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Scarlett of Suburbia

Field Notes from The Motherhood

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September 2009

How Do Innovators Think? Harvard Business Review

What makes visionary entrepreneurs such as Apple’s Steve Jobs, Amazon’s Jeff Bezos, Ebay’s Pierre Omidyar and Meg Whitman, and P&G’s A.G. Lafley tick? In a question-and-answer session with HBR contributing editor Bronwyn Fryer, Professors Jeff Dyer of Brigham Young University and Hal Gregersen of Insead explain how the “Innovators’ DNA” works.This post is part of HarvardBusiness.org’s Creativity at Work special package.

Fryer: You conducted a six-year study surveying 3,000 creative executives and conducting an additional 500 individual interviews. During this study you found five “discovery skills” that distinguish them. What are these skills?

Dyer: The first skill is what we call “associating.” It’s a cognitive skill that allows creative people to make connections across seemingly unrelated questions, problems, or ideas. The second skill is questioning — an ability to ask “what if”, “why”, and “why not” questions that challenge the status quo and open up the bigger picture. The third is the ability to closely observe details, particularly the details of people’s behavior. Another skill is the ability to experiment — the people we studied are always trying on new experiences and exploring new worlds. And finally, they are really good at networking with smart people who have little in common with them, but from whom they can learn.

Fryer: Which of these skills do you think is the most important?

Dyer: We’ve found that questioning turbo-charges observing, experimenting, and networking, but questioning on its own doesn’t have a direct effect without the others. Overall, associating is the key skill because new ideas aren’t created without connecting problems or ideas in ways that they haven’t been connected before. The other behaviors are inputs that trigger associating — so they are a means of getting to a creative end.

Gregersen: You might summarize all of the skills we’ve noted in one word: “inquisitiveness.” I spent 20 years studying great global leaders, and that was the big common denominator. It’s the same kind of inquisitiveness you see in small children.

Fryer: How else do you think the innovative entrepreneurs you studied differ from average executives?

Dyer: We asked all the executives in our study to tell us about how they came up with a strategic or innovative idea. That one was easy for the creative executives, but surprisingly difficult for the more traditional ones. Interestingly, all the innovative entrepreneurs also talked about being triggered, or having what you might call “eureka” moments. In describing how they came up with a product or business idea, they would use phrases like “I saw someone doing this, or I overheard someone say that, and that’s when it hit me.”

Fryer: But since most executives are very smart, why do you think they can’t, or don’t, think inquisitively?

Dyer: We think there are far more discovery driven people in companies than anyone realizes. We’ve found that 15% of executives are deeply innovative, meaning they’ve invented a new product or started an innovative venture. But the problem is that even the most creative people are often careful about asking questions for fear of looking stupid, or because they know the organization won’t value it.

Gregersen: If you look at 4-year-olds, they are constantly asking questions and wondering how things work. But by the time they are 6 ½ years old they stop asking questions because they quickly learn that teachers value the right answers more than provocative questions. High school students rarely show inquisitiveness. And by the time they’re grown up and are in corporate settings, they have already had the curiosity drummed out of them. 80% of executives spend less than 20% of their time on discovering new ideas. Unless, of course, they work for a company like Apple or Google.

We also believe that the most innovative entrepreneurs were very lucky to have been raised in an atmosphere where inquisitiveness was encouraged. We were stuck by the stories they told about being sustained by people who cared about experimentation and exploration. Sometimes these people were relatives, but sometimes they were neighbors, teachers or other influential adults. A number of the innovative entrepreneurs also went to Montessori schools, where they learned to follow their curiosity. To paraphrase the famous Apple ad campaign, innovators not only learned early on to think different, they act different (and even talk different).

Read the penultimate paragraph closely — it explains why nothing ever changes in Corporate America.

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Mad Men Blogs – 1960s Handbook – Confessions of an Advertising Man

“The two most powerful words you can use in a headline are FREE and NEW. You can seldom use FREE, but you can always use NEW.”

