I started and stopped this post four times as I tried to find the right way to open. Eventually I got tired of searching and figured it was easiest to just jump off the note I wrote to myself in Google Keep after the idea popped into my head:
That might not make so much sense (yet), but like any good note it captured enough of the concept that I remembered what I was thinking when I wrote it. I jotted it down as I was prepping for a webinar I did last week offering up some predictions for marketing in 2019. I was getting worked up (as I’m wont to do) about how much it bugs me when everyone in marketing talks about AI as if they have any idea what it really means or the implications.1 Someone asked why it bothered me so much and my answer, which kind of just poured out, was that once everyone starts agreeing about something (and saying it endlessly) it becomes less and less meaningful. This is not just some soft definition of the word meaning, though, it literally has less information.
Literally how?
A few months ago I wrote about Claude Shannon and information theory. Shannon wrote a seminal paper in 1948 called “A Mathematical Theory of Communication“. In it he defined the measure of information as, effectively, its unexpectedness (he called it entropy). The more random, the more information. This is precisely what bits measure (you can think of it as the number of yes/no questions it would take to get to the answer). What happens when you compress a photo? You take away the randomness. That’s why otherwise complex surfaces like sky or skin might come to look a bit pixelated: The compression algorithm is constraining the number of hues available in order to bring down the entropy (and therefore the file size) of the whole photo.
What does that mean for marketing buzzwords?
Well, as everyone starts to say the same thing and continue to offer little behind it, it becomes more and more expected and, therefore, starts to carry less and less information. When people layer on top of those buzzwords with real examples or alternative ideas, they return some randomness (and therefore information) to the concept. At their best, marketing contrarians are attempting to breathe some life into words and ideas that have otherwise lost their information content.
I don’t really like to think of myself as a contrarian because I think that often carries with it some notion of being different for the sake of being different (and trolling). Rather, I think if everyone is following one strategy or idea, the value of being the next person to jump on board is incrementally less (especially when that idea is poorly defined/understood). In a way it’s like an anti-network effect.
Back to Hinkie’s letter. It was leaked and provided an amazing view into the psyche of someone who was willing to be a pariah. In it he paints an interesting picture of the connection between contrarianism and traditionalism.
Here he is on contrarianism:
To develop truly contrarian views will require a never-ending thirst for better, more diverse inputs. What player do you think is most undervalued? Get him for your team. What basketball axiom is most likely to be untrue? Take it on and do the opposite. What is the biggest, least valuable time sink for the organization? Stop doing it. Otherwise, it’s a big game of pitty pat, and you’re stuck just hoping for good things to happen, rather than developing a strategy for how to make them happen.
And on traditionalism:
While contrarian views are absolutely necessary to truly deliver, conventional wisdom is still wise. It is generally accepted as the conventional view because it is considered the best we have. Get back on defense. Share the ball. Box out. Run the lanes. Contest a shot. These things are real and have been measured, precisely or not, by thousands of men over decades of trial and error. Hank Iba. Dean Smith. Red Auerbach. Gregg Popovich. The single best place to start is often wherever they left off.
Let’s bring it back to buzzwords.
So basically Hinkie’s argument is that the most appropriate way to be a contrarian is to also be a traditionalist: To be a respectful student of the underlying principles while also constantly probing and questioning whether they still make sense. One of the things that surprises me about the marketing industry is how often people miss this tradeoff. In an attempt to play the contrarian they shun traditional wisdom, but at the same time they repeat empty phrases and approaches at every conference that will let them on stage.
I actually think one of the reasons Byron Sharp’s book How Brands Grow has picked up as much steam as it has is because it strikes a good balance between these things. It’s a contrarian take (loyalty shouldn’t be a goal because it’s an outcome) but at the same time it’s deeply rooted in some traditional marketing ideas (marketshare, reach, and creativity to name three). This is a tough balance to strike, but when someone hits the spot is has the opportunity to really resonate.
Unfortunately, most of the time the industry misses the market by a lot. What we end up with a bunch of anti-historical/anti-intellectual slogans that get repeated ad-infinitum. It’s lots of words and little information.
