Author Archives: ghotchkiss

Why Marketers Love Malcolm Gladwell … and Why They Shouldn’t

Marketers love Malcolm Gladwell. They love his pithy, reductionist approach to popular science – his tendency to sacrifice verity for the sake of a good “Just-so” story. And in doing this, what is Malcolm Gladwell but a marketer at heart? No wonder our industry is ga-ga over him. We love anyone who can oversimplify complexity down to the point where it can be appropriated as yet another marketing “angle”.

Take the entire influencer advertising business, for instance. Earlier this year, I saw an article saying more and more brands are expanding their influencer marketing programs. We are desperately searching for that holy nexus where social media and those super-connected “mavens” meet. While the idea of influencer marketing has been around for a while, it really gained steam with the release of Gladwell’s “The Tipping Point.” And that head of steam seems to have been building since the release of the book in 2000.

As others have pointed out, Gladwell has made a habit of taking one narrow perspective that promises to “play well” with the masses, supporting it with just enough science to make it seem plausible and then enshrining it as a “Law.”

Take “The Law of the Few”, for instance, from The Tipping Point: “The success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts.” You could literally hear the millions of ears attached to marketing heads “perk up” when they heard this. “All we have to do,” the reasoning went, “is reach these people, plant a favorable opinion of our product and give them the tools to spread the word. Then we just sit back and wait for the inevitable epidemic to sweep us to new heights of profitability.”

Certainly commercial viral cascades do happen. They happen all the time. And, in hindsight, if you look long and hard enough, you’ll probably find what appears to be a “maven” near ground-zero. From this perspective, Gladwell’s “Law of the Few” seems to hold water. But that’s exactly the type of seductive reasoning that makes “Just So” stories so misleading. You mistakenly believe that because it happened once, you can predict when it’s going to happen again. Gladwell’s indiscriminate use of the term “Law” contributes to this common deceit. A law is something that is universally applicable and constant. When a law governs something, it plays out the same way, every time. And this is certainly not the case in social epidemics.

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Duncan Watts

If Malcolm Gladwell’s books have become marketing and pop-culture bibles, the same, sadly, cannot be said for Duncan Watts’ books. I’m guessing almost everyone reading this column has heard of Malcolm Gladwell. I further guess that almost none of you have heard of Duncan Watts. And that’s a shame. But it’s completely understandable.

Duncan Watts describes his work as determining the “role that network structure plays in determining or constraining system behavior, focusing on a few broad problem areas in social science such as information contagion, financial risk management, and organizational design.”

You started nodding off halfway through that sentence, didn’t you?

As Watts shows in his books, “Firms spent great effort trying to find “connectors” and “mavens” and to buy the influence of the biggest influencers, even though there was never causal evidence that this would work.” But the work required to get to this point is not trivial. While he certainly aims at a broad audience, Watts does not read like Gladwell. His answers are not self-evident. There is no pithy “bon mot” that causes our neural tumblers to satisfyingly click into place. Watts’ explanations are complex, counter-intuitive, occasionally ambiguous and often non-conclusive – just like the world around us. As he explains his book “Everything is Obvious: *Once You Know the Answer”, it’s easy to look backwards to find causality. But it’s not always right.

Marketers love simplicity. We love laws. We love predictability. That’s why we love Gladwell. But in following this path of least resistance, we’re straying further and further from the real world.

Decoupling Our Hunch Making Mechanism

Humans are hunch-making machines. We’re gloriously good at it. In fact, no one and no thing is better at coming up with a hunch. It’s what sets up apart on our planet and, thus far, nothing we’ve invented has proven to be better suited to strike the spark of intuition.

We can seemingly draw speculative guesses out of thin air – literally. From all the noise that surrounds us, we recognize potential patterns and infer significance. Scientists call them hypotheses. Artists call them artistic inspirations. Entrepreneurs call them innovations.

