The Right and Left Brain Blog

In recent years marketers have stressed actions such creating a buzz or reaching a Tipping Point. While these are new, explosive and fun, they may not be the most appropriate strategies in today’s environment.

Specifically, we need to revert to a back to basics formula in these difficult times. For example, luxury goods and bells and whistles on products are clearly not the buzz of the moment. Rather discounts, value, and cheap seem to be the new mantras. The Chairman of Google even acknowledged how many more price comparisons consumers are making. Several retailers have commented that 20% off seems to be the new regular price. Stores like Wal-Mart and Costco are prospering while luxury retailers are struggling. This should not mean an end to innovation and creativity but rather simply a change in tactics:

• A few weeks ago I went to buy a plain navy blue suit at a well known department store. They had stripes, plaids, colors, etc. but no plain blue suit in my size. Retailers need to consider what customers want rather than what their whim wants to create. The little black dress, clothes that fit, khaki pants, etc. with great value and quality can still be done creatively. For example, Spanx and Not Your Mothers Jeans have built successful businesses by simply stressing fit.

• Quality and value need more attention and can be creatively approached. Suppliers generally do a horrible job describing quality and value features. They simply need to change from slapping a designer name on a mediocre product and charging more money.

• Customer service can be a critical differentiator in marketing. Geek Squad, internet store pickup with no cost, and Lands End’s no questions asked return policy are examples of customer service excellence. Many auto insurers have simplified the estimate and repair process with both better service and lower costs. In contrast, companies like Dell are charging extra if you want to talk to an American customer service agent.

• Organizations need more collaboration, openness and communication to improve the entire product process. Suppliers say retailers are out to get them. Retailers say they care about their suppliers but that they don’t change. Somehow these discussions need to change from dividing the pie to maximizing the process and mailing the sum more than the parts.

In short we need to focus on maximizing the entire supply process rather than simply developing new marketing or product approaches that simply result in increasing expenses and not increasing total sales and profits.

The recent economic events ignore the complete obsolescence of our corporate models. Nowhere was this more evident than in the recent saga of the auto companies. Their original performance in front of Congress was insulting. However, even their second performance ignored when they will make money, how they will really change and what concessions they need from all constituents.

However this is a symptom of many big companies and not just the auto industry. Financial, furniture, retail, and conglomerates are all examples of entire industries that have simply ignored market realities and provided no returns for investors over the past 6-8 years. For example, here are some key realities that they refuse to address head on:

• The presumed advantages of bigness, such as economies of scale, spreading expertise, marketing synergies, etc. have simply shown little evidence of success in the last few years.

• Their tunnel vision. Organizational constraints ignore emerging technologies and opportunities.

• They lack the flexibility to respond to the needs of the project rather than using outdated solutions to new problems.

• The net disgrace is Boards of Directors continue to pay hundreds of millions of dollars and in salaries and bonuses to executives who have produced unacceptable results for shareholders, consumers and employees.

• Companies refuse to sell or liquidate divisions or product lines that have little long term prospect of success

• At the same time they are loathe to invest in long term needs that will adversely affect this quarters profits.

• In many cases, consulting firms’ and investment bankers’ advice about synergy and economies of scale has just been wrong.

• Companies are still following obsolete strategies such as product proliferation, extensions, etc., which are simply obsolete in a stagnant economy.

Most important, these companies have failed to realize that the rapid changes and crises of the past few years from 9/11, to Google, to then internet, to the emergence of China, to the recent financial recession are here to stay rather than being once in a lifetime events.

The net result of these issues is that many organizations are incapable of creating environments that support the qualities necessary to succeed in today’s changing and complex marketplace. In particular, professional cultures and decision makers need to replace hierarchies, which are the cornerstone of size.

Organizations are frequently focused on control, minimizing risk and treating everyone equally. Edward Demming is quoted in a great line about leadership: “It is the ability to drive fear out of the organization so that employees will feel comfortable to make decisions on their own.” Large organizations cannot focus on maximizing the energy, skills and motivation of its employees.

