Tuesday, January 28, 2014

Create a Business That Will Change the World


I have written blogs and articles on marketing strategies and identifying market opportunities for some time now. I like the idea of finding a starting place in underserved markets and building a business with significant upside.

For medicine I think that the use of technology to deliver healthcare at a distance can provide quality healthcare for individuals in rural areas and perhaps significantly change availability of health care in third world countries.

Clearly the most underserved markets are those living in poverty around the world. Almost half the world, over three billion people, lives on less than US$2.50 per day.

This is probably the most undesirable and underserved market in the world and the needs are extensive. I wonder though if it were possible to create products and services for this group, would it be possible to generate economic activity that would ultimately lead to higher incomes and standards of living.

Take housing for example; there are some entrepreneurs that are focusing on methods to build inexpensive housing for these markets. Contour Crafting is one such company using technology developed at the University of Southern California. http://www.contourcrafting.org/low-income-housing/

It seems to me if a project were focused on creating housing for the impoverished in third world countries, the industry would most likely employ individuals from the areas targeted by the housing project. This would promote the development of other related market activities.

Ultimately this would result in an increase in the standard of living and create demand for more products and services. It might even mean that these populations could drive economic growth worldwide as the populations develop.

Obviously, this is not new and is something that government and philanthropic groups have tried to achieve for a long time.

I would suggest a slightly different approach; build a self-sustaining, profit based business project based on the premise that individuals have income of US$1.25 per day per person or US$2.50 per day per household. Assume that only 1/3 of the income could be spent for housing. Further assume that housing would provide access to water and sewage services and have utilities available for normal home activities.

This is a pretty tall order but not impossible. If a housing unit could be built for US$1500 and financed over 15 years at 4.5% the monthly cost to an individual would be about US$11.50.


I started thinking about this as a potential solution and quickly identified roadblocks. For example, the government of the third world country would have to approve the project. Then there would be the challenge of finding land suitable for developing a low-income project. Then finding the building technology to develop lots for the property and the required infrastructure. The lots, infrastructure and housing unit would all have to be within the US$1,500 total cost. Finally, finding financial institutions willing to finance the projects would be necessary.


Perhaps a pipe dream, but if a business were able to address the challenges the size of the market is immense and the benefits to the world are immeasurable.  Clearly, the enterprise would have to have effective means of working with governments, acquiring and developing land, building housing units and creating financial packages attractive to financial institutions.

I would propose the development of such a business enterprise and would like to hear from anyone with ideas and approaches. I would also like to hear from groups that have started projects along these lines even if the projects didn’t end successfully.

Friday, January 24, 2014

A CHECKLIST TO EVALUATE STRATEGIC ACTIONS


Often organizations will act based on moves by the competition, changes in the environment or new opportunities. These actions may not always be in keeping with the long-term objectives of the organization.

In an earlier blog I gave the example of a young entrepreneur that had a business that installed Christmas lighting for homes for the holiday season. His long-term goal was to grow the lighting business to the point where the capabilities and reputation allowed him to be a major provider for concert and event lighting.

Faced with the need for revenues in the off-season this entrepreneur thought that a possible extension for the business was home landscaping and yard services. While this would have met the short term cash needs of the organization it would might have led to a different focus and prevented the company from focusing on the goal of providing lighting services for concerts and similar events.

One of the best ways to keep a business targeted is to have a Mission and Vision statement that is understood by everyone in the organization.

A Mission statement describes why an organization exists and what it hopes to accomplish in broad terms. As an example Coca Cola has as its mission statement:

                To refresh the world...
                To inspire moments of optimism and happiness...
                To create value and make a difference.

A vision statement describes how the organization will fulfill the mission. This statement shows how value will be delivered to company stakeholders (employees, shareholders, contractors etc.), collaborators (vendors, suppliers, support service providers) and customers.  Alex Chernev, describes the areas where these group values intersect in his book, The Marketing Plan Handbook, as the Optimal value proposition.


The Vision statement describes this optimal value proposition. Coca Cola’s Vision Statement is as follows:

                People: Be a great place to work where people are inspired to be the best they can be.
                Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.
                Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value.
                Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities.
                Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities.
                Productivity: Be a highly effective, lean and fast-moving organization.

Even great companies can entertain actions that are not in keeping with the mission and vision that define the long-term objectives. Coca Cola’s then CEO Doug Ivester mentioned the possibility of using vending machines that would increase the cost of a soft drink as the temperature increased. This didn’t “fit” with the mission, vision or the company image, as it was perceived by the public. While this approach was never implemented, it raised such uproar that it ultimately became a cause for Mr. Ivster's resignation.

A checklist I have used over the years has helped keep the organizations I have led focused on finding short-term actions that supported long term goals defined by the mission and vision statement.

