At the beginning of December I gave a talk at Google’s Firestarters event that built on some of the ideas I wrote up in my post about strategy as algorithm. Rather than posting the whole deck, which at some point I will do, I thought I would try to share the slides in groups of a few at a time and tell the story over a number of posts. This is a bit of an experiment and mostly because I’m trying to get all the posts I can out of the deck, so thanks for bearing with me.
What is strategy? Anyone who works in and around brand has run into something called strategy, but seldom do we step back and actually ask ourselves what it is and what it means. A few weeks ago I posted this definition from Lawrence Freedman’s book Strategy: A History (via Martin Weigel):
Strategy is much more than a plan. A plan supposes a sequence of events that allows one to move with confidence from one state of affairs to another. Strategy is required when others might frustrate one’s plans because they have different and possibly opposing interests and concerns… The inherent unpredictability of human affairs, due to the chance events as well as the efforts of opponents and the missteps of friends, provides strategy with its challenge and drama. Strategy is often expected to start with a description of a desired end state, but in practice there is rarely an orderly movement to goals set in advance. Instead, the process evolves through a series of states, each one not quite what was anticipated or hoped for, requiring a reappraisal and modification of the original strategy, including ultimate objectives. The picture of strategy… is one that is fluid and flexible, governed by the starting point and not the end point.”
Despite that, most of what we talk about when we’re discussing strategy is actually a small set of tools that were all developed before 1970:
- Market Segmentation (1920): “General Motors CEO Alfred P. Sloan managed GM’s car models through loosely monitored “divisions,” which operated as separate companies with Sloan’s oversight, laying the groundwork for today’s corporation.”
- Customer Funnel (1959): “The progression through the four primary steps in a sale, i.e., attention, interest, desire and action, may be compared to that of a substance moving through a funnel.”
- Scenario Planning (1967): “The practice involves envisioning multiple future events and developing plans for responding to them. Shell first experimented with scenario planning in 1967, helping it navigate the oil shock of the 1970s.”
Ultimately a strategy is an approach for solving a problem. In the case of marketing, a strategy is generally the formula a brand develops to identify the best mix of activities and messages to communicate the positioning of the product or company with the goal of driving growth (either in sales, price, or purchase occasion). Strategy, then, is not the activities, but rather the framework a brand uses for choosing (and not choosing) those activities. (We will come back to this point later.)
For strategy to live in the world it must be paired with execution. The problem with strategy is that it doesn’t work in a vacuum. Strategy without execution is just words on a slide. For our purposes, then, when we talk about strategy we are talking about two things: The approach to solving the business problems and the coordination of resources to execute on that approach.
In the next installment I’ll dive into execution, how it’s changing, and why that matters a lot for strategy. Stay tuned.
In response to my post on Strategy as Algorithm, Michael Migurski shared this image with me from P&G CEO A.G. Lafley’s book Playing to Win: How Strategy Really Works.
These are the five questions Lafley’s used for making major strategy decisions at P&G. In explaining why he uses this approach and why strategy is hard, Lafley explained:
In Roger Martin’s and my view, the essence of strategy is making 5 integrated — sometimes difficult — choices; so 5 choices to win. And a lot of us, a lot of human beings, don’t like to make choices, right? Choices are difficult, we want to keep our options open, choices involve taking risks, and not only risk to the business but personal risk. So I think there’s this sort of human resistance to making choices, and choices are the core of strategy.
Business Insider has a nice breakdown of what each step in the above image means and how they were used. Here, for instance, is how they explain the capabilities question:
What are my core competencies that are going to enable me to win? In order to make the above decisions work, they have to be based on and supported by the things that a company’s best at. For P&G, it was innovating quickly and understanding consumers.
Now that Lafley is back at the helm as CEO it’s interesting to take some of his more recent decisions, like the big one to divest a large number of brands, through the lens of this system.
When I was at Naked we used to have a joke for an advertisement that was little more than a strategy line: We’d say “your strategy is showing.” If you work in the marketing world you know what I’m talking about, it’s those ads where someone wrote a line about what the brand was trying to accomplish with its marketing and rather than coming up with a creative way to represent that they just made the line the ad. (I can’t think of a really good one off the top of my head, so if you’ve got one chime in.)
