Thursday, May 12, 2016
Earlier this year I accepted the challenge of creating an executive education program at the Bauer College of Business at the University of Houston. Up until this point, Bauer had no formal strategy for executive education. It did, however, have an outstanding faculty and was engaged with a number of high profile companies in developing custom curricula for developing managers and executives.
My job would be to continue with the custom programs already in place and to add classes that could be used by individuals or companies that had a need for only one or two classes. This would require engaging the faculty and community experts in developing classes for the program, creating a format to for communicating the class topics and qualifications of the faculty and designing a website that would be user friendly. That’s just the beginning.
The next steps include developing a winning marketing campaign and developing enough demand to fill the classes at a rate that covers the cost of the program.
Pricing would be a key factor. Fortunately, there were many universities with executive education programs and studying the existing pricing structures was very helpful. In the end I looked at several public and private Universities and chose a pricing model that would put our program in the middle of the pack.
Product was key. Our classes had to be developed by the best faculty and cover the topics most in demand. Fortunately the Bauer College of Business is highly ranked, has outstanding faculty and has been creating classes for Fortune 50 companies. Restructuring the custom classes for “open enrollment” classes that are available to anyone was easily accomplished.
Additionally, Bauer was nationally recognized for several of its programs, most notably entrepreneurship, sales, accounting, finance and management. Restructuring some of these courses into not to three day workshops would be a challenge. The faculty responded enthusiastically and created a wide variety of “open enrollment” classes.
Finally, there were some topics that might be in demand that would require experts from the business community. Being located in Houston, one of the most diverse economies in the country provided another benefit. We had access to financial, health care, energy, retail, and manufacturing experts just to name a few. Our cybersecurity class will be taught by the chief technologist for platform security and privacy for HP. Our consulting classes will be taught by a former Accenture partner who now has a successful private practice.
Having the classes in a comfortable environment with the latest technology is important. Fortunately, Bauer has state-of-the-art facilities. On the downside there is a lot of demand for the classroom facilities. So in addition to having the availability of campus facilities we formed relationships with other organizations that allow us too use their facilities. In our custom course classes we use on-line webinars to allow an organization’s employees to remain in their offices while learning.
Getting the word out for a new program is always challenging. We are using some newspaper advertising but are focusing on Email to alums, social media, attending conferences and conventions and speaking to chambers of commerce and professional organizations.
While it is very early in the program, I think we are on the right track. Our website is: http://www.bauer.uh.edu/executive-education/index.php.
I would appreciate any thoughts you might have on how to improve the success of this new program.
Tuesday, March 8, 2016
In August of 2013 I wrote a blog on how to save newspapers (http://gwrresearch.blogspot.com/2013/08/how-to-save-newspapers.html) . This blog described the differences between print and digital editions of a newspaper and their websites. The article focused on creating a symbiotic relationship between the newspaper and the website.
I see that newspapers are trying to create a business model that relies on inputs from electronic and print components but I don’t see much symbiosis. Most of newspaper efforts still seem to be driven by the old model and its strengths.
News stories are printed in the paper and digital editions with reference to those stories being repeated in a different format and different timing on the website. I saw, in one newspaper, a large photo (half page) of an event with a caption telling the readers they could learn more about the event on the newspaper’s website.
Now there is a synergistic effort gone bad. The folks getting the newspaper don’t get the story and those on the website are reading what should have been in the newspaper. Newspapers strength is built on great journalism and great photojournalism. These are its strengths. The Internet strength is built on immediacy and audio-video capabilities. The strengths of both platforms were wasted with this effort.
When I was in the newspaper business there was this desire to also own television stations so its audio-visual capabilities could enhance coverage and create new revenue streams. Why is it then, that newspapers now have access to a medium to exploit audio-visual capabilities and fail to use them? In the example above why not have a great photo (smaller) and a good story with a reference to a video of the event on the website? This is synergy – using the strength of both to create something better than either can do alone.
It is symbiotic when each thrives because the other exists. If newspaper editions used their print model for advertising pricing and an electronic model for website pricing perhaps there would be a creation of revenue rather than an internal battle between the website and print sales staffs to move diminishing newspaper revenues to one platform or the other.