The checklist is shown below:

1.    Accreditation requirements – Does the action meet industry and legal standards?
2.    Length of project – Can the action be implemented in an acceptable time frame?
3.    Accommodate systems – Does the action make use of current systems or will new ones need to be developed?
4.    Fit Image – Does the action fit the image the firm wishes to project?
5.    Resources – is the action resource and capital intensive?
6.    Gateway capacity – Does this product lead to the possibility of new products or businesses being developed?
7.    Negative Gateway capacity – Does this action have the potential of damaging image or operations of the organization?
8.    Customer acceptance – will the customer accept this product/action over others offered in the market? 1
9. Profitability - Does the action generate enough value to provide the company with a profitable operation?
This checklist addresses the value collaborators, customers and stakeholders by measuring proposed actions against potential resource use, company image, and the ability to enhance growth and prevent negative consequences.

The best advice I have to offer CEOs and strategic planners is to begin with a well thought out mission and vision statement to guide strategic planning and to use a checklist designed to keep the firm focused on long term objectives defined by the mission and vision statement.

The process described in my blog offering a strategic marketing planning tool should use the checklist process when defining strategic objectives and strategies.
Also the process describing a tactical planning tool should use the checklist process when considering tactics and implementation programs.

If you would like more information or would like GWR Research to conduct a strategic planning training session for your company, email me at gary@gwrresearch.com.

Finally, the Alexander Chernev book gives a good example of how to develop a marketing plan. My new book , Developing Successful Marketing Strategies, introduces the planning tools to support the marketing plan and provides approaches to discover innovative strategic approaches.

Tuesday, January 14, 2014

MARKETING TACTICS PLANNING TOOL


In December I introduced a process for developing marketing strategies.

The example given assumed that a newspaper organization developing a marketing strategy existed.

The process in the example began with a situation analysis to identify the state of the market environment, potential market disruptions and potential market opportunities.  The example then used the information to develop strategies for price, place, product and promotion. These strategies were then placed in an Organizational Impact Chart to show the impact of the strategies on the organization’s workforce, cash requirements, operating procedures and capital equipment requirements.  The impact chart is shown below.

Organizational Impact Chart

PRODUCT - Focus on local and regional news coverage, develop products for conversion of print products including digital preprints, develop customized news and information delivery capabilities and software applications. Develop classified free digital classified ads with a print up grade.

PRICE– Low cost for all digital products and cost based pricing for print products. Preprint delivery would be priced to compete with “marriage mail” products


PLACE - Print products delivered with long-term plan to convert to digital delivery. Preprint delivery would be by news carrier or post office with long-term plan to convert to digital delivery.

PROMOTION– emphasize local news and shopping information, original content, and classified ads with impact. For advertisers, emphasize low cost per reach.
WORKFORCE
Content stringers, mixed with employees for content. Internal sales staff.

High productivity for staff through technology
Outsource and contract for printing and distribution.
Internal brand manager. Outsource ad campaigns.
CASH REQUIREMENTS
Minimize fixed expenses for facilities etc.
Cash flows maximized
Distribution costs below revenues.
Utilize efficient promotions but have constant market pressure
OP. PROCEDURES
High use of technology and outsourcing
High use of technology and outsourcing
High use of technology and outsourcing
High use of technology and outsourcing
CAP. EQUIP. REQUIREMENTS
Outsource software development and lease equipment.
Outsource software development and lease equipment.
Outsource software development and lease equipment.
Outsource software development and lease equipment.



The blog goes on to say that after the development of the strategy and the Organizational Impact Chart the strategist can then develop tactics and a comprehensive plan.

This left the reader in a bit of a lurch for implementing the most difficult elements of executing a marketing strategy. The Organizational Impact Chart shows how the various strategies must work in concert with the organizations resources but this chart does not indicate how the organization should plan, organize direct and control the resources for a successful implementation.

Since the execution of a successful marketing strategy must have all elements of strategy, organizational resources and management actions in concert, it is useful to have a chart that acts as a checklist to insure that all of the elements are accounted for and provide a quick check to make certain all of the actions are in concert.

Below is an example of how a marketing tactics planning chart would look.

Marketing Tactics Planning Chart

PRODUCT
PRICE
PLACE
PROMOTION
WORKFORCE PLAN
Content stringers, mixed with employees for content. Internal sales staff. Outsource printing.
High productivity for staff through technology
Outsource and contract for distribution.
Internal brand manager. Outsource ad campaigns.
WORKFORCE ORGANIZATION
DEVELOP PROGRAM TO ENCOURAGE STRINGERS TO FIND COMPELLING LOCAL AND REIGIONAL STORIES. INTERNAL SALES STAFF STRUCTRED BY CUSTOMER SEGMENT
CONTRACTORS are given a set price for articles.

Sales force commissions are focused on achieving sales goals. Inability to meet sales goals results in reduced pay.
Printing outsourced to quality printers based on bid process and guarantee of press time.  Alternate printers would be available for overflows and emergencies.

