Keeping Cool in a Crisis

Wordpress 19.03.14The media wants answers. Self-proclaimed experts are casting judgements on social media. Meanwhile, inside the business, there’s blame, denial and recrimination. When a crisis breaks, the pressure from all sides will be immense unless you’ve taken the time to prepare for the worst and have a team that can calmly manage the various channels and relay the right message while the problem is fixed.

John White, UK Head of Resilience at KPMG, says: “Perspective, and the ability to appreciate how events and actions will be perceived by all stakeholder groups, plays an important role in the decision-making process. Good decisions are based on good information, and an effective crisis team will ensure they have a tried and tested means of gathering, monitoring, sorting and prioritising information from all sources.”

A similar point is made by Steve Cooper, Head of Personal and Business Banking for the UK Retail & Business Bank at Barclays: “At Barclays we have a dedicated person to lead our reputation and crisis committee. I’m not sure you necessarily need to have a board role for that but I do think you need clarity when a crisis occurs as to who is going to coordinate and pull that together.”

When it comes to communicating events to the media, an informed, joined-up response is essential. Professor Dominique Turpin, President of IMD and Criticaleye Thought Leader, says: “Different types of events call for different responses. Not every crisis requires the CEO to go and talk to reporters but, in all cases, the CEO should be kept informed and be kept close to the action, ready to intervene should the crisis deteriorate further.”

Furthermore, communication is only part of a company’s crisis management plan. Sandy Stash, Group Vice President of Safety, Sustainability and External Affairs at Tullow Oil, comments: “If you think back to The Exxon Valdez disaster [the oil tanker which ran aground on a reef off the Alaskan coast], one of the criticisms was that they didn’t get senior people out in front quickly enough. But, in recent times, I think companies need to be careful that the communications bit doesn’t become the tail wagging the dog.

“Rather than focusing exclusively on messaging, management needs to delve into details about the facts of the response and ask the hard questions … are we putting appropriate resources to this and making the right judgements?; are we doing the right things and being transparent?”

Need for Speed

Social media has undoubtedly made the process of managing a crisis more complex. Kevin Murray, Chairman at PR concern The Good Relations Group, comments: “The level of exposure because of social media and the nature of viral communications means that not only will [a potential crisis] be discovered quickly, but it can go global within seconds. How you respond to a crisis with that kind of speed attached to it has really stretched the capabilities of a lot of comms departments and many are no longer fit for purpose in the digital age.”

However, as John points out, the digital revolution has brought its advantages: “Organisations are now able to use social platforms to communicate with their customers and the media; close monitoring of social media activity can provide a good indication of public opinion and, in some cases, even provide an early warning to an organisation that a reputational crisis could be coming.”

Steve comments: “You’ve got to inform all your stakeholders: customers, colleagues, regulators, politicians, consumer groups; using social media to listen to the mood music… then obviously resolve as much as you can as quickly as possible. And if you can’t resolve it then put alternative solutions in place.”

No company is immune to reputational ruin, whether the cause is through flawed products, dishonest acts by staff, boardroom bust-ups, terrorist attacks or natural disasters. “Best practice in crisis management starts well before a crisis situation occurs,” says John. “Organisations must… maintain a chain of custody for known risk scenarios and ensure that an appropriate investment is made in planning to respond and recover.”

The risks are very real so the time and effort put into planning will make all the difference in the long run.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

 

Is Your Digital Strategy on the Money?

Comm update_11 FebrSo you’ve gone through the headaches and heartbreak of constructing a digital offering. You’ve evolved from multichannel to omnichannel, striving to provide a consistent – seamless may be a stretch too far – level of service via stores, the web and mobile. Now the real hard work begins as it’s time to make full use of data and analytics to establish a clear return on investment.

Charlie Johnstone, Origination Partner at private equity firm ECI, says: “Customers increasingly shop across channels which makes it hard to attribute revenue to one particular area of spend. For example, a straight measure of PPC [pay-per-click] may suggest it is unprofitable, but this could ignore customers who are originally attracted through PPC and subsequently come to the site organically to shop, or indeed transact through another channel.

“Successful businesses are those which not only take a holistic view of the customer but are also able to understand shopping habits through analytics and behavioural insight rather than seeing each channel in isolation.”

By investing in data companies will start to see a difference. Jonathan Elliott, Europe Head of Business Transformation and of Digital Enterprise for Tata Consultancy Services, says: “Smarter businesses use analytics to micro-segment their customers, to better profile their products and also to look at how to use technology to spot bottlenecks in their operations.”

Steve Muylle, Professor and Partner at Vlerick Business School, and a Criticaleye Thought Leader, provides the example of DBS Bank, one of the largest in South-East Asia: “[It] has done a great job by enriching customer service through digital… In terms of cash allocation in ATMs, where Singaporean customers use them a lot more than in Europe, they’ve invested in data and analytics to understand everything from amounts of cash withdrawn, speed of dispensing it and where it’s being withdrawn the most…

“It took six months to develop an algorithm which they then tested for a year, but the net result was a massive improvement in cash allocation across the country and customer satisfaction went through the roof.”

At the end of last year, Gary Favell, CEO of retail concern Bathstore, launched a new e-commerce platform. He explains: “If you truly have an omnichannel strategy, the first thing you need to be able to do is track the return on investment on what you’re spending. If you haven’t got software that can track your customers and a data management system that isn’t totally integrated, you can’t tell that.”

Heather Savory, who chairs the Open Data User Group, which provides independent advice to the UK Government’s Data Strategy Board, comments: “Any business that doesn’t have a digital strategy at its heart will find it difficult to continue to do business in the medium term.  For example, the use of both demographic and geospatial data allows large supermarkets and other retail outlets to work with local government to plan where they should locate their new stores.”

Taking the lead

The use of data as a way to inform and shape strategy is only going to increase, whether that’s from pricing – Amazon reportedly makes 2.5 million price changes a day – to gathering intelligence on purchasing habits.