Suppose that a newspaper website had exclusive rights to live-stream events (yes this means programming expenses) that would be covered in print and digital editions. The digital editions could have a link to the web site.
Suppose the print and digital editions used static ads and the web site used dynamic audio-visual ads (just like television).
I know that newspaper websites use audio-visual capabilities and the newspaper digital editions link to their websites. What is missing is a concerted strategy to make both the website and the newspaper editions successful. Based on what I have seen this is due to separate management teams for each platform. Advertising sales tries to bundle (which usually results in inaccurately valuing the strength of each platform) or discount ad buys based on the number of platforms being used. Content managers work on creating value for each platform, which, in turn, disallows a collaborative approach to building a synergistic, symbiotic strategy.
This outcome underscores the newspaper industry’s inability to understand that the Internet was not and is not a disruptive innovation that requires two separate organizations. The Internet is a sustaining innovation that allows industry leaders to better serve their best customers. A sustaining innovation requires one organization focused on an overarching strategy to create value for customers, the company and any collaborators.
So here it is, if you want to save newspapers have one mission – to provide information and entertainment to as large an audience as possible. This mission should have the vision of:
1) Using multiple media platforms to create value for audiences of all sizes,
2) Create content that has value to audiences and advertisers,
3) Manage content to appear on the platform that provides the best outcome,
4) Create partnerships with entertainment and information groups to provide unique experiences for readers and advertisers.
5) And so on.
Now setting objectives should be somewhat easier and it should be apparent that all platforms have to be engaged in strategy, tactics and execution discussions. If all platforms are not engaged in the same strategy, newspaper organizations will not be successful.
Saturday, March 5, 2016
I have used a framework to guide my consulting projects and internal corporate projects for years. The approach has kept me focused on project completion and has helped in providing data driven solutions for complex problems. The approach to designing a consulting project framework is based on starting with the mission and vision of the organization I am working with and understanding how the objective of the project fits with the mission and vision.
Before next steps are taken there needs to be an assessment of the organization’s current position vis-à-vis the universe in which it exists. Only then can you move forward to developing a strategy, its tactics and an execution plan.
An exercise that should help in gaining clarity for your project relates to the acronym:
Mission – How does the organization service a universal need? This is why the organization exists.
As you consider your next consulting project it is always good to consider how the client’s organization fits in to the scheme of the general universe. Organizations exist to fill some need. This need can help you understand how the organization views its mission. For Coca Cola, their universe is all of the people in the world and one unifying theme is that all people seek happiness and optimism.
Coca Cola’s mission is to bring happiness and optimism to the world.
Vision – How will the organization create value by fulfilling its mission? Remember the organization cannot exist for the long term if it doesn’t create value. Coca Cola has chosen to create value by offering beverages, creating partnerships with bottlers, being a great place to work and providing increasing financial value for its shareholders.
Objective – What action can be taken to enhance the vision and is in keeping with the mission? This exercise is where managers and consultants can experience some difficulty. The initial objective statement may be something like - “What new business should we be in?”
Refining the scope of the objective requires the manager or consultant to fully understand the vision and mission. For example getting into providing low cost, high quality housing might fit into the mission of Coca Cola but not the vision.
Situation Analysis – What is the nature of the universe in which the organization must survive? Who are the competitors? How big is the market? What share of the market is required? What are the organization’s strengths and weaknesses? What are the opportunities and threats? What are the legal and technical challenges?
Remember any changes that are recommended must consider the current organizational structure, the people making up the organization and all of the constraints facing the organization. One of the biggest errors that can be made is moving to strategy development, tactics or execution phases before completing an exhaustive situation analysis. Think of this process as analogous to taking a trip. It would be like deciding to take a trip to Atlanta from San Francisco without understanding the costs of travel, the travel mode options, the best route, the weather conditions and so on.
Strategy – Based on an exhaustive study of the mission, vision, objective and situation analysis, what should be done to reach the assigned objective? In most cases this will push the manager or consultant in a direction that provides a macro view solution. In other words, rather than being in just the cola business or considering adding a new soft drink flavor what other beverages would support the mission and vision of Coca Cola? What new approaches to beverage distribution might provide value?