So says ad man David Ogilvy in his 1963 tell-all Confessions of an Advertising Man. Still considered the de facto guide on modern advertising, Confessions lays out in fine print the strategies the door-to-door salesman turned “Father of Advertising” used to create Ogilvy & Mather, one of the most successful ad agencies in the world.

The book was inspired by Ogilvy’s belief that his industry faced systemic problems in 1963: Manufacturers spent more money on price-off deals than solid advertising while agencies were more interested in awards than products. The solution, Ogilvy contended, relied on research, discipline, creativity with an emphasis on the “Big Idea,” and most importantly, results. “In the modern world of business,” he wrote, “it is useless to be a creative, original thinker unless you can also sell what you create.”

Is social media really different? Or just another dialect in the business vernacular?

A Dozen Social Media Applications

In June, Facebook attracted 24 million new unique visitors with 340 million unique visitors/month, surpassing Wikipedia as the fourth largest site in the world. Twitter’s unique visitors totaled 44.5 million in June, up 19% from May and 3,000% year-on-year.

Many marketers employ a wide range of effective approaches while, despite the super-sized growth, others have not yet leveraged social media. Consider these 12 ways companies leverage social media to build relationships and drive sales:

1. Listen to Your Consumers

Twitter Search (search.twitter.com) offers an easy and free way to monitor keywords, brands or products. Advanced social listening tools combine technology and human analysis to provide more scalable, accurate and meaningful findings. Findings can inform paid search copy, search keyword lists, landing page strategies, reputation management campaigns, and other online and offline strategies.

2. Talk to Consumers Face-to-Face

Social media offers an agent on the ground, a virtual presence in the conversation. Consider Jack in the Box’s Twitter page: http://twitter.com/jackbox. “Jack” interacts with consumers about more than fast food, even thanking followers for well wishes while he was in a coma.

3. Brand Yourself as an Expert

Some companies use social media to become a go to resource. On Facebook, H&R Block leverages the brand’s fan page to become the go to “person” for tax help online.

4. Monitor and Respond to Customer Service Issues

Comcast extends customer service to Twitter, where the company’s director of digital care, Frank Eliason, monitors and responds to mentions of Comcast. Business Week featured Eliason, calling him “the most famous customer service manager in the U.S., possibly in the world.”

5. Manage Reputations, React Quickly to Crises

Social media can be a great way to proactively manage potentially negative situations. Southwest takes control of consumer conversations early on Twitter. In July, the airline used the channel to inform consumers about 737 inspections and customer refunds following a near disaster.

6. Create Massive Conversations about Your Brand

Marketers that haven’t heard what t-shirt marketer Threadless has done on Twitter should see for themselves: http://twitter.com/threadless. Innovative contests and campaigns have earned the niche marketer more than 1.1 million followers, and the brand’s massive Twitter buzz, which costs virtually nothing, rivals that of the iPhone and the Iran Election.

7. Dominate the SERPs

The major engines limit search results to two per domain; so when a consumer searches on a brand name, that brand’s site will show up in a maximum of two results. Marketers can own more of the SERP by establishing effective Facebook, Twitter, LinkedIn and other social media pages to work with their native site to outrank competitors.

8. Optimize Ads to Perform … Just like Search

Facebook’s bidded CPC auction environment enables marketers to only pay for the clicks they get. They create their daily budget, opting to spend $10 or thousands depending on goals.

9. Microtarget Ideal Users

Marketers can target consumers by location, age, sex, education, workplace, relationship status, interests, languages and other psychographic categories. Facebook recently added targeting by connections, locations and birthdays, too.

10. Harvest Data With Custom Apps and Sweepstakes

Hundreds of branded Facebook applications exist to engage consumers. Papa John’s pizza uses frequent sweepstakes to capture names and e-mail addresses while keeping its brand top of mind with consumers.

11. Promote Coupons and Deals to Sell Products

A brand’s Twitter following is a self-selected group raising their hands saying: I’m interested in what you sell or what you are tweeting about. Dell has raked in more than $3 million from its Twitter followers in two years, including $1 million in sales during the past six months. The PC marketer posts six to 10 tweets per week, each containing a coupon or link to an exclusive deal.

