suppliers if there are problems that prevent using good current suppliers. Consider a modified piece of aerospace equipment needed for a defense application that must be made in the US. The existing foreign supplier, although a good one, is excluded from consideration.  This one is also relatively rare.
• New task - opportunity: New task opportunity is truly the chance for new innovative B2B suppliers to shine. Here too incumbent suppliers who supply related stuff have an advantage because they can quickly add people and investments to supply the bare minimum that will work for the buying organization. The bare minimum is from knowing the buying organization and designing an offer that is highly competitive that also enjoys the “familiar vendor” advantage. The opportunity for the B2B marketer is to provide superior knowledge and innovative value that is based on the core competence and highly technical knowledge of the marketer organization. Keep in mind that while incumbent suppliers try to just get by, innovative new suppliers can bring entirely unthinkable value to the buying organization. And, many buying centers have members who are willing to give that break to innovative new suppliers because it helps the buying organization make a quantum leap.

To summarize, the big opportunity for new suppliers in B2B markets is to look for organizations and buying centers that are getting into a new task or looking at the old task with new eyes, say when leadership/management changes. More on B2B marketing opportunities and buying organization leadership /management changes in a later post. Contact StratoServe.

Newsweek to close print edition: should you close your bricks business and go all digital?

Newsweek has a print customer base of about 1.5 million and has decided to go all digital. Should you close your bricks business and go all digital? No, and here is why from the magazine business that should apply to other brick/click combo businesses:

• Bricks will always be there: So long as human beings have physical bodies and senses of touch taste, smell etc. the bricks world will have a market. It does feel nice to read a Newsweek or Time at the dentist's waiting room. And when you get that 80-90% off offer for the print magazine you do tend to sign up. Time magazine has 3.3 million subscribers while Newsweek has about 1.5 million subscribers. 
• Getting online paid subscribers is hard: According to Felix Salmon of Reuters , Huffington Post tried the paid subscriber model for just five issues before going free. There are almost no chances of picking up the 1.5 million subscribers that Newsweek print would have to convert to digital only. 
• Thinking Brick costs is a fallacy: Newsweek Editor Tina Brown says that it costs $43 million to produce the print magazine including the paper, printing and distribution, before hiring a single writer. Going by this logic almost every venture that serves large numbers of people spend more around the supporting infrastructure. Thus every major university and hospital spends far more on the campus, equipment, managers, support staff than the faculty and doctors.
• What business are you in - the US News case: What business are you in, is the question to ask. US News went all digital since 2010 and have an iPad subscription version at 99 cents that has very few takers - comparatively speaking. However, rankings in various categories like colleges etc. provide US News with a huge following. There are 50,000 subscribers for the college rankings detailed information at $29.00. There are 10 web clicks for rankings against two web clicks for news and note that both produce no revenue for US News. In other words, US News appears to be more in the rankings business than the news business.

One must wonder if Newsweek actually asked its print subscribers why they really subscribed to the print magazine, for when you have a customer base in the brick world you have an ongoing relationship in the CRM sense. Asking customers to change to digital en masse also raises the question of the technology adoption ability of the entire customer base.

To summarize,if you have existing "bricks" customers make sure that they will be able and willing to pay for your product digitally before you go entirely digital.   Contact StratoServe.

Pharmaceutical companies outsource innovation to Biotech firms

Pharmaceutical companies have great strengths in the marketing of medicines but tend to outsource the uncertain business of early stage innovation to small Biotech firms. For creativity and radical innovation is difficult to do in very large organizations. There are just too many processes, and many of them are not very clear in the first place. On the other hand, a small Biotech has comparatively few staffers that are highly qualified and very highly motivated. The motivation comes from the possibility of inventing a blockbuster drug and the windfall that could arise upon FDA approval. 

However, here are some numbers to think about to get a sense of the odds of innovation success from page 3 of this brochure from innovation.org a Pharmaceutical research and industry organization: It takes between 9-15 years to come up with one approved drug starting with five to ten thousand (yes 10,000) compounds. It is not uncommon to find Pharmaceutical scientists who have spent 20 years in the lab working on some stage of the process, and having not seen a single product make it to the market!

At the marketing end of the pharmaceutical business one keeps hearing of blockbuster drugs or those drugs that sell over $1 Billion  a year. But it turns out that there are only 125 of these drugs and these too face the "patent cliff" when patents expire and cheaper generics take over much of the market. For example, the blockbuster cholesterol drug  Lipitor from Pfizer saw a sales decline of 42% in the first month of coming off from patent.