Footnotes:
Here’s the notes I had for the question: “Let me start by saying that I predict in 2019 marketers will continue to talk about AI and ML interchangeably with no idea what the words mean. (I’m particularly salty about this.) I would broadly see we will continue to see ML become more available as different kinds of wrappers are made available that enables folks to use it in more of their everyday work. This seems to be some of what Microsoft and Google are doing with smart integrations into their work suites. In general, my take on AI/ML is it’s a classic case of Amara’s law, “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” In the short term, these things aren’t going to be writing copy and, anyway, that’s not that big a deal. In the long term, the promise of ML is data modeling and coding written by computers, not people. That’s definitely not a 2019 prediction, but it’s the road we’re going down.”↑
I recognize that the word/idea transformation belongs in the buzzword bucket, but if you read about Hinkie and what he did I think it’s a fair use of the word with real meaning. He was a heretic who questioned the most fundamental law of professional sports (“you play every game to win”) and rewrote the path to building a championship contender.↑
If you haven’t read any of these yet, the gist is that I’m writing a book about mental models and writing these notes up as I go. You can find links at the bottom to the other frameworks I’ve written. If you haven’t already, please subscribe to the email and share these posts with anyone you think might enjoy them. I really appreciate it.
The vast majority of the models I’ve written about were ones that I discovered at one time or another and have adopted for my own knowledge portfolio. The Variance Spectrum, on the other hand, I came up with. Its origin was in trying to answer a question about why there wasn’t a centralized “system of record” for marketing in the same way you would find one in finance (ERP) or sales (CRM). My best answer was that the output of marketing made it particularly difficult to design a system that could satisfy the needs of all its users. Specifically, I felt as though the variance of marketing’s output, the fact that each campaign and piece of content is meant to be different than the one that came before it, made for an environment that at first seemed opposed to the basics of systemization that the rest of a company had come to accept.
To illustrate the idea I plotted a spectrum. The left side represented zero variance, the realm of manufacturing and Six Sigma, and the right was 100 percent variance, where R&D and innovation reign supreme.
While the poles of the spectrum help explain it, it’s what you place in the middle that makes it powerful. For example, we could plot the rest of the departments in a company by the average variance of their output (finance is particularly low since so much of the department’s output is “governed” — quite literally the government sets GAAP accounting standards and mandates specific tax forms). Sales is somewhere in the middle: A pretty good mix of process and methodology plus the “art of the deal”. Marketing, meanwhile, sits off to the right, just behind R&D.
But that’s just the first layer. Like so many parts of an organization (and as described in my essays on both The Parable of Two Watchmakers and Conway’s Law), companies are hierarchical and at any point in the spectrum you can drill in and find a whole new spectrum of activities that range from low variance to high variance. That is, while finance may be “low variance” on average thanks to government standards, forecasting and modeling is most certainly a high variance function: Something that must be imagined in original ways depending on a number of variables include the company, and its products and markets (to name a few). Zooming in on marketing we find a whole new set of processes that can themselves be plotted based on the variance of their output, with governance far to the low variance side and creative development clearly on the other pole. Another way to articulate these differences is that the low variance side represents the routine processes and the right the creative.
While I haven’t seen anyone else plot things quite this way, this idea, that there are fundamentally different kinds of tasks within a company, is not new. Organizational theorists Richard Cyert, Herbert Simon, and Donald Trow, also noted this duality in paper from 1956 called “Observation of a Business Decision“:1
At one extreme we have repetitive, well-defined problems (e.g., quality control or production lot-size problems) involving tangible considerations, to which the economic models that call for finding the best among a set of pre-established alternatives can be applied rather literally. In contrast to these highly programmed and usually rather detailed decisions are problems of a non-repetitive sort, often involving basic long-range questions about the whole strategy of the firm or some part of it, arising initially in a highly unstructured form and requiring a great deal of the kinds of search processes listed above. In this whole continuum, from great specificity and repetition to extreme vagueness and uniqueness, we will call decisions that lie toward the former extreme programmed, and those lying toward the latter end non-programmed. This simple dichotomy is just a shorthand for the range of possibilities we have indicated.
This also introduces an interesting additional way to think about the spectrum: The left side is representative of those ideas where you have the most clarity about the final goal (in manufacturing you know exactly what you want the output to look like when it’s done) and the right the most ambiguity (the goal of R&D is to make something new). For that reason, high variance tasks should also fail far more often than their low variance counterparts: Nine out of ten new product ideas might be a good batting average, but if you are throwing away 90 percent of your manufactured output you’ve massively failed.