For those companies struggling to identify an ROI, a change in thinking is required. Jay Patel, CEO of mobile data provider IMImobile, says: “A lot of the return on investment hasn’t occurred because multichannel strategies are being applied to situations where companies are trying to win new customers.

“The acquisition of customers is difficult and competitive and just because you can do multichannel doesn’t mean you are going to [be successful].”

Martyn Phillips, former CEO for the UK & Ireland at DIY retailer B&Q, which in 2011 spent £35 million improving its online business, says: “You make certain decisions and review them quarterly, determine what success looks like, plan your investments for that quarter, and then stick with it.

“It changes so quickly and you can just get lost very quickly… [so] you’ll need to be prepared to change your view and rebalance your investments for the next quarter.”

Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “Most of our customers have a multichannel approach to some extent but the crucial bit is developing some clarity around why you need to be in the digital space, how it’s going to benefit your customers and how your organisation is going to use it.

“There are often different silos within the business that have different objectives… but if channels aren’t connected and you can’t start a conversation in one that can be continued in another, then it’s not only disappointing for the customer but ultimately expensive for you as an organisation.”

Incentives will need to be aligned across platforms, a decision which may cause unrest among employees but one that is necessary if an organisation is to mature and move beyond the outdated dichotomy of digital versus physical. Training, development and new hires will also need to be undertaken if a company is going to succeed in building its brand and, in the process, winning and retaining customers.

John Allan, Chairman at electrical goods chain Dixons, which recently created a new Chief Marketing Officer position in order to bolster its multichannel capability, says: “Every management team benefits from having a blend of experienced people who understand the business and people with expertise from outside it, perhaps from other industry sectors… We have to keep moving forward as a business, particularly in terms of digital marketing, and having a new CMO will certainly help us to do this.”

When it comes to best practice, the airline and leisure sectors, plus elements of retail, are often heralded for executing digital strategies to a high level. However, far too many board-level executives continue to be tentative about reshaping business models in order to create that single-view of the customer.

Steve says: “You need to have a five or ten year vision for the digital side of the business and obviously the companies that succeed big time are the ones that double their revenues. They have this big ambition rather than settling for a couple of per cent of online sales in the first year and thinking that’s ok.

“What we see is that a lot of executives are afraid of engaging in digital because of fear of cannibalisation… that’s why you must have top management commitment from the start and make sure that the business is crystal clear on its online positioning to the customer.”

Be concerned if doubts and uncertainty continue to hold back progress in your company. The debate over whether or not to invest in digital moved on long ago, as the main focus for companies today is how to extract, understand and act on data to drive the best service for customers and the highest value for the business across each channel.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Big Data’s Place on the Board

Comm update_19 Nov

The volume of information currently available to businesses, and the ways in which this can be analysed to drive insights about performance, customer behaviour and strategy, has moved onto another level. While ‘big data’ in and of itself won’t provide all the answers, board-level executives increasingly need to sit up and take note of how it can benefit the decision-making process.

Retailers are only too aware of the huge influx of information now at their fingertips, but knowing how to utilise it across various business units is another matter entirely. Fiona Briault, People and Service Director at retailer Asda, says: “The challenge is how you bring all the data together through one part of the business to say: ‘That is what the customer thinks and these are the areas we should be focusing on.’

“At the moment there’s a tendency for data to be fragmented into different business areas… the goal is to understand how you link data together in a complex business to create one story.”

Eddie Short, Partner and Lead for Data and Analytics at KPMG in the UK and EMA, says “What we’re seeing with big data is that a silos-based approach is not always that effective. For example, when you look at some of the big retailers, they’re very good on quotes to the customer and particularly in giving you vouchers and new offers, but they struggle to get line of sight of what that actually delivers to the P&L.”

Look closely

It’s a learning process for businesses, but progress is certainly being made. Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “More bits of information, when they’re pieced together effectively, help us to understand the clients, their propensity to buy, the way they make decisions and how they behave, and their likelihood to either want follow-up support or not. That then helps us to make decisions about how we treat each individual.”

For Steve Parkin, CEO of Mayborn Group, which makes baby and child products, there has been a concerted effort to break down the profile of customers in order to gain a better understanding. “You’ve got to build loyalty though an emotional connection and be very clever with your rational call to action to drive purchase behaviour,” he explains.

“We’ve segmented our marketplace down into six different consumer typology groups… [and] with the data that we’re capturing, we can understand the typologies of mums on the database that we’re building.”

Mark Wood, SVP and Managing Director of EMEA for US-based cosmetics firm Revlon, comments: “We’ve invested a lot in terms of mapping where customers go on digital and social media and following that pattern to make sure that our brand is always front of mind and that we’re always in the right places.

“[By engaging on social media] customers see that we’re listening to them, that we’re taking an active part in terms of what they want from the brand, and that we’re delivering against that through the conversations we’re having with them.”

Each customer touch point has to be seen as an opportunity to innovate. Neil Ward, VP and General Manager of Business Operations at internet communications platform Skype, says: “We’re using data to blur the lines between a support interaction and a brand opportunity… Beyond resolving customer service issues faster and more efficiently, we’re now seeing that problem solving is a gateway to taking a user’s insight and up-selling to them or deepening our engagement with them.”

Inevitably, this does entail not being afraid to try something different. At Asda, for example, it was decided to stop using a marketing agency to run social media interaction and instead bring it into the customer contact centres. “By running it in-house we can not only respond on social media for more of the working week, because our contact centres are open longer hours, but it also gives us consistency of approach in how we talk to those customers and the messages with give them,” says Fiona.

Game changers

According to some reports, 90 per cent of the world’s data has been produced in the past two years. There may indeed be elements of marketing hype around ‘big data’, but equally it’s clear the ongoing transition to digital has created a whole new universe of information to be explored.

It’s a somewhat daunting prospect. Research by KPMG International, which involved conducting interviews with 144 CFOs and CIOs from multinational companies with annual revenues of $1 billion or more, found an overwhelming 96 per cent of respondents believe their company is not currently using data and analytics effectively. Eddie comments: “The one singular wrong answer is to do nothing. We don’t all have to be data scientists with PhDs in statistics, but I think everybody has to embrace a more data-driven approach.”

