Category Archives: Corporate Strategy

Digital Voyeurism: The New Reality

I remember the first time I went to my local gym and saw a new sign, hastily hand drawn and posted, announcing that cell phones were no longer allowed in the change rooms. It took me a minute or two to get it, but I finally figured it out. Ahh..they come with cameras now.

There are two dimensions to this that I wanted to briefly explore. First of all, with digital cameras everywhere, businesses have to be more careful about the face they show to the public, because it’s likely that if their bad side is showing, there’ll be someone there to snap a picture. Consider the example of one Kohl’s store in Dallas.

kohls5_2A shopper visited the store in the post Christmas season, found a store that looked like a tornado just ripped through it and just happened to have a cell phone with a camera and a fairly well read blog. It gets worse. His post happened to catch the eye of Seth Godin, who has one of the most read blogs on the Web. The result? A PR nightmare for Kohl’s. And this can happen anywhere. The next time a character at Disneyworld alledgedly sucker punches a guest, you can count on a camera being nearby. It’s enough to make your average PR Director retire to a remote Caribbean isle, one without internet connections.

The second implication has to do with personal privacy. If there are pictures snapped of us, and they get posted to the web without our knowing, or our permission, what will the fall out be? They’re there for the whole world to see, through any one of a number of image search engines. Fellow SearchInsider David Berkowitz explores that in his column today:

“The overarching issue, the one that’s most likely to keep me up at night, is, “Do we have to entirely relinquish our right to privacy?” If the answer is yes, then it simplifies the issue. We press forward with every technological innovation, privacy be damned. We accept that everything we say can be recorded, and it’s not just to improve customer service.”

Smile..you’re on Candid Camera!

Over 50% of CMOs aren’t looking for Big Agencies for Online

A new study has reaffirmed something I’m hearing more and more. Big agencies don’t get online.

Sapient, through Evalueserve, surveyed a number of CMO’s, and just over half of them believe that traditional, large ad agencies are “ill-suited to meet online marketing needs”. They believe that there’s too much invested in traditional models, and that agencies can’t think beyond these constraints.

The upshot? Fewer than 10% of those polled seek to partner with large agencies for online marketing. They instead look for partners with roots in technology, a high degree of creativity and traditional print expertise, or, even more common, to use multiple agencies.

It’s not that large agencies don’t have people capable of getting online. In many cases, they do. But they’re trapped in a rigid and bureaucratic structure that sucks the lifeblood out of the bold thinking and initiative essential for online. They spend more time fighting turf wars than they do providing value to clients, and it seems that the clients are getting tired of it.

Increasingly, large agencies are struggling to understand the shifting marketplace. They are fighting the idea of a participatory approach to branding, with a community of consumers at least as important in the process as the actual brand itself. They are far more comfortable with the more traditional, and much more profitable, command and controlled channel form of marketing that has been built over the last several decades. They’re struggling to win in a new game where they don’t know the rules, largely because they haven’t been written yet.

The big agencies are out there shopping right now. They’re looking to buy expertise needed. I wonder how successful this will be. It’s not just the expertise they’re lacking. It’s the environment needed to let their experts do their job. You can buy all the roses you want, but if you lock them in a dark basement, you’re not going to see much blooming.

Most Shoppers Don’t “Shop Around,” at least Physically

A new study from the Grizzard Performance Group found that US Shoppers don’t have time to “shop around”, with 62% not bothering to compare prices at even two stores. However, they’re very open to saving money, right up to the time of purchase. It’s just that they don’t have the time.

This ties in with my previous post about real time inventory and e-shopping, currently being tested by a a few online services at malls and major chain stores. When we can quickly and conveniently check prices at a number of stores in our area through our handheld devices, trust me, shopping will change forever. And then, a whole new dimension of direct response marketing comes into play. Last minute pushes of discounts at the point of purchase, delivered through your mobile device. As the study by Grizzard indicates, consumers are very open to saving money on a comparable product, even if it wasn’t previously in your consideration set. So consider this. The shopping engine knows what you’re looking for, knows where you are, and knows what comparable products are in stock in the same store. The advertiser can purchase the right to push a message to you right at the point of purchase, offering you 15% off their product, or even offering an automated “match and beat” deal, where it automatically matches the price of whatever you’re buying, and takes a further 10% off. A store around the corner could do the same thing, making it worth your while to check out at least one more store. All these things could easily be handled by algorithms and pre-set pricing thresholds.

And what if we take the Priceline approach? You’re ready to buy, but before you do, you send an offer to stores in your area with what you’re willing to pay for a particular product. The store in question can then decide whether to accept your offer or not. It would be true consumer control. And the really ironic thing? It’s a whole bunch of sophisticated technology, but it brings us right back to old fashioned haggling over the price. Isn’t it fascinating that the more sophisticated the technology, the closer we get to how we used to shop a century ago?

Should Google Stick to the Knitting or See What Works?