Even though it may be tempting, that’s not a reason to focus purely on the well-structured, low-variance problems, as Richard Cyert laid out in a 1994 paper titled “Positioning the Organization“:
It is difficult to deal with the uncertainty of the future, as one must to relate an organization to others in the industry and to events in the economy that may affect it. One must look ahead to determine what forces are at work and to examine the ways in which they will affect the organization. These activities are less structured and more ambiguous than dealing with concrete problems and, therefore, the CEO may have trouble focusing on them. Many experiments show that structured activity drives out unstructured. For example, it is much easier to answer one’s mail than to develop a plan to change the culture of the organization. The implications of change are uncertain and the planning is unstructured. One tends to avoid uncertainty and to concentrate on structured problems for which one can correctly predict the solutions and implications.2
Going a level deeper, another way to cut the left and right sides of the spectrum is based on the most appropriate way to solve the problem. For the routine tasks you want to have a single way of doing things in an attempt to push down the variance of the output while on the high variance side you have much more freedom to try different approaches. In software terms this can be expressed as automation and collaboration respectively.
While this is primarily a framework for thinking about process, there’s a more personal way to think about the variance spectrum as it relates to giving feedback to others. It’s a common occurrence that employees over-or-misinterpret the feedback of more senior members of the team. I experienced this many times myself in my role as CEO. Because words are often taken literally from the leader of a company, an aside about something like color choice in a design comp can be easily misconstrued as an order to change when it wasn’t meant that way. The variance spectrum in that context can be used to make explicit where the feedback falls: Is it a low variance order you expect to be acted on or a high variance comment that is simply your two cents? I found this could help avoid ambiguity and also make it more clear I respected their expertise.
Footnotes:
This paper is kind of amazing to read. It feels revolutionary to actually look at how specific decisions come to be made within a company.↑
There’s a whole other really interesting area to explore here that I’m mostly skipping over about using the variance spectrum to help decide types of problems and the mix of work. Although I don’t have a specific model (hence why this is a footnote), the idea that you should decide on your portfolio of activities based on having a good diversity of work across the spectrum is fascinating and seems like a good idea. It’s also in line with a point Herbert Simon makes at the very beginning of his book Administrative Behavior: “Although any practical activity involves both ‘deciding’ and ‘doing,’ it has not commonly been recognized that a theory of administration should be concerned with the processes of decision as well as with the processes of action. This neglect perhaps stems from the notion that decision-making is confined to the formulation of over-all policy. On the contrary, the process of decision does not come to an end when the general purpose of an organization has been determined. The task of ‘deciding’ pervades the entire administrative organization quite as much as does the task of ‘doing’- indeed, it is integrally tied up with the latter. A general theory of administration must include principles of organization that will insure correct decision-making, just as it must include principles that will insure effective action.”↑
Bibliography
Cyert, R. M., Simon, H. A., & Trow, D. B. (1956). Observation of a business decision. The Journal of Business, 29(4), 237-248.
Cyert, R. M. (1994). Positioning the organization. Interfaces, 24(2), 101-104.
Dong, J., March, J. G., & Workiewicz, M. (2017). On organizing: an interview with James G. March. Journal of Organization Design, 6(1), 14.
This is post number nine. Looks like I’m going to make my ten post goal for April. As always, you can subscribe to the blog by email. Thanks for reading.
I’ve had this thought rattling around in my head for awhile and after listening to the latest episode of Slate Money about brands I wanted to take a shot at writing it down.
One of my very favorite mental models in marketing is “satisficing.” The idea comes from Nobel Prize-winning economist Herbert Simon and is a portmanteau of “satisfy” and “suffice.” The basic idea is that a much more reasonable model of human behavior than utility maximization is that when we make decisions we ensure that we clear some arbitrary satisfaction threshold (satisfy) and then we give up excess utility for ease (suffice).
Here’s Simon from his 1956 paper “Rational choice and the structure of the environment”:
The central problem of this paper has been to construct a simple mechanism of choice that would suffice for the behavior of an organism confronted with multiple goals. Since the organism, like those of the real world, has neither the senses nor the wits to discover an “optimal” path — even assuming the concept of optimal to be clearly defined — we are concerned only with finding a choice mechanism that will lead it to pursue, a “satisficing” path, a path that will permit satisfaction at some specified level of all of its needs.
What does this mean for brands? Well, first and foremost it means that people are spending way less time thinking about your brand than you hope they are. In most situations brands are a means to an end: A way to ease the burden of choice we all face in our everyday lives. This doesn’t mean that marketing doesn’t matter in the decision-making process, just that we should generally assume people are spending way less time thinking about our brands than we like to think they are.
But I think there’s something much more interesting for marketing strategy at play here. (Please bear with me as I work through some thoughts out loud.) Satisficing says two important things about how people make purchase decisions: First, they ensure that whatever they’re buying clears the threshold and second that they sacrifice excess utility for ease of purchase. (As an aside, I always wondered why it was “suffice” instead of “sacrifice”.)