Good decision-making involves understanding what your options are. You assess the information at hand, analysing data, speaking to various stakeholders and thereafter a choice is made. What follows next is called leadership, so that the decision arrived at is acted upon and implemented across an organisation. It’s the latter that many businesses need to start concentrating on if they’re going to capitalise on the information now at their disposal.

When it comes to big data, it’s a case of use it or lose it.

I hope to see you soon.

Matthew

https://twitter.com/criticaleyeuk

What’s So Scary About Social Media?

Comm update Faces - 28 august1

Executives have an irrational dread of social media. They instantly go on the defensive as they imagine endless breaches of trust and the horrors of shredded reputations. In most instances, it’s way over the top as none of this is overly complicated or taxing – it’s just another form of communication which needs to be understood and managed like anything else.

It’s about taking an interest and knowing what the boundaries are. Paul McNamara, Managing Director of Insurance and Investments at Barclays, says: “From time to time I will ‘join the conversation’ or share thoughts or ideas I find interesting. These could be on significant topics like retirement, financial planning, use of technology… equally, it could be on a simple observation from during the day.”

For Phil Smith, CEO for UK & Ireland at Cisco Systems, social media is a “useful way of providing a concise and current update to a wide community who can typically receive it in a convenient form, which is usually mobile”.

The value lies in it being quick, easy and direct as opposed to putting out messages through laboured, endlessly re-worked press releases. Adam Bates, UK Head of Foresight and Innovation at KPMG, comments: “Not enough UK board members use social media to interact with customers or to show their own people that they are not boring, grey-suited and dyed-in-the-wool…

“The reality is that if they are sensible, don’t give away market sensitive information and talk in general about things that are happening, they are not going to get into big trouble and it’s a great way of communicating with their different types of stakeholders. People are just too cautious and the risk dial is probably turned up too high.”

Test the Waters

Beyond the more established social media channels like Twitter, Facebook and Linked-In, newcomers like Google+, Pinterest and Instagram are gaining traction among the business community (Snapchat might be a bridge too far).

Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “The more I use social media channels in different ways, I get a better feel for how people respond to the information that’s out there and the speed at which they respond. Very often people will comment on a tweet or Linked-in post in minutes, wanting to get a more in-depth view of our opinion because they can see we have some understanding on the topic and that we can add some value to the discussion.”

It’s a case of experimenting and finding your voiceAndrew Powell, Chief Operations Officer at Colt Technology Services, says: “I started using social media about two years ago when our brand team came to the executives and said: ‘Look, none of you guys are using it and you’re missing a trick because this is where the future employee base will live, breath and operate…’

“It’s been a real watershed for me at Colt and has opened up conversations with people who in the past have been very nervous about hierarchy and reserved about approaching and raising business issues.”

The general view from those who’ve ‘done it’ is that it’s not so scary an endeavour after all. Peter Cheese, CEO at the Chartered Institute of Personnel and Development (CIPD), comments: “There are CEOs I’ve come across who are terrified about how much time it takes. And I must admit, before I crossed the Rubicon and embraced social media that was one of my fears.

“My marketing team were constantly saying you’ve got to get on Twitter and I was saying: ‘Well, I haven’t got time for all that, what with all the emails, articles, blogs and meetings I have to attend to… But it’s not that onerous at all.”

Perhaps one of the biggest risks is discovering whether you’ve actually got anything of interest to say. Andrew comments: “If I just re-tweeted or sent Colt corporate messages onto Twitter all the time, people would soon be turned off. You have to give a little bit of yourself and give a little of what you’re thinking to a much wider audience than your company’s employees.

“I have about 700 followers, only about 150 of which are Colt employees, and to have any credibility in this space you have to show you are a human being by expressing your opinions. It’s not just a corporate messaging system.”

Phil says that statements have to be differentiated from the brand messages or “it can be seen as just marketing” and he’s learned to adapt his approach over time to become “very casual and personal”.

Fine Lines

If there is a danger, it’s being unclear about how those within an organisation are communicating. Helen comments: “We take quite a structured and planned approach. We have customer-facing social media experts who also invest their knowledge internally, to help us understand how to use it.

“We also have people in our comms and marketing teams who see things from the brand perspective. We use them to build a plan around what we want to say and between the three or four of us on the board that use social media, we agree who’s most appropriate to respond… if there’s any ambiguity we’ll have a conversation about it, but we’re keen to each have our voice and our own style.”

Yetunde Hofmann, former Global HR Director at Imperial Tobacco, says: “The risks of social media are the same as any other form of written communication, it’s open to interpretation by the reader and therefore the intention of the writer might be completely misunderstood. It’s fine if you’re just providing links and neutral comments, but the minute you’re starting to give your opinions and commentary on other people’s work or responding to questions, therein lies the danger.”

Like any communication, timing and delivery have to be tailored to the situation. Chris Merry, CEO of accountancy firm RSM Tenon which was taken over last week in a pre-pack by Baker Tilly, was not about to start using Twitter to inform employees and shareholders about what had happened.

“We didn’t use social media,” he says. “Rather, we did the usual RNS [Regulatory News Service] announcement via the London Stock Exchange, then I recorded a video which all staff can watch and then there will be a series of presentations in offices which supports the initial written announcement.”

Common sense plays a part in this, as it does with all internal and external communication. But avoiding social media channels completely, or having a half-hearted approach, will only serve to create a negative view of both yourself and the business you represent.

I hope to see you soon.

Matthew

https://twitter.com/criticaleyeuk

Why Social Media has Changed Innovation

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The sources of innovation are changing. As communication channels evolve, companies must learn new ways to open up to customers and collaborate with employees and third parties in order to develop ideas. Harnessing those insights so that experimentation and business strategy are aligned is a major headache, but it’s one that must be dealt with if organisations are to stay competitive.