Whatever the label, we’re not exactly sure what happens. Mihaly Czikszentmihaly (which, in case you’re wondering, is pronounced Me-high Cheek-sent-me-high) explored where these hunches come from in his fascinating book, Creativity, The Psychology of Discovery and Invention. But despite the collective curiosity about the source of human creativity – the jury remains out. The mechanism that turns these very human gears and sparks the required connections between our synapses remains a mystery.

We’re good at making hunches. But we suck at qualifying those hunches. The reason is that we rush a hunch straight into becoming a belief. And that’s where things go off the rails. A hunch is a guess about what might be true. A belief is what we deem to be true. We go straight from what is one of many possible scenarios to the only scenario we execute against. The entire scientific method was created to counteract this very human tendency – forcing rational analysis of the hunches we churn out.

Philip Tetlock’s work on expertise in prediction shows how fragile this tendency to go from hunch to belief can make us. After all, a prediction is nothing more than a hunch of what might be. He referred to Isaiah Berlin’s 1950 essay, “The Hedgehog and the Fox.” In the essay, Berlin quotes the ancient Greek poet Archilochus, “”a fox knows many things, but a hedgehog one important thing.” Taking some poetic license, you could said that a hedgehog is more prone to moving straight from hunch to belief, where a fox tends to evaluate her hunches against multiple sources. Tetlock found that when it came to the accuracy of predictions, it was better to be a fox than a hedgehog. In some cases, much better.

But Tetlock also found that when it comes down to “crunching hunches”, machines tend to bet man hands down. It’s because humans have been programmed for thousands of generations to trust our hunches and no matter how much we fight it, we are born to treat our hunches as fact. Machines bear no such baggage.

This is an example of Moravec’s Paradox – the things that seem simple for humans are amazingly complex for machines. And vice versa. As artificial intelligence pioneer Marvin Minsky once recognized, it’s the things we do unconsciously that represent the biggest challenges for artificial intelligence, “In general, we’re least aware of what our minds do best.” Machines may never be as good as humans at creating a hunch – or, at least – we’re certainly not there yet. But machines have already outstripped humans in the ability to empirically analyze and validate multiple options.

Fellow Online Spin columnist Kaila Colbin posited this in her last column, “When Watson Comes for Your Job, Give it to Him.” As she points out, IBM’s Watson can kick any human ass when it comes to reviewing case law – or plowing through the details required for an accurate medical diagnosis – or assisting students prepare for an upcoming exam. But Watson isn’t very good at coming up with hunches. It’s because hunches aren’t rational. They’re inspirational. And machines aren’t fluent in inspiration. Not yet, anyway.

Maybe that’s why – even in something as logical as chess – the current champion isn’t a machine, or a human. It’s a combination of both. As American economist and author (Average is Over) Tyler explained in a blog post, a “striking percentage of the best or most accurate chess games of all time have been played by man-machine pairs.” Cowen shows four ways a man-machine team can outperform and they all have to do with leveraging the respective strengths of each. Humans use intuition to create hunches, and then harness the power of the machine to analyze relevant options.

Hunches have served humans very well. They will continue to do so. The trick is to decouple those hunches from the belief making mechanism that has historically accompanied it. That’s where we should let machines take over.

 

 

Why I Love New York

I love people watching. I find the passing tableau of human drama endlessly fascinating. Trust me – it’s worth putting the smartphone away and paying attention to what’s happening around you. This past weekend, I hit the trifecta of snooping: subways, airports and shops in New York City.

Scene 1: We’re on a subway and an elderly Polish lady, dressed all in pink (for Mother’s Day, perhaps), going to Penn Station randomly asks a hulking young man of decidedly intimidating appearance for help getting her bag out of the car and onto the platform. You could not have picked a more unlikely duo for this particular dialogue.

He was engrossed in a conversation with his friend and didn’t hear her at first. When she asked again, he wasn’t sure what she said because of her thick accent. Finally, a young pregnant girl beside them offers to help. The Polish lady refuses and starts pointing at the man and scolding vigorously. The young man shrugs, the Polish intonations still coming a little too thick and fast for him to understand. The young girl translates, “She wants you to help because you’re big.”