I was just doing some year end cleaning of my “to be blogged about” folder and found a couple of lingering items from a few months back. While most of that time, that would make them hopelessly outdated, these two touch on a bigger theme that is still relevant, and is aligned strategically to a book I just finished re-reading.

First, the here-to-fore neglected articles. Did-It’s Bill Wise wrote a Search Insider column on how Google wins by losing, and John Markoff at the NY Times talked about the concern over “Google Sprawl”.  Both talk about Google’s strategy of pushing into new businesses at a frantic rate, seemingly trying to reinvent everything at the same time. But they take slightly different approaches. Bill’s opinion is that the strategy works because the string of new challenges, and the many subsequent failures, continually generates buzz for Google that keeps driving it’s main revenue channel, search. The NY Times reports on recently voiced Google concerns that the myriad of new initiatives will confuse users and impact the user trust in the Google brand. It also touches on the implied conundrum that comes with Google’s goal to integrate functionality into a simple and elegant interface, making it the online Swiss Army Knife, and it’s desire to keep user data open, steering away from the Microsoft approach that landed them in hot water with the Department of Justice. The timing of both pieces was right around the Google acquisition of Youtube.

There’s a bigger piece here that seems to be missing from both viewpoints. Let’s look at Wise’s assertion first:

“By continually announcing that it’s expanding beyond search, Google gains tremendous buzz, which translates into higher stock prices, which translates into still more buzz. All that attention keeps Google top-of-mind; by being top-of-mind, Google draws more users and more loyalty towards the Google brand–which means more searchers flock to Google Search, and more searchers stick with it. And it’s through Google Search that Google actually makes its money.

All that buzz is only beneficial if the new launches don’t succeed. If Google were to successfully expand past search, users would mistrust it as a corporate giant bent on empire-building–a problem that’s certainly familiar to Microsoft. Because Google fails at really getting a hold beyond search, users don’t see any effects of Google’s empire-building, and instead only see Google as a company that’s continually on the rise.”

The problem here is that Wise is confusing strategy and a by product of an approach that’s baked right into Google’s corporate DNA. I really don’t believe Google is purposely trying to fuel the buzz machine by venturing into areas with low odds for success. I believe Google does this because they don’t know any other way. It’s part of their genetic code.

Next, John Markoff starts to uncover the clues that point to the bigger picture:

“Google executives generally answer questions about acquisitions by saying that the company is still experimenting with business plans, or by arguing that a program like Sketch-Up — a simple computer-aided design program — will have an indirect revenue impact by making the entire Google service more valuable.”

To be sure, the culture of grass roots innovation that has been scrupulously nurtured at Google is at the same time it’s greatest strength and it’s greatest challenge. And despite the fact that Google is being hailed as a pioneer, it’s ground that has been trodden before. Google is hardly the first to go down this path. Which brings me to my renewed acquaintance with Jim Collin’s and Jerry Porras’s book Built to Last.

The Google mandate that a percentage of their engineer’s time be set aside to work on new, cool and cutting edge products is a chapter that was stolen right out of 3M’s playbook. And 3M, like HP, like Sony, like Motorola and like many of the other visionary companies profiled in Built to Last, started without a business plan. These companies worried first about the who, and then worried about the what. Google is clearly following in the same footsteps.

In fact, in the book, Collins and Porras show how visionary companies often “try a lot of stuff and keep what works”. Here is a pertinent quote from the book:

“Visionary companies make some of their best moves by experimentation, trial and error, opportunism, and – quite literally – accident. What looks in retrospect like brilliant foresight and preplanning was often the result of “Let’s just try a lot of stuff and keep what works.”

Collins and Porras devote a whole chapter to the topic. They show how many iconic corporations struggled, often for years, before they found the right business model. Google has a leg up on these, as they already have a very successful cash cow that’s driving their ability to “try a lot of stuff”. And it’s one notable area where Collins and Porras offer a different viewpoint from previous seminal works, including Tom Peters’ and Bob Waterman’s In Search of Excellence. Peters and Waterman advocate “Sticking to the knitting”, warning “the odds for excellent performance seems strongly to favor those companies that stay reasonably close to the businesses they know.”  Collins and Porras counter that if that were always the case, 3M would still be trying to run mines in Minnesota, HP would be selling nothing but audio oscillators and American Express would still be a delivery service.

The challenge for Google comes in not impacting the user, as Markoff identified in his article. Ironically, it comes from Google’s initial success in search. If Google search wasn’t as successful as it is, Google would have free reign to experiment. But they have to pay scrupulous attention to the user experience. I’ve commented before that Google’s biggest obstacle as a visionary company is it’s early success.