If that’s true (which I think it is), than you could argue there are only two true strategies for marketing a product: You either have to move the bar or you have to make your brand the easiest to buy. Let’s take those one at a time.
How do you move the bar?
Well, there’s not one bar, so let’s start there. But to be a mass product the bar represents the minimum set of requirements for a category of products. For toothpaste that’s pretty much price (around ~$3), taste (minty for most), and distribution (do they have it at Walgreens/CVS/Walmart/Costco or wherever it is you buy your toothpaste). For cars, where there are multiple categories, the first thing you have to do is narrow down your choices based on use case (compact, SUV, truck) and then price (cheap, regular, luxury). After you choose a category (say luxury SUV), there are a specific set of requirements that make up the threshold. (Four wheel drive? Leather seats? Sorry … not in the market for a luxury SUV, but hopefully you get my drift.)
If your product can’t hit that threshold for whatever reason you’re in trouble. Either you’ve got to change your product to break the bar, switch categories, or you’ve got to attempt to move the threshold.
Take airlines: You could argue Southwest (and Ryanair before it) moved the threshold down by pulling hard on the price lever. They said you don’t have to pay a lot for air travel, but to move the price down we’ve got to remove a bunch of the requirements that the category typically has like reserved seats, free baggage, and even flying into major airports (for Ryanair at least). On the other side, when JetBlue launched 20 years ago, they moved the bar up by saying every plane should have cable TV and tasty snacks.
While it seems like both of these moved the bar different directions (and, to be fair, that’s how I presented them), they actually both had the same effect: They raised the bar and made their competition unbuyable for some portion of the population. While Southwest did away with some of the luxuries of air travel, they raised the bar by saying a flight must be less than this amount. JetBlue, on the other hand, decided to play an experience game instead of a price game, but the outcome was the same in that they made their competition unbuyable to a specific target. The competition is left with the same set of choices: Rejigger their product or move the threshold, thereby making themselves buyable again.
One of my favorite current illustrations of this problem is Airbnb. They did such a great job differentiating themselves and their product that they made themselves unbuyable for business travelers. The threshold for most folks traveling for business is basically the opposite of what Airbnb markets: I want the same room in every city, with coffee in the same place, and most of all I don’t want to have to talk to anyone about my life when I arrive bleary-eyed at 1:30 in the morning with a meeting the next day at 7am. If you look at what Airbnb is trying to do with their Work product it’s basically to change their product by highlighting listings that meet these basic threshold requirements (automatic entry, fast wifi, working space if I remember correctly). The next step, of course, is to convince the world that those things actually constitute the bar.
So that’s the first marketing strategy: Find a way to move the threshold and make your competition less/un-buyable. In essence this is category definition/re-definition work.
Onto the second strategy …
How do you make yourself easiest to buy?
What about for situations where you can’t /don’t want to move the bar? This is where you have to make yourself the easiest to buy. The most obvious way to do this is to ensure you’ve got distribution in places people are and/or spend a ton of money on advertising and put yourself in the front of a shopper’s mind when they’re walking down the toothpaste aisle. This is basically the definition of physical and mental availability from Byron Sharp’s How Brands Grow.
But are there other ways to make yourself the most buyable that aren’t about mass reach and also don’t constitute moving the bar? (Again, competing on price, I would argue, is about moving the bar, not making yourself easier to buy.) I think the answer is pretty much no. Obviously there’s stuff like naming and packaging, but changing those can also have the opposite effect (see: Tropicana, 2009). There’s an interesting argument that some of these new ecommerce plays across every industry is about making things more buyable, but I’d actually argue getting a mattress delivered in a box or new razors at your door every month are the definition of moving the bar in an attempt to make your category competition unbuyable.
So what’s the conclusion?
Well, as usual, I’m thinking out loud and not totally sure. One of the interesting questions this raises is whether I’m thinking of things too zero-sum, but while we know consumers try lots of brands in a category, it’s safe to assume any single purchase is almost always zero-sum.
The other question is whether you can/should be doing both of these things at once? Should you be using your reach to try and move the bar. I think the answer to this is almost definitely yes. You should either be using your reach to move the bar or make yourself the easiest to buy and you should be very clear about which outcome you’re trying to drive. Of course, that raises the obvious question of whether you could use marketing to try and raise the bar while at the same time making yourself easier to buy and I think the answer is probably yes, but I’m not sure yet.