He grins sheepishly and picks up the suitcase. The Polish grandmother toddles off happily.

Scene 2: We’re walking through an airport and a young man is coming home from college (again, perhaps for Mother’s Day.) He’s meandering his way from the gate, weaving back and forth across the concourse and trying to carry on a somewhat agitated conversation with said mother. My first instinct is to pass him but then I decide to hold back and eavesdrop a little bit. The son obviously has no patience for his mother:

“Mom, I told you, I never asked you to come and get me. It was your idea…”

“Why are you picking me up in departures? I’m arriving. You should be in arrivals…”

“I can’t help it if you have to go all the way around again to get there. You should have thought of that before you pulled into the airport.”

I can only imagine how the rest of this Mother’s Day visit went. Next time, let him catch a cab.

Scene 3: We’re in one of those tacky souvenir shops off Times Square (no, it wasn’t my idea). Two elderly ladies come in and ask to see a T shirt that says “Help Donald Drumpf make America Great Again”

“Why is it spelled ‘Drumpf’?”

The shop owner (in another thick accent – Middle Eastern this time), “It’s wacky spelling.”

“Why?”

“It’s a joke. It’s a jokey T-shirt”

“Do you have one spelled correctly?”

“You want real t-shirt?”

“Yes”

“No, we only have the jokey ones.”

Meanwhile, outside a sidewalk prophet is yelling that Jesus is the only true way and that we are headed straight to hell while standing under a 60-foot high electronic screen advertising “The Book of Mormon.”

New York – you crack me up.

How We Might Search (On the Go)

As I mentioned in last week’s column – Mediative has just released a new eyetracking study on mobile devices. And it appears that we’re still conditioned to look for the number one organic result before clicking on our preferred destination.

But…

It appears that things might be in the process of changing. This makes sense. Searching on a mobile device is – and should be – significantly different from searching on a desktop. We have different intents. We are interacting with a different platform. Even the way we search is different.

Searching on a desktop is all about consideration. It’s about filtering and shortlisting multiple options to find the best one. Our search strategies are still carrying a significant amount of baggage from what search was – an often imperfect way to find the best place to get more information about something. That’s why we still look for the top organic listing. For some reason we still subconsciously consider this the gold standard of informational relevancy. We measure all other results against it. That’s why we make sure we reserve one slot from the three to five available in our working memory (I have found that the average person considers about 4 results at a time) for its evaluation.

But searching on a mobile device isn’t about filtering content. For one thing, it’s absolutely the wrong platform to do this with. The real estate is too limited. For another, it’s probably not what we want to spend our time doing. We’re on the go and trying to get stuff done. This is not the time for pausing and reflecting. This is the time to find what I’m looking for and use it to take action.

This all makes sense but the fact remains that the way we search is a product of habit. It’s a conditioned subconscious strategy that was largely formed on the desktop. Most of us haven’t done enough searching on mobile devices yet to abandon our desktop-derived strategies and create new mobile specific ones. So, our subconscious starts playing out the desktop script and only varies from it when it looks like it’s not going to deliver acceptable results. That’s why we’re still looking for that number one organic listing to benchmark against

There were a few findings in the Mediative study that indicate that our desktop habits may be starting to slip on mobile devices. But before we review them, let’s do a quick review of how habits play out. Habits are the brains way of cutting down on thinking. If we do something over and over again and get acceptable results, we store that behavior as a habit. The brain goes on autopilot so we don’t have to think our way through a task with predictable outcomes.

If, however, things change, either in the way the task plays out or in the outcomes we get, the brain reluctantly takes control again and starts thinking its way through the task. I believe this is exactly what’s happening with our mobile searches. The brain desperately wants to use its desktop habits, but the results are falling below our threshold of acceptability. That means we’re all somewhere in the process of rebuilding a search strategy more suitable for a mobile device.