Tactics – Based on the strategy defined above, what combination of manpower, methods, money and machinery will be required to implement the strategy successfully? This is the plan.
Execution – After developing an understanding the resources that will be required, how will these resources be organized, directed and controlled (outcomes measured against goals)?
At the end of your project your recommendation should have all of the above elements included. As you proceed through your project searching for a strategy, you may feel like you are not making progress. If this happens, go back through the MVOSSTE framework to see what you have missed or could have considered differently.
Wednesday, August 5, 2015
For those of you that are looking for a simple process for launching a new product or entering a new market, I have developed a checklist below that can be used for either.
1. State your company mission – This is why the business exists or will exist. Coca Cola is a good example, their mission talks about refreshing the world, creating value and inspiring happiness and optimism. Note there is nothing said about selling Coke.
2. State your company vision – This is how the company will create value for the company, the customer and collaborators. Again, Coca Cola is a good example. The coke vision talks about being a great place to work, building a portfolio of quality beverage brands, nurturing a winning network of customers and suppliers, being a responsible citizen, being a profitable company and being a lean, effective and fast moving company.
3. Does the new product or new market fit with the mission and vision? – Clearly introducing products other than beverages would not fit with the vision and would have to be scrutinized carefully. An individual in the Christmas lighting business with an aim to grow to be a lighting provider for entertainment venues shouldn’t enter into the lawn maintenance business for supplemental income.
4. Is the market large enough to be financially viable – Some basic market research can identify the market potential.
5. Will the market accept this particular offering – More advanced market research and perhaps a concept test can provide insights into how consumers would react to the product or how the product may be promoted to fit a market segment needs.
6. What are the key customer segments? – The research and concept test should be designed to uncover jobs the customer needs performed by the product. Identify product, pricing, promotion and distribution requirements that closely fit the capabilities of the company. The closer the fit, the more likely the segment will be a group of key customers.
7. Will the introduction result in a profitable contribution to operations – Using the research above to determine the size of the market, project the number of purchases and associated costs. My rule of thumb is a new product or market introduction must provide a 30% operating margin to be viable. This is usually large enough to cover hidden costs or projection errors.
8. Do workforce, cash, capital equipment and operations requirements support the mission and vision statement?
9. Does the introduction create value for the company, the customers and collaborators? Missing value creation in any of these categories jeopardizes the chances for a successful introduction. Again consider Coke and the emphasis they put on creating value for the bottlers (collaborators) which in turn creates value for the customer and ultimately the company.
Usually walking through this checklist will identify areas that need attention before a launch of a new product or entry into a new market. While it is not foolproof it does provide a simple review that can be helpful.
This is the approach we use at GWR Research and it has proven very successful.
If you have some approaches that should be included in the checklist, let me know.
Wednesday, July 29, 2015
When I worked as a newspaper executive we had a special sales group called print specialists. This group typically was comprised of the more senior and gifted sales personnel. These specialists had knowledge of ROP (in-paper) advertising, preprints, commercial printing, direct mail and production processes.
This group sold the more complicated products and assisted sales people selling more traditional lines of newspaper products in broadening the scope of sales opportunities.
A print specialist was able to set down with an advertiser and develop an advertising program that best suited the customer’s needs. The program could include ROP ads coupled with a direct mail campaign with customized brochures reaching targeted audiences.
Sales commission programs encouraged all sales groups to use the expertise of the print specialist. Using this approach all sales personnel had an opportunity to increase their income while improving the newspaper’s profits and providing real value to the advertiser.
The newspaper was ideally suited to serve the customer since the newspaper was a key element of the marketing mix. The print specialist was trained to create packages to meet the advertiser’s needs and develop bundled pricing packages that encouraged use of the newspaper’s products as part of the mix. Newspapers were also able to sell third party products and services as part of the bundled package that provided additional revenue and profit streams.
I was once asked if selling products in this fashion cannibalized the core newspaper products. Since I didn’t really know, I asked our accounting department to conduct a study of ad revenues and the effect of the sales approach on our core products.
The audit showed that 100% of the advertisers using the expanded product offerings spent more in the core product lines than before starting the new programs. This was due primarily to providing real value to advertiser as well as having a carefully thought out pricing and commission program.