12. Create More Engaging Display Ads

Sponsored Twitter Pulse ads target mothers on thousands of sites, like Babycenter.com. The Twitter feed scrolls every 30 seconds showing the most recent conversations. A Juicy Juice sponsorship associates its brand with the parent conversations.

So why not do more with social media? Chief marketers should discuss with their teams what’s currently being done and what might best serve each brand’s unique situation.

Stuffing your facebook: The kitchen is open online

Since Galvan started using Twitter four months ago, he estimates his sales have doubled.

“What helps the most is that the chefs who follow my updates can actually see the quality of the product we’re carrying, in real time,” Galvan says.

He isn’t alone. As technology has made communication easier and faster, a growing number of chefs and others in the food industry have taken to social media services such as Twitter and Facebook to promote themselves and their projects, interact with customers and fans, offer special promotions — or just see what all the fuss is about.

Others have taken to setting up their own blogs or writing blogs for larger media groups, such as Alinea’s Grant Achatz, who routinely files posts for the Atlantic Monthly’s food blog.

Still, some chefs, including Blackbird’s Paul Kahan, have been slow to embrace social media.

Kahan’s publicist Ellen Malloy thinks perception is part of what’s holding them back.

“They actually don’t think anyone cares about what they have to say,” Malloy says. “They couldn’t be more wrong. People are salivating for their words and thoughts almost more than for their food.”

Master of the medium

With his cookbooks, cooking shows and recent win on “Top Chef Masters,” Rick Bayless is as media savvy a chef as they come. When he was looking for an outlet to interact with customers and fans, Bayless set up a Twitter account.

“A friend of mine in California suggested I take a look at Twitter,” Bayless says. “I looked at Facebook — my wife and daughter have Facebook profiles — but it looked like it would consume me if I dove in.

“Ninety percent of what we do goes on behind closed doors and I wanted to give fans a glimpse behind the scenes on the way toward them becoming vested members of the Frontera family. Twitter seemed like the simplest route to do that.”

What Bayless likes about Twitter is its immediacy and ease with which he can post updates.

“I could maintain a blog, like the one I wrote during ‘Top Chef Masters,’ ” Bayless says, “but Twitter has a limit of 140 characters and I can steal away a few seconds to post updates on my phone.”

But Bayless’ use of Twitter goes beyond promoting all things Frontera. He’s become a master of the medium, using it to offer advice to aspiring chefs; post recipes, photos of his backyard garden in Bucktown and videos of trips to Mexico; hold haiku contests, and re-tweet posts from others he finds interesting or amusing.

He has given hearty nods of approval to other restaurants, such as the Wicker Park Greek restaurant Taxim. Bayless wrote that Taxim “does for Greek food what we’re trying to do for Mexican.”

I even saw Bayless take time out from opening day at XOCO, 449 N. Clark, his new tortas and chocolate shop, to tweet.

I must be craving fish today or something.

Ingenious use of the time-sensitive nature of Twitter. Seafood merchant posts photos of ‘today’s catch’ and tweets them to interested chefs who may want to place an order.

You’re Not Spending Enough Money! Startup Financial Tips

The money flowed like beer at a frat party.  We hired people right and left – even though we didn’t have time to orient them and put their talents to good use.  We sponsored events and went to tradeshows – even though our time would have been better spent on making individual sales calls, rather than the distractions of picking out tradeshow booths.  We spent oodles of money and, worse, time commissioning swag and marketing materials and advertising creative – even though we had little revenue coming in.

In the end it didn’t help the business.  While speed is important, a startup paradoxically also needs time — time to iterate on product development, time to get the team aligned with the business vision, and time to focus on closing sales.

Startups are like babies – you can’t force babies to grow up faster just by throwing money at them.