Mediative’s study shows me a brain that’s caught between the desktop searches we’ve always done and the mobile searches we’d like to do. We still feel we should scroll to see at least the top organic result, but as mobile search results become more aligned with our intent, which is typically to take action right away, we are being side tracked from our habitual behaviors and kicking our brains into gear to take control. The result is that when Google shows search elements that are probably more aligned with our intent – either local results, knowledge graphs or even highly relevant ads with logical ad extensions (such as a “call” link) – we lose confidence in our habits. We still scroll down to check out the organic result but we probably scroll back up and click on the more relevant result.

All this switching back and forth from habitual to engaged interaction with the results ends up exacting a cost in terms of efficiency. We take longer to conduct searches on a mobile device, especially if that search shows other types of results near the top. In the study, participants spent an extra 2 seconds or so scrolling between the presented results (7.15 seconds for varied results vs. 4.95 seconds for organic only results). And even though they spent more time scrolling, more participants ended up clicking on the mobile relevant results they saw right at the top.

The trends I’m describing here are subtle – often playing out in a couple seconds or less. And you might say that it’s no big deal. But habits are always a big deal. The fact that we’re still relying on desktop habits that were laid down over the past two decades show how persistent then can be. If I’m right and we’re finally building new habits specific to mobile devices, those habits could dictate our search behaviors for a long time to come.

In Search- Even in Mobile – Organic Still Matters

I told someone recently that I feel like Rick Astley. You know, the guy that had the monster hit “Never Gonna Give You Up” in 1987 and is still trading on it almost 30 years later? He even enjoyed a brief resurgence of viral fame in 2007 when the world discovered what it meant to be “Rickrolled”

google-golden-triangle-eye-trackingFor me, my “Never Gonna Give You Up” is the Golden Triangle eye tracking study we released in 2005. It’s my one hit wonder (to be fair to Astley, he did have a couple other hits, but you get the idea). And yes, I’m still talking about it.

The Golden Triangle as we identified it existed because people were drawn to look at the number one organic listing. That’s an important thing to keep in mind. In today’s world of ad blockers and teeth gnashing about the future of advertising, there is probably no purer or more controllable environment than the search results page. Creativity is stripped to the bare minimum. Ads have to be highly relevant and non-promotional in nature. Interaction is restricted to the few seconds required to scan and click. If there was anywhere where ads might be tolerated, its on the search results page

But…

If we fully trusted ads – especially those as benign as those that show up on search results – there would have be no Golden Triangle. It only existed because we needed to see that top Organic result and dragging our eyes down to it formed one side of the triangle.

eyetracking2014Fast forward almost 10 years. Mediative, which is the current incarnation of my old company, released a follow up two years ago. While the Golden Triangle had definitely morphed into a more linear scan, the motivation remained – people wanted to scan down to see at least one organic listing. They didn’t trust ads then. They don’t trust ads now.

Google has used this need to anchor our scanning with the top organic listing to introduce a greater variety of results into the top “hot zone” – where scanning is the greatest. Now, depending on the search, there is likely to be at least a full screen of various results – including ads, local listings, reviews or news items – before your eyes hit that top organic web result. Yet, we seem to be persistent in our need to see it. Most people still make the effort to scroll down, find it and assess its relevance.

It should be noted that all of the above refers to desktop search. But almost a year ago, Google announced that – for the first time ever – more searches happened on a mobile device than on a desktop.

eyetracking mobile.pngMediative just released a new eye-tracking study (Note: I was not involved at all with this one). This time, they dove into scan patterns on mobile devices. Given the limited real estate and the fact that for many popular searches, you would have to consciously scroll down at least a couple times to see the first organic result, did users become more accepting of ads?

Nope. They just scanned further down!

The study’s first finding was that the #1 organic listing still captures the most click activity, but it takes users almost twice as long to find it compared to a desktop.