Another piece of older research by Grabowski and Vernon (1990) reports that of  those prescription drugs that made it to the market 4 out of 5 or 80% made less than $250 million dollar after reckoning the R&D costs for the drug. In other words, those 125 blockbusters do have a very long tail of low selling drugs that all went through the travails of the drug innovation process.

Thus, it does makes sense for big Pharmaceutical companies to outsource early stage development to biotech companies and have multiple alliances to ensure that there is a very thick pipeline of products under development. By doing so, the Pharmaceutical company can focus resources and processes around later parts of innovation like clinical trials and marketing. These activities can be made into an efficient routine that delivers results far more easily with a large organization than the uncertain endeavors of creatively coming up with initial ideas that small biotech firms can do well. Contact StratoServe.

Supply Chain rationalization means fewer jobs in small businesses

At a recent conference an entrepreneur at the $25 million sales level mentioned that all the bigger organizations preferred to deal with $100 million level firms for purposes of supply chain rationalization. Quite understandable, but this does affect  employment in US small businesses. Let's see how:

• Supply (procurement) managers buy goods and services that must fit reliably and seamlessly to the process and supply chain of the buying organization. Reliability of the supplier is absolutely important and rises exponentially according to the items risk value position.
  
  • For big volume leverage items like raw materials or direct materials and services it's difficult for the buying organization to take a risk with a small business.
  • For strategic items and particularly high knowledge content services sometimes a big firm will hire a small business but again large suppliers have an advantage as they come across as less risky.
  • Bottleneck items do not have volume and do require large investments as in making pneumatic valves for food process industries. Here too small businesses are at a  disadvantage.
  • Non-critical items like stationery also favor large suppliers primarily due to the ability of the larger firms to offer on-line ordering and better servicing.
• The alliance mechanisms for smaller firms to achieve scale in B2B markets are just not well developed. The only option is to merge and become big and in the process rationalize the merged organization that inevitably leads to job losses.
• Small businesses inevitably collapse to operating nail spas, restaurants and liquor stores that are strictly B2C and offer only low wage US employment.

Given that a large part of alliance and B2B marketing thinking derives from the human marriage model, perhaps it is time to have some kind of easy ways of arranging small business alliances and entities. These alliances and entities should be able to give comfort to big organizational buyers so that small businesses get orders in the value add - high tech- high pay segments of the economy. Or else the US economy and its small businesses will only be creating low paying jobs in nail spas and restaurants. Contact StratoServe.

Outsourceability : an example from the US doctor's office

Since the recession-outsourcing and outsourceability- a taboo topic is now being discussed much more openly in America. Most people agree that if your job can be outsourced to a cheaper location or to technology - it will be outsourced. Thus young people, mid and late career folks are all thinking again about outsourcing and its impact on their professions. So here is an example from the doctor's office for  the patient facing folks. We exclude back office tasks like medical transcription now outsourced to technology etc.Here is how an annual  visit to the ophthalmologist works out:

• The appointment is taken over the phone and the receptionist also seems to be a nurse  or at least someone experienced enough to categorize and schedule the patient. This task is pretty contextual, does require at least an associate degree and an understanding of the medical procedures  that occur in that office. Is key to getting the patient into the practice and thus corresponds to a front-line sales /service role. There is probably a small segment of tech savvy patients who can fix their appointment online and bye pass the receptionist/nurse. These tech adopters will rise as will the clarity of insurance payments so the job at the reception  desk will get increasingly outsourced to technology.
• The patient arrives and a series of optometrists who are both skilled and qualified go through a bunch of measurements. Your eye and the machine both are present and someone needs to manage the test and the patient. Both skill and physical presence of the optometrist/technician is essential. Naturally the pay and skills of the optometerist/technician is higher than that of the receptionist/nurse and this is a job that is difficult to entirely outsource to technology or overseas.
• The MD and specialist finally sees the patient for a few minutes along with all the piles of data that have been gathered. Technically it is possible to outsource routine un-complicated patients records and review to a cheaper qualified ophthalmologist . All the data gathered in the previous steps can and will be available digitally eventually and appropriate doctors at different locations (and costs) might be able to review test results and decide about the need for the actual consultation with the specialist.  In other words, even at the highest levels of medical skills outsourcing is possible and is being done for expensive skills like radiology.

Does this mean that only jobs that require a physical presence and contact (as the optometerist/technician) are the only jobs that are not outsourceable? Yes and these physical presence jobs include at the lower pay end food preparation and serving. At the high pay  end , it includes the surgeon who performs urgent surgery.  I say urgent because non-urgent surgery can be moved overseas at low cost to health insurers.

Just as a  doctor's office can have different outsourceability levels for the patient facing folks so goes for every other professional work context. Contact StratoServe.