Anyway, I was looking at Twitter when they first launched their redesign and all I could think was “your strategy’s showing.” Obviously it’s not an ad, but when you see the labels on the tabs at the top its so obvious that they let their strategy slip into their nomenclature decisions.
For those who haven’t noticed the new tabs are “home,” “connect” and “discover.” Home is good, it works, I get it. But connect and discover are very funny choices for a company that is otherwise almost always very impressive in its UI decisions (it’s sort of amazing how far they’ve come since they were an organization that outsourced design completely).
Anyway, back to “connect” and “discover,” what do they mean? “Connect” is interesting and I really like the new activity feed view, but I certainly wouldn’t think of what lies beneath as being represented best by the word “connect.” “Discover” takes things even further. That’s one of those words that gets thrown around (we used it at Percolate for awhile) even though I’m fairly convinced no normal person on the planet has ever though of what they do when they find cool stuff on the internet as “discovery.”
The beauty, of course, is that if you’ve got a platform with however many hundreds of millions of people used Twitter than you can actually define these things. Often, that’s the best solution since no other word perfectly encapsulates what it is your trying to represent. We ultimately went with “brew” to describe the main Percolate dashboard for brands because it’s something unique and because of the relationship with clients, something we can be sure to define as part of the on boarding process.
But still, it’s funny when you catch someone with their strategy showing.
We’re hiring for a bunch of different positions at Percolate and one of the big ones is sales. My co-founder, James, wrote a good post outlining how we approach sales and hiring salespeople. This part in particular hit close to home:
I’ve thought a lot about my profession as my career in digital advertising sales has evolved. It is an interesting profession that I’ve enjoyed but there are things about being a salesperson that I’ve always been intrigued by. For starters, a lot of salespeople, even very good sales people, don’t like to think of themselves as being in a sales profession. They will call themselves ‘business development’ or ‘account manager’ or ‘chief strategy officer’, while often their goals all ladder back to a direct sales relationship with the company that employs them. They might pass it off as, ‘well everyone sells’, and while that is hopefully the case, why shy away from what your profession is? Own it and be proud to say you’re in sales.
Towards the end of my time in agencies I began to fully grasp this. Most/all of your job as a senior strategy person is actually sales: You’re helping to get client buy-off on creative ideas. As we’ve been starting to hire salespeople I’ve been talking to some of the folks I know from the agency world and trying to get them to come over under this capacity. Surprisingly, most are much more open than I would have expected. To James’ point, the holdup is almost entirely in the title, they are worried about the implications of being a “salesperson” not in the actual selling (which most of the folks in advertising I know live for).
Anyway, no specific point here other than to say you should read the post and, if you like it, come work for Percolate.
I was going to wait and talk more about Percolate a little later in the week when I had a chance, but then Felix Salmon went ahead and wrote a pretty epic post about what he saw as the future of online advertising and now I’m left with no choice but to write a response (because I found myself nodding so much, not because I disagree).
The world Felix lays out is the same one I’ve been seeing and thinking about for the last seven years. It’s a world where online advertising, mainly banner ads, has fundamentally failed brands in a crazy number of ways. The dirty secret about the business is that brands, agencies and media companies all run banners knowing that they mostly don’t work. Everyone is in on it. It’s not that they don’t care about their effectiveness, it’s just that there’s not really another easy way out there. All parties know the web is important and banners are the easiest way to check the box.
That’s never been my bag. I joined The Barbarian Group a few years ago because I fundamentally believed that for brands, earning attention was more valuable than buying it. I don’t believe there’s no place for online advertising (I’m using the word in the narrowest sense to mean the buying of placements on media sites), I just don’t believe it’s the center of a successful digital marketing strategy. Period.
I think most people point to the shift from one-to-many to one-to-one as the primary difference between the offline and online world for advertisers, but I think there’s something else at play. This morning an article I’ve been working on for a month or so came out on Adage, where I explain how I see the shift:
The idea of “buying media” always struck me as a bit odd. If anything, what brands have been doing is renting: Paying the media owner to borrow the audience’s attention for a short period of time. In the pre-internet days, rental was pretty much the only game in town and that was just fine.