The study’s second finding was that even though organic is still important, position matters more than ever. Users will make the effort to find the top organic result and, once they do, they’ll generally scan the top 4 results, but if they find nothing relevant, they probably won’t scan much further. In the study, 92.6% of the clicks happened above the 4th organic listing. On a desktop, 84% of the clicks happened above the number 4 listing.

The third listing shows an interesting paradox that’s emerging on mobile devices: we’re carrying our search habits from the desktop over with us – especially our need to see at least one organic listing. The average time to scan the top sponsored listing was only 0.36 seconds, meaning that people checked it out immediately after orienting themselves to the mobile results page, but for those that clicked the listing, the average time to click was 5.95 seconds. That’s almost 50% longer than the average time to click on a desktop search. When organic results are pushed down the page because of other content, it’s taking us longer before we feel confident enough to make our choice. We still need to anchor our relevancy assessment with that top organic result and that’s causing us to be less efficient in our mobile searches than we are on the desktop.

The study also indicated that these behaviors could be in flux. We may be adapted our search strategies for mobile devices, but we’re just not quite there yet. I’ll touch on this in next week’s column.

 

 

 

 

 

 

 

 

The World in Bite Sized Pieces

It’s hard to see the big picture when your perspective is limited to 160 characters.

Or when we keep getting distracted from said big picture by that other picture that always seems to be lurking over there on the right side of our screen – the one of Kate Upton tilting forward wearing a wet bikini.

Two things are at work here obscuring our view of the whole: Our preoccupation with the attention economy and a frantic scrambling for a new revenue model. The net result is that we’re being spoon-fed stuff that’s way too easy to digest. We’re being pandered to in the worst possible way. The world is becoming a staircase of really small steps, each of which has a bright shiny object on it urging us to scale just a little bit higher. And we, like idiots, stumble our way up the stairs.

This cannot be good for us. We become better people when we have to chew through some gristle. Or when we’re forced to eat our broccoli. The world should not be the cognitive equivalent of Captain Crunch cereal.

It’s here where human nature gets the best of us. We’re wired to prefer scintillation to substance. Our intellectual laziness and willingness to follow whatever herd seems to be heading in our direction have conspired to create a world where Donald Trump can be a viable candidate for president of the United States – where our attention span is measured in fractions of a second – where the content we consume is dictated by a popularity contest.

Our news is increasingly coming to us in smaller and smaller chunks. The exploding complexity of our world, which begs to be understood in depth, is increasingly parceled out to us in pre-digested little tidbits, pushed to our smartphone. We spend scant seconds scanning headlines to stay “up to date.” And an algorithm that is trying to understand where our interests lie usually determines the stories we see.

This algorithmic curation creates both “Filter” and “Agreement” Bubbles. The homogeneity of our social network leads to a homogeneity of content. But if we spend our entire time with others that think like us, we end up with an intellectually polarized society in which the factions that sit at opposite ends of any given spectrum are openly hostile to each other. The gaps between our respective ideas of what is right are simply too big and no one has any interest in building a bridge across them. We’re losing our ideological interface areas, those opportunities to encounter ideas that force us to rethink and reframe, broadening our worldview in the process. We sacrifice empathy and we look for news that “sounds right” to us, not matter what “right” might be.

This is a crying shame, because there is more thought provoking, intellectually rich content than ever before being produced. But there is also more sugar coated crap who’s sole purpose is to get us to click.

I’ve often talked about the elimination of friction. Usually, I think this is a good thing. Bob Garfield, in a column a few months ago, called for a whoop-ass can of WD 40 to remove all transactional friction. But if we make things too easy to access, will we also remove those cognitive barriers that force us to slow down and think, giving our rationality a change to catch up with impulse? And it’s not just on the consumption side where a little bit of friction might bring benefits. The upside of production friction was that it did slow down streams of content just long enough to introduce an editorial voice. Someone somewhere had to give some thought as to what might actually be good for us.

In other words, it was someone’s job to make sure we ate our vegetables.