Fast forward to my current business.  I bootstrapped it with my savings and by consulting on the side.  That means it has grown slo-o-o-owly.  But I wouldn’t have done it any other way.  In the beginning I had to earn every dollar personally with the sweat of my brow before I could plow it back into the business.  That in turn caused me to focus on whether I REALLY needed to spend money.

Of every expenditure, I would ask myself:  “how many hours would I have to work to pay for this expense?”  That one question brings clarity.

And the following is what I have learned about spending – and saving money – in the startup years.  I looked at some highly successful and well-known entrepreneurs for inspiration and came up with five rules for companies in the first 3 years of their existence:

(1)   Be picky.  In the words of Evan Williams, a founder of Blogger and Twitter, startups have to be willing to say no –  no to partnerships and unnecessary product features and the wrong employees.  More wasted money and time comes from going in too many directions than from focusing.

(2)   Act like a little company.  According to Jason Cohen, founder of Smart Bear Software, who are you kidding by trying to look and sound like a big corporation? As a startup, you’re a little company going after early adopters. Be human.  Instead of the snazziest website possible, have a more informal website or blog.  Ditch the marketing speak.  Not only will you communicate better, but you will save a lot of money on all that fancy design, and you’ll save time wordsmithing all that marketing speak.

(3)   Watch every penny.  This advice from Michael Arrington of Techcrunch may seem obvious.  But in a young company you need to turn “watch every penny” into an art form. First principle: operate in Spartan surroundings.  I would add this:  become a do-it-yourselfer.  Be prepared to spend your weekends and evenings working on tasks – marketing and a little light technology work such as updating your website — that later on you’ll delegate.  You will save money.  And you’ll learn these tasks from the inside out, and be able to better judge whether you’re getting good value from service providers in the future when you can afford them.  Also, use accounting software religiously.  When you track your numbers closely, cost containment becomes woven into your business DNA.

(4)   Seek out discounts.  Not only should you watch every penny – but squeeze those nickels for more.  According to Jason Calacanis, go to each of your vendors every 6 to 9 months and ask for discounts. I would add: get used to searching for online discount codes, buying in bulk where it makes sense, and paying the annual rate to save 15% versus a monthly rate.  Be on the lookout for rewards from credit cards and charge cards that help you save even more.

(5)   “Sales cures all.”  Those are the words of Mark Cuban, as one of his startup rules.  And I couldn’t agree more.  Start selling and bringing money IN the door as fast as possible, rather than worrying about expensive surroundings or tradeshows which are all about money going OUT the door.  Track your time to see how many hours in the day you spend working on sales, versus activities that are expense-oriented. Make adjustments. Get your priorities straight.

Now, I realize some of this may sound anti-marketing.  Trust me, it’s not.  I am a big proponent of paying for good marketing — for a business that can afford it.  But first things first. Be ruthlessly stingy on marketing expenditures and every other kind of expenditure in the beginning.

The good fiscal habits you practice in the startup phase tend to stay with you as the business grows.  You’re much more likely to remain on a solid financial footing throughout your business’s life cycle.

Great advice from a small business expert I deeply admire.

Giant Supermarkets Seek Advantage of Small Stores

To advance its efforts the company promoted Ron Bagley to director of compact formats, a newly created position. Bagley, whose most recent position was director of operations, merchandising, will report to Steve Lamontagne, vp of format development. In April, the supermarket operator opened Giant To Go, a 4,400 square foot facility, in Lancaster, Pa., combining typical convenience store assortment and services with a more elaborate food presentation including produce, meats, deli and bakery. Consumer using the convenience store are linked to the supermarket operation via the loyalty card they can use in each.

Yet, company spokesperson Tracy Pawelski said Giant To Go isn’t all that the company has in the works. It is developing additional concepts involving both new stores and existing supermarkets slated for renovation. “Giant has been looking at how to work with new formats to expand and broaden our company’s geographic reach,” she said.