There is no question that there is more communication than ever today. Many of us receive some combination of more than 100 emails, 2-3 hours of T.V., 2-3 hours of listening to an iPod, 3-5 hours of interaction with the computer, reading numerous books, magazines and other papers, 1-2 hours of phone conversations, 1-2 hours with the Blackberry, 1-2 hours of blogging, podcasts or networking sites like MySpace, 2-3 hours of meetings, and even a little social time with our family and friends. The problem is, what do we really hear? The answer is, despite all the great efforts of these communications, we hear very little:

• Just think of the loss in communication when we are multi-tasking on the web, talking on the phone and thinking about something else at the same time, and being with our family kids, which are often the case.

• The option of “reply all” on our internet programs has probably encouraged more useless communication that we don’t need or care about than any other simple vehicle.

• Similarly, voicemail, Tivo, and other recording devices allow us to catalog even more communication that we mostly didn’t need in the first place.

• Answering cell phones while in a meeting and can’t talk to the person anyway is so annoying. People are so paranoid that they answer the phone in a meeting, and say they can’t talk rather than not answering and letting the person simply leave a message.

One of the obvious characteristics of communication is the perceptions of the presenter and environment of the communication. What we all know and seldom acknowledge is that our perceptions of the presenter have a dramatic effect on our understanding and acceptance of the communication. However, we frequently ignore this fact, which has been well proven in what is called the “Theory of Cognitive Dissonance,” which articulates this view and has been affirmed through years of research. We all know better appearance, clearer communication, a pleasant environment, and respect for the presenter affect our acceptance of communication. This is one of the rationales for using celebrities, pretty girls or experts in much of our advertising.

In short, it is not just what we say but to whom we say it that affects our success. As a personal example, I am constantly bothered that readers of my communication will correct my spelling and grammar and ignore my message. Do you have a good example? Let’s hear it.

Have you heard of Sergey Brin, Mark Zuckerberg, Larry Page, Chad Hurley, or Jawed Karim? They are under 40 years old and the founders of companies like Google, YouTube, Facebook and PayPal. All of these entrepreneurs and thousands of others have tremendous skills, have developed revolutionary concepts, bucked the system, followed their dreams and devoted unending energy to make their efforts successful.

This is not a new phenomenon. America was built by great innovative entrepreneurs such as Ben Franklin and Thomas Edison. The challenge is to change our individual, organizational, and cultural norms to focus on encouraging rather than diluting exceptional performance. In today’s challenging environment, we need to explore ways to overcome the bleak the realities and step out to face new challenges. How do we really promote excellence at the individual, organizational and social level? There are easily doable actions:

1. Recognize your strengths and weaknesses and pursue the strengths. In particular, it is the weaknesses that are frequently ignored.
2. Seek opportunities where you can succeed. People are frequently loathe to quit many dead end jobs or admit they are wasting their careers.
3. Have the confidence to pursue what you should be doing. Many times both individuals and organizations minimize risk even if the payoffs more than the justify risk. Similarly, we need to work on the factors that reduce confidence. For example, working in troubled organizations can simply be deadly.
4. Spending too much time trying to correct weaknesses rather than exploiting advantages can result in significant lost opportunities. Organizations continue to feed lost causes and ignore realities.
5. You cannot achieve excellence or meet goals if you are not measuring the result and getting and receiving feedback. In particular, rewarding success both small and big in terms of both psychological and career rewards becomes a self fulfilling prophecy in creating more excellence.
6. If you don’t mistakes, you aren’t trying hard enough. This is the best phrase I have heard in terms of learning to accept risk. The key issue is not to encourage failure but do the successes justify then total effort.
7. We must recognize the importance of upgrading ourselves, our organizations and our society.

In summary, it is clear that both individuals and organizations have over emphasized the risk of failure versus the rewards of success. One need only look at the old line industries such as automobiles, and furniture to realize that many of them are simply not adapting to their changing environments and taking the necessary risks to survive. Similarly, individuals underestimate the risk of staying in poor situations and the rewards of trying to maximize their capabilities.

If you aren’t part of the solution in dealing with the recession, you are part of the problem.

This old 60’s phrase is relevant in many organizations’ reactions to the economic crisis, which is affecting most organizations today. While everyone acknowledges the recession and is worried about it, there is a lot more discussion than action. Most of the response is “it will pass soon; there is nothing we can do,” traditional responses such as cost or position reductions, etc. What is needed is a drastic rethinking of organizations’ business and financial models. Some suggestions are as follows:

• The first need is to recognize the problems and that they will be longer rather than shorter. The almost weekly changes in forecasts and plans in many organizations are evidence of the denial. A more important reality is that in the next year or less some of our competitors, suppliers and customers will probably not be in business and we need to take action to ensure it is not us.