The Wave Form of Complex Strategy

I’ve been thinking about waves a lot lately. As I said to a recent group of marketing technologists, nature doesn’t plan in straight lines. Nature plays out in waves. As soon as you start looking for oscillations, you seem them everywhere. Seasons, our brains, the economy – if complexity lurks there, chances are there is a corresponding wave.

So how do waves tie into my recent two columns (Part One and Part Two) about agency relationships? Simply this – like most complex things, our corporate strategy should also plot itself against a wave-like cycle. And in that cycle, there is a place for both external partnerships and internal execution.

Let me give you two examples of the ubiquity of waves.

Remember how I talked about Bayesian Strategy? Again, it’s a wave, or, if you’d prefer, a loop (which is simply a wave plotted in a different form). It is a process of setting a frame, opening that frame to external validation and then updating that frame based on our newly perceived reality. This approach to strategy borrows from the work done on how we make sense of the world, which is also a loop, or a wave.

Alex “Sandy” Pentland’s “Science of Great Teams” also embodies its own wave:

“Successful teams, especially successful creative teams, oscillate between exploration for discovery and engagement for integration of the ideas gathered from outside sources. At the MIT Media Lab, this pattern accounted for almost half of the differences in creative output of research groups.”

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Alex “Sandy” Pentland

The thing about waves is that they require very different approaches at the peaks and valleys of the wave. The oscillation is caused by this dynamic tension. The act of gathering input is very different than the act of synthesizing and acting on that output. And it’s very difficult to do both at the same time. Again, Pentland found this in his observation of effective teams, “Exploration and engagement, while both good, don’t easily coexist, because they require that the energy of team members be put to two different uses.”

Increasingly, in complex situations, we have to incorporate wave planning into our strategic approach. And when it comes to marketing, this will likely include a wave that winds itself through working with an external partner to gather the value that comes from their external perspective and in creating an internal “sense-making” discipline with an embedded marketing team. This will require a clear understanding of control and authority transference at the appropriate times. Like the Exploration/Engagement cycle of Pentland’s teams, both are necessary but they shouldn’t necessarily run in parallel.

I’ve found in the past that most of the value that can come from a strong external partnership gets burned off in turf wars and discounting outside information and advice because it doesn’t come from “inside”. Even when this information is accepted, it’s subsumed into internal dialogues and documentation, losing whatever insight it once offered.

Similarly, the partner loses precious cycles trying to keep up to speed with the internal directional course changes that inevitably happen. The problem comes when both these processes try to co-exist and run along the same straight line. The result is a rapidly zig-zagging line that tries to stay the course but loses any energy it might have had in constantly readjusting itself to meet “straight line” strategic objectives.

I believe the right answer to the in-house/agency debate is not an “Either/Or” but rather a wave-aware “And.”

The Case for Strong External Marketing Partnerships

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Sherry Turkle

We like to spend time with others that agree with what we have to say. In her book, Reclaiming Conversation, Sherry Turkle says this leads to us living in a bubble – in this case – a bubble of agreement. While soothing to our own sensibilities, this can be a dangerous path to walk down. It leads to dangerous biases in perception like Group Think and Information Cascades. It doesn’t give us a true picture of what the world is really like.

Last week, I said that a shorter “sense-making” cycle is one reason why moving advertising and marketing in-house might be a better way to go. But what if those sense-making cycles lead to a skewed view of the world because of perceptual distortion? What if it leads to us seeing the world not as it is, but as we wish it was? Today, as promised, I want to look at the other side of the question – the advantages that can come from having strong external partnerships.

As I said last week, Bayesian Strategy relies on three principles:

  • Strategic planning is a continuous and iterative process
  • Strategic plans are nothing more than hypotheses that are then subject to validation through empirical data
  • The span of the loop between the setting of the strategic frame and the data that validates it should be kept as short as possible.

While moving more functions – including marketing – in-house helps with the last of these, it can lead to problems with the second step: Empirical Validation.