Here, Google is faced with the Yin and Yang challenge that faces all visionary companies. How to preserve the core while at the same time stimulate progress? And this gets down to a fundamental place where Google might be veering off track. Google’s core purpose, and the one that Google search succeeds very well at, is to organize the world’s information and make it universally accessible and useful.  This should be what the company scrupulously protects. All of Google’s free time initiatives should be aligned to that core purpose. But Google seems to be trying to pursue a number of core items at the same time. Redefining how advertising is bought and sold (recent forays into print and radio) seems to have little to do with Google’s stated core purpose. Controlling the main intersections of the new online global community (the purchase of YouTube) might be tangentially related, but clear alignment is not apparent. If Google stuck to their initial core purpose, that gives them scads of room for growth and innovation.

If Google is going to pursue a grassroots culture of innovation, that’s admirable. If they want to try experimenting in a number of areas and see what succeeds, while at the same time pruning out the failures, they can take comfort in knowing that strategy worked well in the past, notably for 3M. But to go down this path, it’s essential that an overarching core purpose be defined and communicated clearly to each and every Google employee. Innovation has to be aligned with a common goal. And when companies try to identify more than one core purpose, they can lose direction. Google might be well advised to see how other trailblazers have handled this in the past. For example, the core purpose of 3M is to solve problems through technology. While it’s broad and all encompassing, it does provide a sense of direction for 3M employees.

If I was to identify one challenge for Google to face in 2007, it would not be the fragmenting their business model, or even defining one. It would not be nailing another surefire revenue channel. It would be deciding, clearly and unequivocally, what they want to do, communicating the hell out of that internally and by doing that, point all that formidable brainpower in one direction.

Finding Fame Online – and Fame Finding You

First published August 17, 2006 in Mediapost’s Search Insider

Gassime would never consider himself famous. He’s a very gentle, very kind man who happens to run a small hotel in Florence, Italy called Hotel Europa. He quietly goes about his business, welcoming guests, making sure rooms are clean and ready, and ushering people to tables in the small breakfast room.

There’s really nothing unique about the Hotel Europa, either. It’s probably similar to many small hotels in Florence and throughout Italy. It boasts just two stars out of five, is in a converted convent that’s hundreds of years old, and has a handful of modest but clean rooms.

But if there is anything unique about the Hotel Europa, it’s Gassime himself. In our brief stay in Florence, he charmed our socks off. First, he made a potentially frustrating experience–a miscommunication about our reservation that left us roomless on the first night–into a minor road bump and a memorable moment in our trip. He found two empty rooms, had them made up immediately while we waited, and constantly checked in to let us know the hotel’s staffers “were working for us.”

Over the next three days, we watched him say a cheerful good morning in at least four different languages to the various guests. Gassime personified graciousness. By the time we checked out, we felt like we were leaving family behind. We left him with a small gift, a thank-you card and the promise that if he ever comes to Canada, we’d love to return the hospitality. He thanked us, but said he’s too busy catering to tourists to do any touring himself.

Apparently, our experience at the Hotel Europa is not unique. We picked it because of similar testimonials on sites like TripAdvisor. In fact, if you search for Hotel Europa online, you’ll find a litany of kudos for Gassime. As we were checking in, a lady from the States asked me if we’d picked the hotel because of TripAdvisor. When I said yes, she said she had as well. She was traveling with a fairly large group. Although Gassime has never sought fame, by quietly doing his job and providing exceptional service, fame has found him.

And there you have an essential quality of the Internet. As we define community around topics of common interest, in this case trips to Florence, we join together to create our own celebrities. We make the Gassimes of the world heroes, and lay a trail so that others can follow in our footsteps. Through travel sites like TripAdvisor and others, we create our own recommendations.

Search acts as the connector to these nuggets of information. We gain the benefit of others that have been there and done that. The good is separated from the bad in a way that defies gaming the system and keeps everyone honest. I picked every place we stayed through the recommendations of others online, and we didn’t hit one dud. But better than just finding clean rooms, we found new friends, like Gassime.

Across Europe and around the world, diligent travelers are now finding these hidden heroes. They’re the people that run the kind of places you used to have to know a local to find–and even then, you could never be sure if you were getting a bum steer to a cousin or friend.

Another hidden hero was the family that runs the Donna Rosa Ristorante in Montepertuso, high up the mountain above Positano on the Amalfi Coast in Italy. This little gem of a restaurant is run by the energetic and talented Raffaella family, a wife and husband who drew their two grown-up children back from successful careers in various parts of Italy so they could do something together. How do I know this? I found it online. Donna Rosa has also found a measure of fame online, including being one of the favorite haunts of Diane Lane when she was filming “Under the Tuscan Sun.”

I like to think that I’m somewhat unique in the amount of online research I do prior to a trip. But the number is growing, and I’m sure that people like Gassime are starting to notice their small but increasing online fame. I hope that Gassime’s hotel continues to thrive, and that Donna Rosa’s reservation book stays full. These are rewards that come from a job well done, and I for one think it’s a very good thing that the Internet can make down-to-earth, gracious people like Gassime and the Raffaella family heroes. All too often we make our heroes from less worthy stuff.