Social media presents an opportunity to rapidly create communities with employees and customers, but for genuine engagement and innovation to happen something more sophisticated is required from businesses. Tulsi Naidu, Operations Director for UK & Europe at Prudential, says: “I suspect all businesses now are doing a range of blogs and Twitter-type interactions, but I’m particularly excited about our ‘colleague ideas’ portal which we launched about a year ago.

“It’s an open portal which started guerrilla-style through a home-coded collaboration forum by a bunch of IT colleagues, and is now being rolled out to over a thousand people. It has a lot of energy around it because people tend to dive in every day, look at their favourite ideas and post comments.”

Ruth Cairnie, Executive Vice-President of Strategy and Planning for Shell International, explains that a programme was introduced to capture innovative suggestions from employees and external parties. “Entrepreneurs in all kinds of organisations can submit their ideas to us and we have a team of people who vet those ideas, decide which ones would have potential, then they can be supported with investment and expertise to turn an idea into reality,” she says, noting that one such suggestion, relating to a floating liquefied natural gas facility, is “now on its way to become part of a world-class project”.

Ideas have to be shaped so that they inform the business strategy. Annette Burgess, Commercial Director of books and stationery wholesaler Baker & Taylor UK, says: “All stakeholders need to play an active role in social innovation, but I think there needs to be a gatekeeper in terms of looking at what points and which conversations should go onto these social innovation platforms. The difficulty is that as well as having all these meaningful conversation, not all ideas will be taken forward in this collaborative process, so somebody needs to steer the initial conversations.”

Paul Baxter, Social Business Leader at IBM, explains that the company engages in real-time conversations internally for the purpose of innovating. “It could be around redefining corporate values, which we have done, or it might be about thinking how we redefine our product or service proposition in the marketplace,” he says. “Everybody in the organisation will come online and contribute but, importantly, it’s not just an opportunity to gripe about anything that comes to mind, it is structured around key themes which are carefully moderated.

“In terms of how you derive insight from that mass of data, we use our analytical tools to look at what the hotspots are around the conversation, what the key influences are and then, as an output, we’ll make sure we go back to check that everyone is up-to-date with what the main insights are that came out of that very large online conversation, and which ideas are going to be taken forward.”

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Rock the boat

There has to be a leap of faith from executive teams in how ideas are encouraged and rewarded. After all, as much as introducing something ‘new’ is perceived to be good, the reality is that it can stir up friction within an organisation. “You need to welcome change and innovation, but many business leaders are absolutely terrified of it,” says Don Elgie, CEO of insight and communications company Creston.

In a number of industries, the pace of change is relentless. Simon Johnson, UK and International Group Managing Director for publisher HarperCollins, comments: “If you’re not creating fresh approaches, you’re in trouble. Our ability to do this is a key competitive advantage because, while we aren’t trying to become the biggest publisher in the world, we are trying to build the fastest, most creative, nimble and innovative business.”

Beyond driving ideas through social media and variations of crowdsourcing, the fundamental problem within a vast number of companies is how to create an innovative culture. It requires maintaining the traditional hierarchy, operations and efficiencies within the organisation while, at the same time, there is effectively a shadow business running alongside which is agile, flatter in structure and able to drive new strategy development and product innovation.

This leads to conflicts about culture, performance measurement (think of the traditional retailers fighting their ‘space vs online’ battles) and degrees of permissible experimentation. Where exactly is the line between hitting quarterly targets and securing the long-term future and success of the business? Just how far can innovation be pushed within an organisation so that it doesn’t just undermine day-to-day performance, but even produces ideas that render the existing business obsolete?

Each company has to decide on its boundaries and definitions of success. Simon comments: “It’s about avoiding the ‘innovators dilemma’. For a business like ours, which has been around for a long period of time, it’s vital that we are the disruptor and not the disrupted. That may mean at some stage disrupting your own business model, not just focusing on the short-term financial targets. Generally, incumbents have a predisposition to not evolve because they are worried about destroying their legacy business.”

This can be kept at bay if the focus is on the customer and defined goals. Tulsi comments: “We’ve made a point of saying everything must have a conclusion and being able to go in and look at the graphs that tell you how many ideas you have on there, what stage of the process they are in and whether they are under consideration, in implementation or have been stopped from further progress.”

If the engagement and passion are right, then ideas should flow. Costas Markides, Criticaleye Thought Leader and Professor of Strategy and Entrepreneurship at London Business School, comments that “ideas can come from anybody, anywhere, anytime so any processes that help to put this philosophy into practice are welcome”. Although there is nothing particularly new about this per se, he does acknowledge that the speed at which technology can be used to galvanise the ideas of numerous people does give a different twist to innovation.

Paul says: “Over the next decade or so, companies will start to think about how they foster, measure and reward collaboration and knowledge-sharing internally. Rather than just being about how much business you have sold or how much revenue you have earned, the extent to which people are collaborating and seen to be leading thinkers within the business, and the ability to put some objective measures around this, will be built into some of the HR scorecards of the future.”

No one is saying this is easy, but executives must be brave and experiment rather than assume that the old ways of creative thinking are going to provide the competitive edge going forward.

How to Create a World-Class Brand

Businesses are operating in marketplaces with unprecedented international opportunities, retail channels and competition. When adapting a brand to meet the diverse and new demands of customers, leaders face a real challenge in keeping an organisation on the right track.

Professor Dominique Turpin, President of IMD and a Criticaleye Thought Leader, says: “There are some basic principles to be a great brand these days, such as a regular stream of innovation – small, regular alterations to keep yourself new and interesting. A brand that doesn’t have that is perceived as dusty and customers just won’t buy it.”

That’s why it has to be a boardroom issue. Pam Powell, Ex-Group Marketing Strategy & Innovation Director at brewer SABMiller, argues that leaders would be foolish to assume that their ability to steer a brand has diminished in recent years: “Branded consumer goods companies live and die by their brands, and the senior executives take a responsibility for the changes that are made, even if they rely on their marketing teams and departments to bring them proposals. This notion that you put a brand out there and hope for the best is just wrong.”