It was evident that advertisers viewed the program favorably because the relationship between the newspaper and the advertisers improved to the point that advertisers routinely called the newspaper staff for advice on production techniques and ad campaign ideas. One of our key advertisers even called me to ask about the advantages of digital photography. I told him that I was no expert but that I would have an expert from one of our strategic alliances give him a presentation. The result was an even more robust ad program that resulted from the savings gained through the new photo process.
Today, as in the past, the winner in ad sales will be the organization that can best provide value to advertisers. It will not be the organization that is focused on selling one or two products, even if the products are the latest social media craze
In this age of the Internet and digital products, there appears to be an opportunity to return to the advertising specialist sales person.
Advertisers today are finding that developing a successful ad campaign is increasingly difficult. While many of the traditional sales tools continue to provide reach to a strong audience, new ad vehicles are finding ways to find new audiences and better target an advertiser’s key customers. Social media, search engine optimization and data analytics have provided new opportunities for all advertisers.
In earlier blogs I have said that creating a symbiotic relationship between print and digital editions of a newspaper and the website was strategically important for the survival of the newspaper industry.
Just as critical is having a sales team that can piece together customized ad campaigns that incorporate all of the capabilities offered by print, digital, direct mail and broadcast platforms.
Having sales leaders that can structure alliances and pricing with third party providers will be critical to piecing together an array of products that can be used to fit any advertiser’s needs.
Imagine a sales professional, developing an ad campaign with elements in the newspaper (print and online), on cable television, on YouTube, supported by Facebook and a targeted direct mail campaign. That is considerably different from a newspaper sales person selling the newspaper website and digital products.
For success today an organization must embrace the idea of value creation for the customer, the company and the collaborators. For media organizations, having a sales team that can combine products and content in a manner that provides real results for advertisers and new revenue and profit streams for the company and the strategic allies will be absolutely essential.
Thursday, July 9, 2015
Disruptive Innovation theory holds that disruptive innovations result from a new industry entrant finding a way to better serve the industry leader’s least profitable customers. After the new entrant has captured the least profitable customers from the industry leader it begins to pursue the next level of customers that are underserved by the industry leader. This process continues until the new market entrant displaces the industry leader.
This is well researched and there is a large body of evidence to support this theory of market disruptions. It does not, however, explain disruptions that seem to take place at the top of the customer value chain.
For example the disruption of the nylon tire business by the steel belted radial tire was not due to unprofitable customers being underserved by the industry leader (DuPont). Rather it was the need for a superior tire that was sought by the most profitable customers.
For newspapers, the first segment of business to be lost was classified advertising. This group of advertisers found that the advanced search capabilities of the Internet helped match buyers and sellers with greater efficacy than the print model. This segment of business was one of the most profitable revenue streams for the newspaper industry.
Consider now the taxicab industry. New market entrants such as Uber and Lyft are attracting the core customers of that industry. The new market entrants provide speedier service, convenient pay methods, ability to choose vehicle type and other advantages not offered by taxis.
Finally, the hospitality industry is being challenged by the like of Airbnb. This service allows individuals to stay at private residences, condos and apartments instead of hotels. Airbnb provides individuals with the ability to customize their travel accommodations according to their needs. The process is highly efficient and provides exceptional value. Here too, the customer attracted is the most desired by the hotel industry.
In all of the cases above it appears that the disruptive innovation theories regarding underserved low profit customers might not be valid in certain instances.
What is certain with the underserved low profit customer is that there is a need for a “good enough” product that doesn’t have all of the “bells and whistles” or the pricing of the products the industry leader is selling to its most profitable customers.
In the case of the more profitable customers, it is likely that the market leading companies are aware of the new market approaches but are not able to respond due to the nature of their structure. It might be that the financial focus and current capital structure won’t allow changing market approaches without heavy financial loss. This encourages managers to focus on improving existing technologies to keep their profitable customers. This strategy can fail since the new technology is superior and using pricing and guarantees on the older technologies won’t stop consumer adoption.
In some instances the industry leaders just choose to keep the current business structure with some modifications to fend off the new market entrants. In the newspaper business this proved disastrous.