Of course, small stores have become more popular with major retailers. Tesco invigorated the trend when it opened up its Fresh & Easy concept, but the growth of Aldi, Trader Joe’s and Walmart’s Neighborhood Market already had many retailers considering the value of operating compact units, particularly as they could better fit more densely populated markets in terms of scale and cost. The result has been a range of tests including Walmart’s smallest store operation, Marketside. Yet, while many of the newest store concepts are under 25,000 square feet, Meijer has developed a 100,000 square foot concept designed to more easily fit dense urban markets, particularly around Chicago, than its 200,000 square foot full-sized supercenters. Kroger has marketplace, which is scaled up from its supermarkets at 100,000-plus square feet, but scaled down from — and actually based on a small-store format originally developed by — its Fred Meyer supercenters. With its P-Fresh stores, Target is, essentially, exploring the market for mini supercenters — one tested by Kmart before its financial troubles and bankruptcy made the experiment untenable — by adding a full range of perishables to the groceries and frozen and refrigerated food typically available in its supercenters.

Ahold’s most visible store initiatives lately have involved shifting the stores in its centerpiece Stop & Shop/Giant-Landover division to everyday low price operations, while simultaneously cutting the number of products in its assortment to focus more heavily on fast moving items and segments. By looking at new formats in the Giant-Carlisle division, Ahold can develop vehicles that use the kind of focused product strategy it has been developing elsewhere but incorporated into a wider range of vehicles. Thus, a small store in Harrisburg might still have an assortment limited to fast moving items/segments but be significantly different from the focused assortment available at a unit in the Reading suburbs. Additional formats provide Ahold with the opportunity to serve customer with efficient stores and still meet a wide range of needs. Being able to scale locations to the size of their communities and the sales volumes they can generate provides cost advantages but also being able to provide different, tailored product selections in stores styled to serve specific population provides additional competitive and customer satisfaction benefits simply operating the same format in a greater or lesser size can’t.

Lessons here for all retailers, not just grocery.

Entrepreneur casts his social media net wider for business

A shop aimed at fishermen within a mile of the sea on every side seems bound
to succeed, but when Harding ,41, moved in, its turnover was low. “The
shop was off the main street, so I did simple things like putting a board on
the corner advertising all-day opening hours.

“I found it very frustrating, because most shops in St Anne [the island’s
only town] still close for lunch, shut at five and have half-day closing on
Wednesdays, which limits the time that people come to shop. I spread the
word that we’re open all day.”

Alderney’s main source of income is tourism but the season is short and
concentrated on the summer holidays. Harding knew he had to make an effort
to market the shop to visiting fishermen. “We put leaflets in every
self-catering property, made sure our poster was in all the B&Bs and
advertised in the tourist centre,” he said.

He made contact with the charter companies running angling trips to Alderney
from the south coast, going to the harbour every morning to sell tackle and
bait. His shore guiding sessions expanded the potential market for the shop. “I
run two-hour lessons by the breakwater teaching kids to fish – they’re
hugely popular, and in the summer I could be out there three times a day.
Another session is aimed at people with a little experience who want to
improve their casting and presentation.”

In 2006 Harding moved his business to the main street. “Takings increased
by 20pc almost immediately. The premises were larger, and we’d ploughed all
the profits back into increasing our stock.”

Last year Harding diversified into B&B, decorating three bedrooms in the
flat above the shop with a nautical theme. “Visiting fishermen kept
asking about where to stay, so it made sense to use the space here. It means
we can offer them a better service because when the shop is closed there’s
time to talk tactics and give advice.”

From the start Harding has had a website with local fishing news and
conditions and – the most popular page – his fishing diary. The mail order
section even attracts customers from Australia and Canada. “Our prices
are very competitive because there’s no VAT, and we have lower overheads
because there’s no company tax. ”

The holiday “staycation” syndrome, supposedly benefiting UK
destinations, has affected Alderney less than other places because the only
commercial transport to the island is a 16-seater plane. “Getting here
is expensive,” admitted Harding, “but if you want seclusion you
have to pay for it.” But his specialist B&B business is
flourishing, with bookings from April to December, and he and his partner
Fieona Cosheril, from an island family, have all-round plans for expansion.