Nevertheless, the advent of social media means that the level of control an organisation can exercise over a brand has changed dramatically. Graham Hales, UK CEO of brand consultancy Interbrand, says: “In reality, you cannot create a brand without consumers. The number of consumer ‘spokespeople’ is far greater than those employed by a business, and word of mouth over the internet is given far more credibility than the corporate’s own branding. As a result, consumers probably have an even more important role in creating the brand than the people you pay to communicate it.”

Stephen Pain, Vice-President of Reputation Strategy, Planning & Research for Unilever, sees collaboration as the key to the future of brands: “In the world of social media, brands do not tell, they engage and invite dialogue, moving from creating a brand for consumers to curating brands with consumers through communities of interest. And never forget the importance of your employees; they are the most powerful brand advocates of all.”

Rising stars

The multiplicity of channels adds to the complexity, especially when targeting new territories. Pam explains: “When you take the brand international, there is always a tension between keeping the global mix consistent […] and how much you adapt to local cultural norms or requirements. Changes can water down positioning over time, with lots of different things in various markets with no connections, shared platforms or benefits of scale.”

For five years Pam was Global Brand Director at beauty and skincare specialist Dove, where she worked on implementing the brand concept of femininity: “The cultural expressions of that notion vary hugely between Northern Europe and South America and the presentation and delivery are quite different, but knowing that, we were able to get the core message of the brand across in the same way, but in a manner that was locally relevant and culturally sensitive.”

Mark Allan, Chief Executive of housing specialist UNITE Group, says: “For a brand to make a consistent impact it must bear scrutiny on a rational and emotional level. If the core proposition doesn’t align precisely with the experience, the sales pitch or the company’s reputation with any stakeholder group, it will undermine commercial strategies quickly. At the first sign of weakness or inconsistency, that’s it for your brand.”

It’s something that holds true for both small and large companies. Ian Bowles, CEO at software provider Allocate, says: “Creating a strong brand as a smaller company is difficult, but not impossible. Our brand is evolving as we grow, but it is recognised in the sectors we are focused on. You can build a brand without huge marketing budgets, but the strategy has to be very carefully considered before you begin.”

Mark says: “Building a global brand must start with staff. As the constant living embodiment of the brand, all employees need to understand what their company stands for, how this will make customers feel, and therefore how they need to ‘be’ in order to deliver this experience every time.

“Consistency becomes more challenging across different markets and cultures, but simplicity and clarity will help, reinforced through constant measurement of brand perception, and sharing of good practice and successes.”

It’s a tough line to tread and requires substantial planning. Graham explains: “Organisations have to move into new regions with a great deal of intelligence – you have to give the brands the right degree of autonomy to succeed in their different marketplaces but design them to allow them to become, ultimately, more synergistic and more consistent.”

As the world communicates faster and more expansively, it is becoming increasingly evident that leaders must position their businesses in a way that gets the right kind of attention.

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Innovation – Tips from the Top

Talent certainly helps when it comes to driving innovative thinking, but the real art is in harnessing the skills you have within a business so that people feel empowered to come up with new ideas and aren’t afraid to fail. Fundamentally, an organisation has to possess a sense of direction and purpose that is communicated clearly from the top.

Graeme Butterworth, General Manager of Global Process Services at IBM, says: “The board sets out major market themes which anticipate market trends, the direction for the company and provides a clear focus for the different parts of the… business to be brought together to develop innovative market solutions.”

It’s about unlocking the excellence that exists within a business. Geraint Anderson, CEO of TT electronics, comments: “When I came to TT electronics people were not used to sharing knowledge, so we had to create ‘virtual teams’ to link up our people – manufacturers and software designers – and allow their passion to come through.”

Graeme adds: “IBM dedicates people to work on driving… innovation, pulling them in from different parts of the organisation including from the research [division]… Distributing knowledge through our people, processes and systems is one of the keys to making innovation flow throughout [the business].”

Choose your target

The goals and overall ambition of an organisation have to be defined. Geraint says: “You need to create symbols – hooks – for change too, so that the new focus becomes permanent and embedded in the culture of the business… As leaders, we must create the environment where innovation can happen.”

Linda Grant, MD of A&N Media’s Free Division, the consumer media company whose titles include the Metro newspaper, says: “The leadership team needs to put time and effort into creating the right environment and kick-starting initiatives to encourage people from across the business to come together to problem solve or invent.”

A similar point is made by Steve Pateman, Head of UK Banking at Santander: “Agility and innovation is within everyone’s grasp. Often it’s about making choices as businesses must be rewired to respond more efficiently to a customer’s changing wants.”

Linda adds: “You must also bring your customers into the mix with a commitment to truly listen to them and understand what they want… Well-prepared, innovative research that is predicated on understanding can give you invaluable insights into your customers.”

It’s something that appears to have been encoded into the model of the most innovative companies. Alison Esse, Co-founder and Director at change consultancy The Storytellers, says: “It’s the relationship with the customer that is going to differentiate your product or service… if you can put the customer at the heart of your story, it can lift people out of their silos and unite them behind a common purpose. It breeds innovative thinking.”

Geraint says: “We work with customers such as BMW that are looking 10 years ahead, so we must have the capability to innovate with them, beyond our own three-year plan… You need a clear strategy; one that has carefully considered where your business and its offering fits into the market and can carve out its niche.”

In many cases, this means being brave about where you see your relevance and long-term traction in specific markets. David Plumb, General Manager of Enterprise at O2 UK, argues that the first steps to innovation can be deciding what you don’t want to do so that “investment, time and resources can be released to create something new”.

Dipak Jain, a Criticaleye Thought Leader and Dean of international business school INSEAD, suggests that companies that put the customer first and have a pragmatic strategy for innovation tend to go beyond simple ‘transactional’ thinking to create enduring value and relationships. He explains: “Apple and Starbucks, to cite two prominent examples, have enjoyed customer loyalty because they create experiences that transcend the ordinary in terms of quality and engagement. They do this in many ways, including by paying attention to design: Apple seems to put almost as much attention into the way it packages its ideas as it does for the ideas/products themselves.”