For the taxicab industry, it is a combination of financial structure and government regulations that are preventing a competitive response to Uber and Lyft.
For the hotel industry there may be a sense that the old model will survive entrants like Airbnb coupled with the financial investment in the current model that may prevent a successful defense of market share by the industry leaders.
Interestingly, a strategy suggested by Clayton Christensen works for protecting the lower and higher profit customer segments. Clay suggests that the market leader should invest in or develop a company to compete in the new technology arena.
This approach allows the industry leader to manage the output of the current technology while developing the potential of the new technology. For industries like newspapers and hotels it allows the ability for the current business model to continue to serve its loyal customers while developing a new model for changing customers needs.
For industries like taxicabs it provides a realistic way to develop a new market and sidestep regulations and bureaucracies that impede accommodating needed market changes.
Saturday, May 16, 2015
Value creation is a phenomenon that is much discussed and is the basis for all economic activity. That is, for a product or service to be sold it must be viewed as providing some value for the purchaser.
In some instances, value is based on long-standing measurements and is tied to supply and demand. The more some thing is demanded when there is a limited supply results in an increase in its value.
For individuals with new products or services, determining value is critical to the success of a new venture. In these situations there is no history to gauge value that might be based on supply and demand. There is only anecdotal and (at times) research based evidence on the potential value of the new offering.
In the early 1970s Gerald Zaltman (Processes and Phenomena of Social Change, Wiley Interscience, 1973) conducted research based on social change. In these studies he determined that there were several factors that caused societal change.
In the late 1970s I used these factors to establish Consumer Adoption Drivers that could be used to determine the factors that would cause consumers to by a product. These factors would be instrumental in determining the value of new products to audiences.
Some of these factors measured the influence of peer groups and social status as creating value for customer segments while other factors measured the impact of competing products and the need for technical training on the creation of values. Value was determined by the willingness of a market to adopt a product. This, in effect, was a means of using phenomena of social change to determine the willingness of a targeted market to adopt a product.
The Consumer Adoption Drivers used are as follows:
1) Group Influence Intensity – relates to peer pressure exerted on customers
2) Perish ability – the length of time the product is deemed useful,
3) Psychological appeal – status associated with the product
4) Price sensitivity – the need for the customer to budget for the purchase,
5) Relative Price Influence – the attractiveness of other products as a substitute when price is a consideration,
6) Frequency of Purchase – The frequency with which the customer purchases the product,
7) Search Time Intensity – the amount of time invested in the search for the “right” product,
8) Tangible Differentiability – physical differences between products,
9) Intangible differentiability – non-physical differences between products (guarantees, relationships with company, branding etc.),
10) Technical Complexity – the need for training before a customer can use the product. This may be a factor in determining the type of sales force that will be required.
These adoption drivers are used by my firm, GWR Research, as the basis for developing questionnaires to determine the basis for value of a new product offering to a potential target market.
In some cases availability (supply chain) will be the creator of value. This happens most often when the product is frequently purchased and the search time willingly invested in finding the “right” product is low.
In other cases, promotion will be important in creating value. This happens in cases where peer-pressure plays an important factor (showing peers benefitting from the product) or similar products are available (differentiating the products based on benefits derived).
Pricing can be critical in value creation when other products are similarly priced or the target market has a limited budget.
The product design can be critical in creating value through tangible differences in product design and reduction in technical complexity for the consumer.
Using the Consumer Adoption Drivers as a basis for research can assist marketers in determining the best marketing mix of price, place, product and promotion for the creation of value.
If marketers do not consider all of the factors that may cause an audience to adopt a product, they could miss a critical component of value creation, which could lead to failure when launching a new product.
This process along with programs for developing the marketing strategies and tactics are discussed more thoroughly in the book, Developing Successful Marketing Strategies, Business Expert Press, 2014. The book is available on Amazon.com, BarnesandNoble.com and Businessexpertpress.com.
This process along with programs for developing the marketing strategies and tactics are discussed more thoroughly in the book, Developing Successful Marketing Strategies, Business Expert Press, 2014. The book is available on Amazon.com, BarnesandNoble.com and Businessexpertpress.com.