Prolonged ideological homogeneity is never a good thing. Yet human nature craves it. So, from Socrates on down, we have created rational frameworks that force us to consider divergent thoughts. Democracy is built on such a framework. But over time, most organizations naturally move towards a shared opinion of the world – and that opinion usually starts at the top. It’s what Avinash Kaushik calls the HIPPO Syndrome – The Highest Paid Person’s Opinion.

Agreement bubbles expand due to confirmation bias. Even if we pay lip service to validating our opinions with empirical data, what we count as data depends on what we believe. We look for evidence that confirms our beliefs. We can deny we do it, we can chastise ourselves for doing it, but the fact is, it’s human nature. In the end, we’ll still do it, because we’re programmed to do so.

One way to reliably poke our “agreement bubbles” is to build robust mechanisms to both encounter and embrace ideas from outside the bubble. Remember a few months ago, when I wrote that cultures in which higher percentages of atheists are found also tend to be more innovative? The same factors are at work here. Those cultures have more ideological divergence. More perspectives are considered. The result is almost always a more accurate view of the world. Everyone wants to believe they are “right”, but what is “right” – or as close as is possible – is a synthesis of many different opinions and beliefs.

In this case – especially with something as vital to strategy as marketing – a strong external partnership can force us to consider our agreement bubbles. This is where an agency can bring new views to the table. But the agency and the client have to realize that this is where the value of these partnerships lies. They have to embrace this role and build the trust required to introduce external perspectives into the strategic sense-making cycle.

With two sides of the argument now sketched out, we’ll look next week at how the agency partnership of the future might look.

The Case for Bringing Marketing Inhouse

“We were just writing a lot of checks to agencies, but digital marketing is now in our brand DNA.”
Blake Cahill – Philips Global Head of Digital

When we talk about disruptions in marketing, one of the elephants in the room is the increasing demand to bring marketing in house. Companies like Phillips are bringing more and more marketing functions in-house. As an ex-agency guy, this will sound either blasphemous or disingenuous, but I suspect that it might be the right way to go. I’ll tell you why. It has a lot to do with the evolution of strategy.

In the past, we did two things when we planned strategy. We planned in relatively straight lines and we planned over long time frames – a minimum of 5 years was not unusual.

Here’s how it would play out. Executives would go through their strategic planning exercise, which may or may not include getting input from the internal and external marketers. Strategic plans would be formed and this would then be broken down into departmental directives. Department heads – including marketing – would then execute against the plan, with periodic progress reviews scheduled. The entire loop, from input to executional plans, could easily span several months or even a year or more.

The extended timeline is just one of the issues with this approach to strategy. The other problem is that this assumes that strategic planning is only something executives can do. The strategic frame is only set at the highest levels of the organization. And it’s the executive’s prerogative to either consider or completely ignore any input from their direct reports. Even if they do consider it, this feedback is likely several steps removed from the source – namely – the market.

I’ve written before about the concept of Bayesian Strategy. There are three basic foundations to this approach:

  • Strategic planning is a continuous and iterative process
  • Strategic plans are nothing more than hypotheses that are then subject to validation through empirical data
  • The span of the loop between the setting of the strategic frame and the data that validates it should be kept as short as possible.

With Bayesian strategy, the corporation needs to maintain a number of acutely aware “sensing” interfaces that provide constant data about the corporation’s current “reality”:

  • The internal “reality” – especially in more qualitative areas that might fall outside typical KPI’s – like moral, satisfaction, communication effectiveness, etc.
  • The external “reality” – What’s happening in the market? What are customer’s perceptions? What is the competition doing?

These “sensing” interfaces create the frame for the organization. As such, they’re integral to the setting and updating of strategy. Just as our brain depends on our senses to define our sense of what’s real, the organization depends on these interfaces. And when it comes to the “external” reality, no department is in a better position to make sense of the world than marketing. The span of distance between marketing and the management of the company should be as short as possible. This is very difficult to achieve when you rely on external partners for that marketing.