Innovation is propelled by listening to and anticipating what customers want. Dipak continues: “Both companies also have robust digital strategies that focus on building relationships, not on conventional marketing. With a website like mystarbucksidea, the coffee giant has been active in soliciting insights from its customers and bringing them inside the company… Of course, Apple and Starbucks also maintain vibrant digital channels on Facebook, Twitter, and YouTube, all of which help strengthen communication — two-way communication — between the company and its customers. Such tools bring complexity that must be managed well, but they also bring undeniable benefits.”

Talking about innovation is straightforward enough. At the board level, it’s about making sure that, while the reputation of a business is protected, your people are rewarded for their forward thinking and not only defending and being ambassadors of the status quo. Unfortunately, many of the businesses getting into trouble today fell victim to the cultural malaise of the latter and are suffering the harsh consequences.

As David says: “While it sounds illogical, you have to think about the overall profitability of the business in the future as today’s successful division may not be tomorrow’s.”

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Wake-Up Call for Web 2.0

As fantastic as it may seem, web-based companies may finally be growing up. While there will always be a time and a place for entrepreneurial bullishness, it has become clear that a story will only get you so far. The name of the game is now profitable growth.

Take the recent decision of Groupon to postpone its float. For a time, the online coupon business seemed to hark back to the excesses of the dotcom days, recalling memories of business-owners boasting about their ‘burn rate’ (ie haemorrhaging cash). That’s simply not going to cut it anymore, especially when a company is seeking third-party investment.

In the public space – and, to be fair, in private equity too – investors aren’t in the mood to be wooed by tall tales of world domination if the business model is based on a mythical approach to profit and loss. Even Facebook has delayed its IPO to 2012, preferring to concentrate on products and ward off competition (notably from Google) by evolving from a social network into a ‘media hub.’

For wiser heads, this only confirms what should be blatantly obvious. “The fundamentals of what makes a business successful haven’t changed at all. It’s cash, cash and cash,” comments Don Elgie, founder and CEO of PR and communications business Creston plc. “To deliver cash you need to be making profits. If you forget that, your business will fail regardless of whether you’re online, off-line, half-line or through-the-line.”

Froth, anyone?

For those companies that remember this basic principle and fully capitalise on the digital revolution, there is a real opportunity to become one of the blue-chips of tomorrow. Ian McCaig, the Deputy Chairman of energy saving company First Utility and former CEO of Lastminute.com, says: “People are placing very large bets on businesses with established user bases, but you’ve still got to make money off it.”

And money can be made – by the bucketload. Web-based advertising keeps outpacing traditional channels, online shopping is now a fact of life and, increasingly, companies are waking up to the value of subscription-based models.

For some, however, the rapid pace of change makes it hard to identify the wheat from the chaff. Aside from the largely successful LinkedIn float in May (so far, at least), nervous investors have viewed web-based companies as leprous propositions.

Sam Smith, CEO of the broker, finnCap, suspects that the foundations of these companies are often decidedly brittle: “The internet remains a free-for-all with very fluid customer base. Look how quickly people deserted Friends Reunited and MySpace. There are fears that Facebook will go the same way, as Google+ comes on the horizon.

“It’s cheap and easy to set up a business on the internet as there is infinite room on the www. high street… [Many are] very simplistic social networking games with a repetitive format that we think people will tire of long before they justify the IPO valuation … these are fads, not long-term business models.”

It’s a point taken up by Steve Muylle, Criticaleye Thought Leader and Professor at Vlerick Leuven Gent Management School in Belgium: “Return on investment is still controversial, particularly with social media companies, and many are struggling to understand their company’s potential for profit, the revenue drivers and monetisation models. You need a solid story in terms of what the future uptake will be, whether the figures can demonstrate this and whether the brand will be enough to sustain it.”

Keep it (virtually) real

Again, though, this is true of any business, not just those of the Web 2.0 generation which seem to be tarnished by the dotcom disasters of yesteryear. Today, at least, there is a fast-evolving infrastructure, not to mention a ready and willing army of consumers. “Internet businesses now have global reach and proper members and subscribers, rather than huge levels of random incomprehensible traffic, which was a characteristic of 2000,” says Ian.

Of course, every business must be able to tell a good story in order to generate excitement. The companies that flop are the ones where the spin outgrows the reality of the business model. That’s when ‘burn rate’ suddenly sounds like a buzzword to be proud about.

George Tovstiga, Professor of Strategy and Innovation Management at Henley Business School, says: “We don’t yet have all the elements of an appropriate revenue model in place. Some appreciation of the value proposition, from a user’s perspective at least, is coming together, and this may be driving the more speculative heightened investment interest and excitement.”

While Groupon’s decision not to float is another sign that the public markets are deeply troubled, it might equally be an indication of a saner view emerging about what a business should be about and how it can deliver. After all, it doesn’t matter what sector you’re in, the principles of running a good company remain the same.

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Social Media and Your Business

While executive teams may welcome the ability of social networks and micro-messaging sites to bring an organisation closer to customers, there’s no denying the doubts and anxiety that exist around deciding on how this should be done. In fact, a lot of businesses – certainly at board level – still don’t have a clue when it comes to executing an effective social media strategy.

“You can see the rabbits in the headlights,” admits one business leader. “We’re all looking at it and going candidly: ‘Bloody hell, what is it that we do?’”

Martin Towers, Non-executive Director of manufacturing company RPC Group plc, says, “The typical plc board will regard social media with suspicion through ignorance, and therefore the subject has generally not got onto the boardroom agenda. I foresee that it will, probably through HR and possibly marketing, especially if a business is consumer facing as opposed to B2B. As with everything else, a strategy will be required.”

Gary Browning, Chief  Executive of HR consulting and people performance company, Penna, says, “I’d be very surprised if most boards or  CEOs weren’t aware that something was happening, but I’d also be surprised if they had much understanding or knowledge of it. Given the average age of boards, [they mostly believe that] this clearly sits within the remit of the 19 to 24 year olds.”