• Our prior growth and marketing models have typically been built on differentiation and adding product extensions. This is being replaced in the short term with an almost reverse psychology of price, sale, unbranded products, Wal-Mart etc. being considered chic.

• In addition, suppliers and customers don’t need all the proliferation of products that don’t sell, take up inventory and cause excess product development expense. Rather we need to focus on winners and ensure survival rather than trying to find marginal opportunities in a difficult environment.

• We need to review entire processes and structures rather than just making marginal cuts. Unproductive product lines should be dropped, efforts to simplify and shorten operations and lead times need to be evaluated.

• We need to understand the uncertainty and fears of our organizations and be more open. In terms of communicating changes, the need-to-know approach is simply outdated by communication, gossip, interpretations etc.

• Decision making processes need to be reconsidered. The old authority or “we have always done it this way” don’t work anymore. Organizations need to use more expertise, collaboration, planning and fact gathering in their decision making.

In short it is a new world and organizations need to accept the current environment as a test for the future. Flexibility, speed, and innovation will replace yesterday’s methods.

The auto industry crisis is an example of decision making with little understanding, goals or analysis. On one hand, advocates argue that the government needs to bail out the industry in order to save jobs and related companies, and prevent more economic crises. Critics claim the companies have no plan; they will only need more money in a year or so and are not dealing with long term solutions. However, few participants are looking at the impact of various proposed solutions.

For example, American companies’ costs and dealer networks are both expensive and non-competitive. The companies have failed to develop plans to make small cars competitive while relying on gas guzzlers like big vans for their profits. They have models and dealer structures that are unwieldy and out of touch with today’s realities.

We probably need some kind of Federal bailout to keep the companies solvent and avoid bankruptcy, which seems to have more negative consequences than the country wants to risk. However, why not consider some of the following suggestions to provide long term solutions and ensure that the companies and its employees make a commitment to fix the problems:

• Ask all employees (union and management) to take a 10 % pay cut to make the companies more competitive and save lots of cash. Set up a pool to give that savings in options at 50% above the current stock price. It thus provides incentive systems for employees to earn back the lost pay.

• Eliminate unprofitable cars and marketing with little hope. In particular eliminate gas guzzlers to provide investment for more efficient cars.

• Reduce dealer incentives costs and force dealers to be competitive. This will result in an inevitable loss of 20-40% of the dealers.

• These changes should also reduce costs, enable car companies to lower prices and increase sales.

• Have the companies focus on energy efficient cars to provide long term social gains. This can be simply accomplished by expanding the taxes on cars with low gas mileage.

Discussing these or other programs forces the companies to develop long term solutions. It also forces them to take responsibility for their futures rather than just ask the Federal Government for handouts. Finally it changes the argument from political philosophy to developing integrated solutions.

We always worry about the communication and not the process of the communication in business. Quite simply, we need more interaction and informal communication. These issues are well illustrated in a discussion of PowerPoint, which is among the most overused current communication tools that ignores the needs of the audience. I certainly applaud the benefits of the technology, capabilities, ease of use and its inherent ability to make presentations simpler and clearer. However, it is a tool gone whacky. There is nothing worse than having the lights go out, and sitting through a 30-60 minute canned, slick, PowerPoint sales presentation that talks about how passionate, skilled excellent, involved experienced, and differentiated the supplier is.

The presenter is usually a sales person who has nothing to do with implementing the project, and may have sold for a competitor or another product three weeks ago. In addition the presentation is frequently prepared by a graphic artist or department that has no relation to the product or presenter. Similarly, the presentation is mostly about how great the supplier is without saying what they can do for the client.

They frequently ignore the fact that in most cases they wouldn’t have been asked to present if the client didn’t know how great they were to qualify in the first place. What’s worse is they don’t allow interaction because they aren’t really prepared, have little information on the specific clients needs, and refuse to provide the presentation before the meeting to allow the client to prepare and ask questions. Furthermore, they are oblivious to the fact that half the people take a nap with the lights out and that the client has listened to virtually the same presentation from however many resources they have qualified to present.