When a company like Phillips brings marketing in-house, it’s more than just a cost-saving or consolidation effort. It’s bringing the function of marketing as close as possible to the core brand. It’s not only giving it a seat at the strategic table but making it one of the key contributors to that strategy. Like I said, it’s a move that makes a lot of sense.

But there is another side to this story, and that has to do with perspective. I’ll look at the flip side of this argument next Tuesday.

 

The Future of the Workplace

I noticed a post a few weeks back that said many companies are abandoning their sprawling suburban campuses and are moving back to the city. I found this interesting, because where we work, like so many things in our lives, seems to be in the midst of disruption.

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Frederick Winslow Taylor

 

The psychology of the workplace is now a thing. It never used to be. In fact, my youngest daughter is focusing on exactly that as she pursues her post-grad thesis. In the Frederick Winslow Taylor induced hangover that most of corporate America has been trying to get over in the past several decades, workers were considered machinery. Which was a step forward. Prior to that, they were considered grist for the mill. At least Taylor recognized that well maintained machinery worked better than neglected machinery.

But there have been a significant number of studies looking at how the psychology of the individual contributes to the corporate bottom line. And some interesting paradoxes are emerging. Many of these deal with the nature of the workplace.

We used to think of all workplaces as factories. They were built where land was relatively cheap. This led to the whole concept of the suburban campus. But we spend a lot of time at work. We should be happy there. And our work life should not be out of sync with the rest of our lives. So being exiled to the corporate hinterlands of Blandeville, Connecticut or Nondescript, New Jersey may not fit very well with our life plans anymore. We want workplaces that are close to where we choose to live. We want an integrated work-life balance, not an artificially divided one.

The location of our office isn’t the only thing being disrupted. Should we even go to the office at all? Telecommuting has been explored as a viable option by a number of companies.

When I was CEO of my own company we tried our own telecommuting experiment. The rationale is pretty compelling: if you just need a computer and a connection to work, why bear the expense of all the trappings of a formal office? Additionally, it allowed us to recruit in cities where we didn’t have an office. Finally, there was little doubt the majority of our telecommuting employees were happier with the new arrangement.

For us as employers, however, the results were mixed. When our company was acquired, the new owners ended the telecommuting experiment. It was not a popular decision with our employees. I initially fought against it, but eventually, I came around and supported the requirement to share a physical space. This was a few years before Marissa Mayer brought the same hammer down on the telecommuting employees of Yahoo. The infamous memo was sent at Mayer’s behest by Yahoo’s Head of HR, Jackie Reses on February 22, 2013. Here is an excerpt that provides context for the decision:

“That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home.”

We found the same thing. While employees loved telecommuting and were generally disciplined in ensuring we got full value from them, we missed the collaboration and creativity that comes from chance encounters and serendipitous discussions. One could make a strong argument that telecommuting might be more efficient in terms of productivity, but an increasing number of studies show that effectiveness is often sacrificed.

Like most things in the sphere of human behavior, I think the disruption of the workplace is subject to the pendulum effect. The starting point was the faceless beige cubicle satirized in Dilbert. As this started to change, we swung too far over to the other side, embracing the geographically unlimited possibilities of a connected workplace. But we found that something was sacrificed in the transition. The best answer likely falls somewhere between these two extremes.

I have talked before about the research done by MIT’s Alex “Sandy” Pentland. He found that the most effective teams have two distinct phases they go through – exploration and engagement. Innovation and creativity comes from exploration. Productivity comes from engagement. I suspect that telecommuting might work well for engagement. But exploration requires some type of common ground – literally. For example, Pentland found something as simple as all employees taking coffee breaks at the same time lead to a significant increase in team effectiveness.

However the workplace may evolve in the future, I believe we’re learning that some essential element of teamwork still requires us being in the same place at the same time, or, as John F. Kennedy once said, “breathing the same air.”