One thing it does clearly suggest is that it’s critical that everyone has a sober eye on the threshold requirements and an understanding of whether your product currently meets them or not. Another is that you shouldn’t try to persuade someone rationally if it isn’t towards the end of raising the bar of the category.
One of my favorite marketing stories to tell is about how when I was working at an agency early in my career we were doing research for one of the big consumer electronics companies. Specifically, we were testing a new commercial another agency had put together. The commercial was “edgy” (it had snowboarders!) and got high marks by all the random consumers who got pulled into a room in the mall to watch it. That is, until they were asked the last question: “What brand was it for?” To which they all replied with the company’s biggest competitor. The moral is simple, after all that time and money, a commercial had effectively been made for another company. (One of the most well-known stories of this is the famous ad with a gorilla tossing around soft-sided luggage which was for … American Tourister.)
In Byron Sharp’s book How Brands Grow he talks a lot about ownable brand assets. These are the colors, iconography, and, increasingly, aesthetics that consumers associate with a single brand. The examples are endless: Tiffany’s has blue, Hermès orange, and UPS brown. Starbucks has the mermaid, Pepsi’s yin-yang, and McDonald’s golden arches. Coca-Cola has red, Spencerian script, polar bears, and Santa Claus (seriously, click through on that last one, it’s pretty amazing). There’s some evidence that the more unique assets a brand owns, the more valuable it is.
Sharp has made it pretty deep into the marketing world, particularly with consumer packaged goods companies like Procter & Gamble. Lots of them have taken his advice (and consulting hours) and applied it to how they approach building their brands, particularly media buying (MOAR REACH). But what I found especially interesting about the Tide Super Bowl takeover is that they took things one step further, finding a way to apply Sharp’s principles to both the media and creative execution.
The media part is simple: According to Sharp (and lots of research AND COMMON SENSE), big brands need to be bought by lots of people and, for that to happen, they need to reach lots of casual buyers who may or may not be in the market to buy them. For all the talk about the death of TV advertising (which is hugely overstated), the Super Bowl is an incredibly unique media opportunity. Not only is it a gigantic audience, but it’s also the only time and place they’re actually excited to see ads.
On the creative side what Tide did was pretty obvious (they did explain it after all), but definitely not simple to pull off (imagine convincing a client you’re going to spend $16 million worth of airtime doing nothing original). They used the visual language of advertising, especially Super Bowl advertising, and found a way to link it all back to the brand. The value wasn’t really in the ad itself, but that you were watching every other ad looking for the tropes (and clean shirts of course). If the main goal of advertising is to create and own “brand assets”, Tide went above and beyond by reinforcing their own and finding a way to effectively hijack everyone else’s. What’s more, by splitting things up across the game in the way they did, they made it so you could never watch too many commercials without being reminded that they might be a Tide ad.
Outside of Tide, every other commercial felt pretty unremarkable to me (other than the Dodge/MLK thing, of course). That’s partially because it’s very hard to be unexpected when another company has already predicted your behavior, and partially because most of the themes brands are experimenting with around are the same ones they were playing with last year. For all the talk about the speed of change, brands, especially the big ones, are moving slow as they try to find a safe space in our ever-more polarized world. I suspect the transition will continue to take time.
Until then, we’ll almost definitely get more ads like the one from Toyota, which put a Jew, Christian, Muslim, and Buddhist in a car together with the tag line “We’re all one team.”
Over at the Percolate blog I wrote up a twopart series around a talk I gave at our client summit on the history of brand management and the need to create a new system of record for marketing. Part one opens:
Late last week James wrote a post called Moving from Installation to Deployment, where he laid out a framework for thinking how technology moves throughout history and where our modern age fits into the puzzle. As part of his post he introduced some ideas from an economist named Carlota Perez, who argues that each technological revolution (of which we’re in our fifth) follows a similar pattern of installation, where we essentially lay out the new technology in the form of infrastructure, followed by deployment, where we finally get a chance to build upon that infrastructure and realize its value.
Whereas part two dives into the implications and a framework for building this new system of record for marketing:
To approach the problem of scaling marketing at the rate of technology to address the increasing complexity, we have to take a page out of the P&G brand management playbook, Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble. It points out how “P&G recognized that building brands is not exclusively or even primarily a marketing activity. Rather it is a systems problem.” This is fundamental. When you’re dealing with a huge amount of change and complexity as tempting as it is to answer the question with a one off solution, the systemic path is always more powerful. This is where we have to start in solving the challenge of rethinking marketing for this new age.