This confusion is exacerbated because a strategy for utilising social media can change radically depending on the business. Rob Crossland, CEO of recruitment company Parasol, comments, “There is a customer and sectoral element to social media because of where you sit in various supply chains and how you attract customers. That has a huge bearing on how you choose to deploy social media.”

Threat and opportunity 

The fear of reputational damage, security breaches and an unclear return on investment all present challenges for organisations considering a social media strategy. Rob observes that training is vital so that staff interact with customers in an appropriate fashion. “We all know that social media is good for bringing down the barriers in terms of social interaction, but you have to be careful to get the tone of voice right. If you have a tone on your website and in your literature and you suddenly start to lose that with social media, it can be a problem. Of course, when people use social media personally and in business, those edges can become blurred.”

In the early days, Rob outsourced the social media interactions to an agency. “We started back in the day, but recently we brought it back in-house. I think, for us as an organisation, where there is a lot of consumer-like interaction, it’s appropriate that we are running it and are very aware of what is going on… The inevitable delays that can happen, even when you outsource social media, make it something that we would prefer to have in-house.”

An obvious concern is the brand damage that can be inflicted by negative comments. “You have to be brave and accept you won’t get plaudits all the time,” he continues. “You have to monitor and be aware of that but you have to respond professionally. If you do get something wrong, don’t try to cover it up on social media as that is just the worst thing you can do. Admit your mistake. Make the apologies. Rectify the issue and move on.”

Many organisations monitor sites for general unpleasantness or brand damaging remarks through what’s been termed ‘social listening’. Internally, there are potential threats which need to be given due consideration. Caroline Firstbrook, Managing Director of Strategy in Europe, the Middle East, Africa and Latin America for Accenture, says, “A company needs a social media policy as it may find employees are saying things that are negative or can compromise IP [intellectual property]. It’s important to be proactive and get to grips with this – some companies already prohibit the use of certain websites as they don’t want those kinds of breaches.”

Target your audience 

At Premier Farnell, a global distributor of electronic components, the decision was made to set up a social networking platform within the company’s website to bring together its unique audience of designers and engineers. “We started off, as everybody does, using existing social sites, such as Facebook and Twitter and so on,” says Kevin Yapp, Premier Farnell’s Chief Marketing Officer. “But two-and-a-half years ago we recognised there was a real gap and our customers were telling us that they could use these tools, but they were really for fun and for consumers. Our customers were spending a huge amount of time surfing around on multiple sites to try and find what they needed. So I guess, rather than let it be a problem for us, we saw it as a huge opportunity where we could create a global community that drags all of this together.”

He claims the site now has enough critical mass for its highly technical users to become self-policing. “If information is posted that is garbage then the community will stamp all over it and criticise it by stating that’s it’s not technically accurate. We’re not worried about that kind of moderation – it’s a case of keeping an eye out to make sure there is nothing which is going to offend people.”

Board buy-in

The decision to set up the community platform wasn’t taken lightly. “Operationally, the senior team believed this was something we had to do and could switch on our brand in the eyes of customers by driving awareness,” says Kevin. “At board level, it was a little bit of a leap of faith as there is no obvious return on investment. When we were originally pitching it two-and-a-half years ago, the board, to give them their credit, had the foresight to give their support and say we should go for it. The difference now is that they’re all huge advocates of what social media can do for the brand.”

Mark Castle, Managing Director at construction company Mace Group’s contracting arm, comments that, while none of the company’s directors are at the stage where they’re reporting their every movement on Twitter, “there is a strong consciousness in the Mace boardroom for the need to understand and engage with the latest technologies where relevant to our business”.

Again, how the various media are utilised will vary from sector to sector. “We don’t see it as a sales tool,” states Mark. “It’s part of the communications toolkit available to us. As a business-to-business company operating in the construction and property industry, we have a long buyer’s journey and complex contractual relationships that don’t lend themselves easily to the consumer focused and informal social networking areas. Where it is appropriate [for us] is in enabling communication teams to listen to the conversations taking place, to take part and hopefully influence in an open and honest way. Social networking is almost anti-marketing.”

Mary Jo Jacobi
, a Criticaleye Associate, comments, “Social media has moved far beyond networking to earn a place in every company’s marketing mix.  Companies can’t ignore the size of the social media marketplace, the opportunity to build trust and rapport. No other media offer such instant accessibility, immediate feedback and direct participation. Wise boards will recognise the opportunities for both push and pull engagement, the ability to communicate in real time with millions of followers, the chance to immediately clarify or correct misinformation and alert the public to important messages.”

Let’s get personal

The rules and scope of marketing have unquestionably been redefined with the advent of social media. “There is a clear marketing opportunity but there is a lot of noise,” says Richard Hull, Managing Director of the UK and Ireland division of beauty products company Sally Beauty Holdings. “We all know there is something there and we all have to get our heads around what’s the best tool we are able to use to extract the best information out of that intelligence.”

Eight months ago, the company set up a Facebook page. It now has over 12,000 devotees, most of them women aged between 21 and 35. “We are hitting big numbers and it continues to grow,” says Richard. “From an MD’s perspective, I know there is a massive opportunity for me to communicate to my customers in a far more astute manner than other forms of marketing communication. For the first time, I can actually get some real quantitative information back without having to pay a silly sum of money to a [marketing agency] by just asking: ‘What do you think of Cheryl [Cole’s] new hairstyle?”

It’s an unprecedented level of immediacy, but the interaction has to be meaningful. Rob says, “There’s no point you being out there and tweeting and doing various bits and pieces if you’re not really connecting with the right people. It’s important to think a little more strategically and collect the appropriate data as opposed to just ‘having a go’, as that has a tendency to tail off in terms of impetus and impact because you are not actually hitting the people that you need to hit.”

Harnessing the data and interpreting it through customer relationship management (CRM) and business intelligence software is a bigger challenge than how to communicate for many organisations. Richard says, “The fundamental thing that I am changing is my marketing structure to reflect the whole issue around CRM. This is an overused term that has been in play for 20 years – when I was a consultant, I was using it. But we need a holistic picture so that, if say we introduce a loyalty card, how can we make it more effective and link it to social media?”