“We’re moving the fishing tackle business to a shop on the harbour,
keeping the sports and leisure side in town – and hopefully adding another
bedroom for fishing visitors. But the main focus will be on expanding mail
order including introducing a basket system on the website.”

Running a niche business in a community of just 2,000 people has challenged
Harding to discover ways of extending the holiday season and find a global
market.

RECESSION TOOL KIT

 Keep your prices competitive, and consider reducing your mark-up to
keep goods turning over.

 If one area of your business is hit by the recession, concentrate on
making up the sums elsewhere. Our income from charter boats was hit because
people were cutting down on that type of holiday, but we worked hard at
increasing B&B and mail order.

 Be prepared to work harder than ever, particularly at customer
service. People will remember, when the recession is over, and keep coming
back.

STARTING OUT

DO

 Listen to what your customers want and do your best to deliver

 Explore every avenue to find business opportunities. I realised that
there was a ready market for fishing tackle among the charter boats coming
into the harbour, so I’m moving the business to be on the spot.

DON’T

 Hold back from trying something new. I’d never run a shop but in my
30s decided to go for it and turned my hobby into a business.

This guy followed his passion, even though he had $20,000 debt, started his business and grew from there using social media and smart networking tactics. If he can do it, so can you.

Why social networks don’t improve your judgment

Past studies have shown that when people interact, they tend to affirm their commonalities. Two colleagues who are both fans of a particular sports team, for example, will talk about the team frequently in their workplace conversations. These two colleagues could then mistakenly believe they have more in common than they actually do.

This misperception could be especially true regarding ethical and moral beliefs, since coworkers often don’t discuss such issues. Instead, coworkers tend to discuss their families, current events and other topics they perceive as safe. Flynn and Wiltermuth have shown that having this ethical blind spot can be particularly dangerous for people at the center of social networks, because these individuals are more likely to perceive themselves as being more in touch with others’ opinions than they actually are.

“If members of organizations erroneously assume that their ethical judgments are in line with the prevailing view,” write Flynn and Wiltermuth, “they may feel emboldened to act and only learn of their misjudgment when it is too late to avert the consequences.”

CEOs and other executives are particularly vulnerable to making such miscalculations because past research has also shown that people in powerful positions are more likely than others to search for evidence confirming their beliefs rather than exploring contradictory information. Moreover, ethical dilemmas are inherently tricky.

ht @amandachapel

If Doing Good Isn’t Part of Your Corporate DNA, Consumers Won’t Buy It

I’m talking about companies that have made a strategic commitment to make “goodness” part of their brand’s equity. They link responsible brand citizenry into what the brand essentially represents to consumers.

I received a round of support for this idea in a conversation I had recently with Marc Pritchard, global marketing officer and global brand-building officer for Procter & Gamble. “People are definitely embracing brands that are purpose-inspired and benefit-driven,” he told me. “As such, over the course of the last few years … we’ve looked at how to make the social benefit of a brand congruent with its core equity.”

By way of example, Marc told me about the Pampers UNICEF Program, which focuses on eliminating maternal and neonatal tetanus in developing countries. “The benefits of the Pampers product are fitness, dryness, comfort,” Marc said. “This makes for happier, healthier babies. It makes their lives better, and it makes moms’ lives better. With our Pampers UNICEF Program, for every package of Pampers a parent buys, P&G will donate the cost of one tetanus vaccine to save the life of a child. What’s important to take away from this is that we aligned the core benefit of the brand — healthy babies — with the societal benefit of the program. If you can’t tie the benefit of your actions to the essential DNA of the brand, it doesn’t help your revenue or the brand’s equity with the consumer.”

Marc’s last point is vital to success. If consumers don’t get the intrinsic link between brand benefit and social purpose, they won’t buy it, literally or figuratively. To be believable and sustainable, your efforts must be fundamental to both the brand promise and the business strategy. They must be built into the brand’s identity and part of a long-term business model. To say they must also give your brand a competitive advantage is a given.

P&G is leading us into the next 30 years of marketing.

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