Distribution contractors bids for delivery area would be awarded based on rate and quality.
Brand manager would find a mix of media to meet goals within prescribed budget.
WORKFORCE PROCEDURES
DEVELOP STANDARDS OF PERFORMANCE FOR CONTRACTORS AND EMPLOYEES.
DEVELOP STANDARDS OF PERFORMANCE FOR CONTRACTORS AND EMPLOYEES.
DEVELOP STANDARDS OF PERFORMANCE FOR CONTRACTORS AND EMPLOYEES.
DEVELOP STANDARDS OF PERFORMANCE FOR CONTRACTORS AND EMPLOYEES.
WORKFORCE CONTROLS
DEVELOP METRICS TO EVALUATE WORKFORCE PRODUCTIVITY AND SUCCESS. EG. SALES PER PERSON, ARTICLES PER WEEK ETC.
DEVELOP METRICS TO EVALUATE WORKFORCE PRODUCTIVITY AND SUCCESS.. EG. SALES PER PERSON, ARTICLES PER WEEK ETC.
DEVELOP METRICS TO EVALUATE WORKFORCE PRODUCTIVITY AND SUCCESS. EG. COST PER PAGE, COST PER ADDRESS DELIVERED.
DEVELOP METRICS TO EVALUATE WORKFORCE PRODUCTIVITY AND SUCCESS.. NEW CUSTOMERS PER PROMOTION.
CASH PLAN
CASH NEEDED TO COVER OPERATING COSTS, OPERATING FACILITIES AND CAPITAL EXPENDUTURES
USE DISCOUNTS FOR EARLY PAYMENT AND PENALTIES FOR SLOW PAYMENTS. NEGOTIATEVENDOR PAYMENTS THAT ALLOW CASH COLLECTIONS TO COVER PAYMENTS
LONG TERM LEASE FOR OFFICES. PURCHASE OF CENTRAL OFFICE IF BETTER USE OF CASH
PRODUCTION COSTS INCLUDED IN PROMO EXPENSE. NEGOTIATE FOR MEDIA RATES USE TRADE OUT IF POSSIBLE.
CASH ORGANIZATION
ALL RECEIPTS AND VENDOR PMTS MADE THROUGH CENTRAL BANK
ALL RECEIPTS AND VENDOR PMTS MADE THROUGH CENTRAL BANK
ALL RECEIPTS AND VENDOR PMTS MADE THROUGH CENTRAL BANK
ALL RECEIPTS AND VENDOR PMTS MADE THROUGH CENTRAL BANK
CASH PROCEDURES
INVOICES APPROVED BY OPERATING MANAGER, SUBMITTED TO AP FOR PMT. LOCK BOX FOR CUSTOMER PMTS
INVOICES APPROVED BY OPERATING MANAGER, SUBMITTED TO AP FOR PMT. LOCK BOX FOR CUSTOMER PMTS
INVOICES APPROVED BY OPERATING MANAGER, SUBMITTED TO AP FOR PMT. LOCK BOX FOR CUSTOMER PMTS
INVOICES APPROVED BY OPERATING MANAGER, SUBMITTED TO AP FOR PMT. LOCK BOX FOR CUSTOMER PMTS
CASH CONTROLS
PERFORMANCE METRICS – PROFIT/UNIT, NET CASH FLOWS ETC.
METRICS – MARK UP /PRODUCT,  PROFIT/UNIT, SALES VOLUME.
REV./SQ.FT., COST/SQ.FT. ETC.

Cost/customer delivery vs. rev/ customer delivery
SALES VOLUME CHANGE PER  $ OF MEDIA EXPENDITURE, SURVEYS TO MEASURE IMPACT



SYSTEMS PLAN
Financial and MIS reporting
Financial and MIS reporting
Financial and MIS reporting
Financial and MIS reporting
SYSTEMS ORGANIZATION
Departments prepare reports for mgt each month
Departments prepare reports for mgt each month
Departments prepare reports for mgt each month
Departments prepare reports for mgt each month
SYSTEMS PROCEDURES
Departments prepare reports for mgt each month
Departments prepare reports for mgt each month
Departments prepare reports for mgt each month
Departments prepare reports for mgt each month
SYSTEMS CONTROLS
Financial, MIS and performance metrics reviewed each month
Financial, MIS and performance metrics reviewed each month
Financial, MIS and performance metrics reviewed each month
Financial, MIS and performance metrics reviewed each month
EQUIPMENT PLAN
Lease major equipment, purchase small equipment
Lease major equipment, purchase small equipment
Lease major equipment, purchase small equipment
Lease major equipment, purchase small equipment
EQUIPMENT ORGANIZATION
By department
By department
By department
By department
EQUIPMENT PROCEDURES
Defined by dept. mgt and approved by senior mgt.
Defined by dept. mgt and approved by senior mgt.
Defined by dept. mgt and approved by senior mgt.
Defined by dept. mgt and approved by senior mgt.
EQUIPMENT CONTROLS
R&M costs vs. revenue production, Rev/FTE, Cost/Unit
R&M costs vs. revenue production, Rev/FTE, Cost/Unit
R&M costs vs. revenue production, Rev/FTE, Cost/Unit
R&M costs vs. revenue production or brand impact.






This is a simple example but gives you an idea of how to use this tool to keep the strategic marketing process on target and when completed have a document that can guide the implementation process.

As I have mentioned before, the marketing process begins with an objective, then strategy development then the development of tactics. The tools presented in the December blog and here can help a strategist keep all aspects of strategy and tactics development in concert. When in concert the execution will be more effective and the objective has the best chance of being realized.