But then the web came along and started to play with the economics. All of a sudden you could pay once and message continuously. (Think: Brands buying fans on Facebook.) The thing is, because of the peculiarities and rates of audience rental in traditional media, brands (and agencies) are built for campaigns instead of sustained communication.
Sustained communication is a real shift in thinking for brands (and agencies). Lots of people talk about this shift as a move from campaigns to products, but I think calling it sustained better explain the shift and value opportunity. That value opportunity is about building on top of previous success (and audience) instead of starting over every time. Microsites were probably the best example of this: Buy a bunch of advertising, drive people to a new .com, stop advertising, stop getting traffic, tear the site down, repeat.
Like Felix, I believe content needs to be at the center of a brand’s sustained communications strategy. Agencies seem to agree, bringing in content strategists en masse to work with clients on become publishers. The issue I’ve seen is that most of these strategies just aren’t sustainable. In my Adage article I put it in terms of stock and flow:
Traditionally, brands have been quite good at creating stock content in the form of ads and some of the more forward-thinking ones have found really interesting ways to translate that capability to beautiful web video and interactive experiences. While that’s great for short bursts, creating a sustained messaging strategy requires a combination of both stock and flow: longer-form, higher-quality content coupled with the quick-hit links to other interesting and relevant content on the web.
How does this look? On the extreme end it’s BabyCenter, RedBull.com or AMEX OPEN Forum, those brands are so far out ahead of everyone else from a publishing standpoint it’s just amazing. And look at the value they’ve created for themselves: Their sites are big enough that other brands want to advertise on them to reach the audience they’ve amassed. Not necessarily the most important thing for the brand, but a pretty good statement about what they’ve accomplished.
Now obviously those aren’t the most accessible examples and the two most common concerns marketers have when they hear them are 1) I don’t have the permission to speak to my audience in that way and 2) I can’t afford to build a content organization in the way that those brands have.
The idea of Percolate (you knew I’d come around to it) is to make it answer those questions and make it possible for every brand to create a sustained platform. On the permission question, it’s really just a problem with definition. Every brand with customers has permission to speak to them, they just need to find their voice. Look at the work of Weiden + Kennedy and BBH on deodorant brands if you don’t believe me and American Express is a credit card brand, that’s hardly the most exciting category on the planet. On the second point (staff & costs), it’s about a good balance of stock and flow and having the right tools in place (like Percolate) to make it all happen. The way we see it breaking down is in these three components:
- Calibration: To begin consuming, you’ve got to decide what to consume. If you’re a person, that’s easy, you’ve got your tastes and interests mapped out. If you’re a brand, it’s a little more difficult. We’ve worked out a method that we use to back out of brand/campaign strategy, and into a set of sources for Percolate to sift through.
- Algorithm: Separating the signal from the noise is even harder if you’re a brand (or an editor at a brand) than if you’re an individual. The algorithm does a lot of heavy lifting to try to get to the most interesting content.
- Publishing: The real point of all that lifting isn’t so it can display it in Percolate, it’s so the brand can find interesting content to comment on and push back out.
When you put the content produced in Percolate and combine it with the beautiful content that is an agency’s bread and butter you get a compelling publishing platform that can actually be sustained over time. Once you get that down, it’s only a short step to start thinking about what you do with the content, which is where Felix and I converge again:
It’s easy to create an ad unit which is primarily links to third-party sites; I’m sure with a bit of effort and creativity you could put one together which is even better than the Counterparties unit on Reuters.com. Start placing that ad over the web, and people will, for the first time, actually have a reason to want to look at your ad; when they see it, they’re even likely to click on it! Sure, that click won’t take them to your site — but it’s still a great measure of engagement. And they will love you for sending them to great content.
We’re not quite at that part yet, but hopefully this helps lay out the vision and explain what the hell we’ve had seven people holed up in an office on Bond Street working on for the past year.