The difficulty is in tying up the various channels, which for the largest organisations may stretch from shops, the web to mobile and call-centres, making it tough to provide a singular customer experience. Richard explains, “How, if somebody is shopping in our main company, Sally Beauty Holdings, do I understand if they are also shopping at Beauty Express, a sister company? Given the power of Facebook and Twitter…, I need to satisfy what is clearly a customer demand by keeping it simple, providing customers firstly with what they want and secondly by giving me the information that can strategically change decisions in my business.”

This may be new territory for many executives and non-executive directors, but, make no mistake, those who persist in dismissing this as a fad or some ephemeral new wave are playing a dangerous game. Caroline says, “It is a board and an operational issue. It definitely affects the board because it can have such a broad impact on a business – purely as a risk management exercise [at the very least], they should be aware of the potential problems.”

Penna’s Gary says, “Boards know it is a business imperative but they don’t quite understand it and why should they? It’s another operational issue – you wouldn’t expect the board of a large company to understand this. But the bright ones know they have to do something about it and invest.”

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk 

The Language of Leaders

An ill-judged remark has always been potentially devastating for a business, as the jewellery entrepreneur Gerald Ratner famously discovered when a joke about the quality of his products nearly led to the collapse of the company. But what has changed dramatically for business leaders in recent times is the ease with which they can slip on a reputational banana skin.

The rise of social media and round-the-clock reporting mean there is an ever-present, braying audience for bad news and PR gaffs. Paul Drechsler, Chairman and CEO of the building and construction company, Wates Group, says: “It isn’t that trust and reputation are more important today than they were before – it is that [business leaders] are more vulnerable in today’s world. I say to my colleagues in Wates that my number one concern is that, through their actions and behaviours, a brand and reputation that took 140 years to build up, could be destroyed in an instant.”

It’s all too easy to send the wrong message. The experience of Tony Hayward at BP following the Gulf oil crisis demonstrates how a  mighty corporation can be brought to its knees by an accident and subsequent mishandled communications. Graham Mackay, Chief Executive of drinks company SABMiller, says, “Businesses are much more like open democracies. People expect to be communicated to … and see themselves as part of a democracy where they consent to being led. As well as the need to communicate more with employees, there is increased regulatory scrutiny, the rise of global NGOs and 24/7 media. You have to represent yourself and explain your company and your actions all the time.”

In the spotlight 

There’s no ‘off switch’ or downtime for the leaders of the UK’s business community. Kevin Murray, Chairman of PR firm Bell Pottinger, says, “Good leaders steer organisations to success by inspiring and motivating followers, by providing a moral compass for employees to set direction and by communicating a compelling vision the future.”

In other words, communication is a key weapon in a modern CEO’s armoury. Sir Stuart Rose, former Executive Chairman of retailer Marks & Spencer and current Non-executive Director of Land Securities Group plc, says that “for a business leader, building reputation and trust IS the day job, which makes communication the day job too”. It’s a point taken up by Jeremy Darroch, Chief Executive of media giant BSkyB: “Organisations that aspire to long-term success have got to have trust as an important part of their agenda. You never trust somebody you don’t know, whose motives you don’t understand. So, as a leader, you have to give people inside and outside the company a sense of who you are, and what you stand for. That’s what will help people decide whether they are willing to trust you.”

High stakes

Companies are expected to communicate well and properly engage with consumers and clients like never before. John Connolly, Former Senior Partner & UK CEO of Big Four firm Deloitte, says, “I believe that we have come to a stage where we have now to imagine a new definition of the purpose of business. What is it for? How does it make a positive contribution? There has to be more of a focus on long-term sustainable success rather than just short-term gain. It is only if you think long-term that you build more value in your business. You cannot sustain your business in an environment, either social or physical, that does not have a future.”

Jeremy adds, “You’ve got to make sure that your mission and values are relevant to a broad range of audiences, and that they understand your endeavours are making a contribution beyond the narrow profit of your business. What is good for you as a business is generally good for others too, whether you are a partner, an employee, or a customer. So you have to be prepared to stand up and explain why your success is good for all of those people.”

If managed correctly, this transparency and openness presents a fantastic opportunity for businesses to get closer to their core markets. Dame Amelia Fawcett, Chair of the Guardian Media Group, says, “Most communications are just not fit for purpose in the Facebook, Twitter, blog and 24/7 news world. News is now being produced by professionals and non-professionals working together – in what we call the mutualisation of news. One correspondent on the Guardian has a following on her blog of 750,000 people; The Guardian has a circulation of 365,000. If you know how to engage with that sort of network it can be very powerful.”

For Sir Stuart, CEOs and non-executive directors should be proactive in explaining how trade and commerce are positive forces for society. “I think it is beholden on business leaders to spend time in educational establishments, especially schools, and explain to children that work is not a bad place and that, unless they are unusual, they are going to spend 30 years or more in work. One of the downsides of the financial crisis is that there is now a feeling in schools that the creation of wealth is a bad thing.

“We’ve got an obligation to explain to the community at large that business growth is good, otherwise we wouldn’t have roads, universities, trains, planes, and all the other infrastructure we need. People need to understand that the Government  is spending the money that business makes. This is hugely important and I’ve been quite vociferous about it.”

Jeremy agrees. “There is no use in doing a lot of good and then not communicating it. Business has got to get itself on the front foot. Leaders have got to start laying out the positive case for business and private enterprise in a much more compelling way.”

Silence and a hands-off approach won’t be tolerated any longer. But every communication needs to be carefully weighed-up and balanced as nobody wants to suffer the merciless consequences of ‘doing a Ratner’ in the digital age.

This Update has been inspired by the content of a new book on leadership by Kevin Murray. The book, which is due to be published in November, is entitled ‘The Language of Leaders.’ You can find out more by clicking here (enter ‘Language of Leaders’ into the search facility). A supporting article is alsoavailable here.

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk