Collaboration will Create Disruption in Regenerative Medicine – Yeah!

On Wednesday, May 9th, at York University, I had the opportunity to hear Dr. Michael May speak about the work he is doing in the area of stem cell research and regenerative medicine.  From the progress made to date, it is clear that within our lifetime we will indeed see the disappearance of the need for bone marrow and organ donors, as well as the market introduction of cures for diabetes, Alzheimer’s and other diseases.  From the sounds of it, Dr. May’s team will play a large role in this.

Why?  Obviously he is doing amazing work.  But so are hundreds of other biochemists.  The reason he is more likely to succeed is related to what Clayton Christensen calls creative disruption.

One of the main reasons many scientists conduct research is for the discoveries that can change processes, industries, lives.  Although such findings have the potential to disrupt how things have “always been”, they do not – not on their own in any event – fit into Christensen’s disruptor definition of innovation.  

According to this way of looking at business strategy, the “true disruptive power of an innovation lies not in the technology itself, but in the business model surrounding that technology.”  In Dr. May’s case, he has done an outstanding job of creating a collaborative model that brings together business thinkers, funders, scientists and companies that can invest in and profit from the breakthroughs. 

In one simple move he has managed to get competitors to collaborate to maximize funding potential and shorten the path to bring good products to market.  That move is the creative disruption that will lead to use seeing real cures in our lifetime.

Kudos to Dr. May.  To learn more about the network and his inspiring work, please check out the Centre for Commercialization of Regenerative Medicine in Toronto, Canada. 

When he spoke, Dr. May quoted Abraham Joshua Heschel who said, “The beginning of awe is wonder, and the beginning of wisdom is awe.” He also said, “Knowledge is fostered by curiosity; wisdom is fostered by awe.”  So in awe of both the medical and business break throughs, I wish you a week in which your curiosity leads to acquire more knowledge.

Jane-Michèle

 

P.S.  If you’re interested in reading an interesting article on how to be a disruptive scientist, please go to: http://bit.ly/IRqlFq.

Becel’s Busted Business Strategy

Okay, the Becel strategy is actually sound, but I liked the alliteration in terms of what happened today.

Driving along I heard the current Becel commercial discussing how controlling your cholesterol level is an important first step in preventing strokes and heart attacks and talking about the two-day clinics being held across the country to test people’s blood levels. (To see the “Love Your Heart” campaign, please go to: http://www.loveyourheart.ca/proactiv/)

Ignoring the fact that this is a free service in this country anyway, it’s a good idea. The marketing plan ties a good product in with caring for the community while giving it the patina of medically-proven health enhancement.

The whole campaign is based on higher levels of cholesterol being harbingers of heart attacks and strokes. As part of its plan, Becel sponsors the Heart & Stroke Foundation – great idea, given that Becel Pro-Activ is a margarine that is fortified with plant sterols.

Plant sterols are the common name for phytosterols which are found in fruits, grains, legumes and vegetables. Phytosterols slow the body’s absorption of dietary cholesterol as well as cholesterol that is made by the liver. Research shows that two grams of plant sterols can lower bad cholesterol (LDL: low-density lipoproteins) by 10%, which means that by simply spreading Becel on your toast in the morning as part of your regular routine, you’ll get about half of what you need to lower your cholesterol. Use a little more at lunch and you’ll likely start to see a difference in your numbers.

So what’s the problem? Hard on the heels of the Becel commercial was the announcement that “research shows that contrary to what we believed before, cholesterol levels are not indicators of a woman’s likelihood of having a stroke.”

A longevity study conducted by Danish researchers over a 33-year period showed that non-fasting cholesterol is not the right marker for stroke risk. Apparently triglycerides, which are another type of fat contributing to plaque build-up, are the real indicators of potential stroke. Especially in women – and the Becel campaign is directed at women.

See the dilemna?

Does that mean that Becel needs to abandon its campaign? Less-than-savvy marketers might, but in my opinion, that’s not the right approach.

If it were my client, I would include the info about the Danish study (http://bit.ly/eFV7Tx ) on the “Love Your Heart” site, alert woman to the need to have their triglyceride measured, while continuing to reduce LDLs to help with plaque build-up that can damage their hearts.

Handled properly, it’s still a win – and a good PR person can even use the news to get more air time!

Until next time, have fun, take calculated risks and watch your cholesterol!

Innovation – Simply Put

Today I received one of those e-mail stories that circulate through cyberspace. It’s a simple story, but it sure makes a point... with a lesson that is as apt for business as it is for personal matters. Here it is:

A blind boy sat on the steps of a building with a hat by his feet. He held up a sign which said: "I am blind; please help." There were only a few coins in the hat.

A man was walking by. He took a few coins from his pocket and dropped them into the hat. He then took the sign, turned it around, and wrote some words. He put the sign back so that everyone who walked by would see the new words.

Soon the hat began to fill up. Many more people were giving money to the blind boy. That afternoon the man who had changed the sign came to see how things were. The boy recognized his footsteps and asked, "Were you the one who changed my sign this morning? What did you write?"

The man said, "I only wrote the truth. I said what you said but in a different way. I wrote: ‘Today is a beautiful day but I cannot see it.’"

Both signs told people that the boy was blind. The first sign simply said the boy was blind. The second sign told people that they were so lucky that they were not blind. Should we be surprised that the second sign was more effective?

Moral of the Story: Be creative. Be innovative. And reap the rewards.

The Role of Loyalty Programs Today

Earlier today I promised to write a little more on the role of loyalty programs today. This is not an exhaustive take on the matter, but should give you a little insight into the way things are moving.

It is commonly accepted that well-conceived and executed, formal customer loyalty programs can increase retention rates as well as revenue and profitability per customer. Despite the expectation that over $2 billion will be spent worldwide on customer loyalty programs in 2010, however, less than 15% of companies today are leveraging their customer loyalty programs to advantage.

In part this is because fewer and fewer programs are being well-managed, and in part because the way rewards-based loyalty programs are being perceived by customers is changing.

Although having a loyalty program is as de rigueur as having a website these days, customers are increasingly indicating that these programs do not necessarily make them loyal customers because so many companies with similar offerings have programs with similar rewards.

For this reason, my advice to companies today is this: Only join, or introduce, a formal rewards-based customer loyalty program if....

• Your primary reason for introducing the loyalty program is to capture data... and you ensure that your systems are designed to allow for easy analysis of the data, and that marketing initiatives are deployed accordingly; and

• You want to use the information to better understand your customers’ behaviour patterns and preferences in order to improve the product offering, customize service and create a more meaningful relationship with the customer, and

• You are prepared to invest sufficiently in the program to provide meaningful benefits to your customers – benefits that will actually enable you to shape customer behaviour; and

• You understand the benefits of customizing services and/or packages and/or communication to the specific needs of individual customer cluster groups; and

• You are willing to offer special benefits to your best customers – and think that it is okay to treat your top clients like VIPs (yes, excellent service to all, but kingly treatment for the top tier).

That’s a lot of ands – but you need to take this to heart if you want a loyalty program that reaps rewards for you.


Why? Two reasons.

1) Rewards alone don’t create loyal customers.

2) Customers expect that, in exchange for allowing marketers to track their purchases and other consumer behaviours that they will be rewarded with more personalized, customized service.


Point #1: Rewards

Despite nearly 70% of participants saying they are satisfied with the loyalty programs in which they participate, less than 25% say that the programs make them loyal to the company running the program.

In nearly 70% of cases, people have come to view these programs simply as a way to get a little extra perk when they patronize retailers and service providers they like for other reasons. They participate in all the programs offered by the types of retailers they frequent so as not to miss out.

The following comments from a few of the research respondents are representative of the broader picture:

About gasoline: “I play in the Esso, Shell and Petro-Canada games. That way, I can go to whatever gas station I find on the right hand side of the road when my gas light goes on. I don’t really care whose gas I buy because it’s all the same to me and it’s all the same price, too.”

What business travellers said about hotels: “When I book a hotel, I choose one that, in order of priority, is a) close to the conference or meeting, b) within my corporate allowance, c) known for being clean, safe and accommodating and d) has a points program. If the first things aren’t in place, it won’t matter what kind of rewards program the place offers; I simply won’t stay there.”

About grocery retailers: “If the program is free, I sign up. If not, I don’t. I always show my card when I’m in the store, but I don’t decide where I’m going to shop because of the card. If there are great specials or points on certain items, I may buy them, even if I hadn’t plan to when I entered the store, but as I said, things other than the loyalty card make me decide where I’m going to do my groceries.”

Given a choice between frequenting a retailer or service provider that was conveniently located but had no loyalty program – and one with a loyalty program that was not conveniently located, 90% chose convenience over loyalty program, as long as the companies’ reputation were similar and the price gap not too large.

Interesting observation: As a result of the glut of loyalty programs in the market, collectors are becoming loyal to the reward and points play, rather than to the company.

The only way to change this is to either have a loyalty program that is superior to anything else – and this includes almost unprecedented levels of customized service and communication

In terms of the rewards themselves, they need to be attainable. In many instances, respondents indicate that the rewards are becoming harder and harder to earn and that this is making the rewards program less of a motivating factor. This is supported by a recent CMO Study which finds that 38% of participants overall say there are too many conditions and restrictions on the programs and that 37% of people feel the rewards lack any real value.


Point #2: Recognition

For the top tier clients, the one who represent the highest revenue contribution per person – and are also usually the most profitable, too – recognition is more important than reward. Indeed, the most active participants in a program expect that the company reps should be able to recognize their value to the company and they should be given special treatment as a result. Fewer than 10% of companies surveyed, however, say they have special tools in place to a) recognize the best customers and b) provide them with special treatment in any case.

Many airlines and hotels are notable exceptions to this – and room and seat upgrades and other special treatment can cement relationships with the best clients. Said one senior exec: “I travel a lot and my airline knows me. When my meeting is done early, I just head to the airport. Even if I have a later reservation, I know they’ll get me on the next flight, even if they have to bump another passenger. I don’t care about free trips; I do care about getting home sooner.”


What Does All This Mean in Terms of The Role of Loyalty Programs Today?

In an age where is an increasing gap between customer satisfaction and loyalty, it is clear that true loyalty comes from having customers who feel like they are valued. It’s equally clear that the purpose of a customer loyalty program is to give marketers the insights that will help them treat special clients like VIPs. This will, in turn, lead to higher retention levels, large revenues per transaction, more referrals and better profitability overall.

If we look at the evolution of loyalty programs, we’ll see that this is not a new concept. For more on this, please read: The evolution of loyalty programs: http://bit.ly/cBW6dc


If you would like clarification on anything, please feel free to contact me: jmc@theQgroup.com.

Until next time, remember to have fun and be prepared to “go out on a limb because that is where the fruit is.”

Jane-Michèle Clark

The Evolution of Loyalty Programs

By taking a partial look at the evolution of customer loyalty programs, it is easy to see why so many rewards-based programs are not delivering what the customer really wants.

According to the Turkish tour guide who showed us around the ruins, the first documented “loyalty” program was recorded in Ephesus (ancient Turkey) in the 2nd Century AD. Rival oil merchants apparently would offer customers a free amphora refill every 5th time and would give customers special stones to mark each of the first 4 purchases.

Apocryphal? Who really knows? What is clear, however, is that merchants have been finding ways to encourage customer loyalty for centuries through use of discounts, “buy one get one free”, punch cards and various other types of offers.

In the 1970s, the first of the airline frequent flier programs made its debut. At the time it was a powerful way to get people to choose one airline over another. As more airlines jumped on the loyalty bandwagon, and more people started accumulating frequent flier miles in different programs, however, lines were drawn. If someone were racking up miles in one program, flying on another airline meant making a negative decision against himself (or herself).

The natural human response: Join the other loyalty programs.

Seeing the sign-ups and changing reservation patterns, car rental companies, hotels and others in the travel business entered the fray. As did large retailers such as Zellers, sub stores, coffee chains, grocery stores, video rental outlets... you name it and today it probably has some kind of loyalty program. You’ll also find online programs such as Mypoints, Ebates and other that reward loyal shoppers. There are even non-profit online services such as SchoolPop and iGive.com that have been created with built-in have loyalty building mechanisms.

The result is that today, over 80% of North Americans participate in at least one loyalty program*. One third belongs to two or more – and a whopping 10% of North Americans now participates in more than 20 loyalty programs.

According to COLLOQUY, the average for the US: 14.1 programs. For Canadians the average is 17.5. Not surprising given the proliferation of such programs. In Europe the numbers are lower, but on the rise there, too, nevertheless. According to both Forrester Research and META Group, people’s propensity to join such programs is not expected to diminish in the near future, despite the diminishing of perceived value to the average consumer.

Why is that? In our parents’ and grandparents’ day, the “loyalty program” was actually the service provided by the corner store grocer. He built relationships with his loyal customers and they came to count on him. When Mrs. Smith’s had family coming in from the east coast, he made sure to order her dad’s favourite lamb roast. When the White’s daughter was getting married, he ordered in special ink to use on the invitation envelopes. When Mr. Green was injured at work, the grocer brought the 50 lb. bag right to the house because he knew the Greens’ sons were only 2 and 3 years old. As for the beef bones, they were always saved for the Coxwell’s collies.

Customers were loyal to the establishments where they were recognized and treated as though they were special.

For a while, we in North America moved away from expecting this kind of special personalized, customized service, but the pendulum is swinging back.

Today, with consumers understanding that companies can track individual orders and keep track of who spends what with a company, there is a returning desire to receive the old-fashioned corner store recognition.

The advent of social media tools is increasing this expectation, so marketers need to re-examine how they will use their loyalty programs for these programs to remain effective.

Today, a formal rewards-based customer loyalty program must...

• Capture customer demographic, transactional and preference data. Systems must be designed to allow for easy analysis of the data, and marketing initiatives need to be deployed accordingly;

• Make use of the information to better understand customers’ behaviour patterns and preferences in order to improve the product offering, customize service and create more meaningful relationships with customers;

• Receive adequate financial and personnel support to provide customers with relevant benefits – benefits that will actually help to influence customer behaviour;

• Include customized services and/or packages and/or communication that respond to the specific needs of individual customer cluster groups; and

• Offer special benefits to the best customers.

It’s funny, but as we have become more technologically sophisticated, we are seeing a return to older time customer service values... and the marketers who recognize this, and put in place the systems to provide this level of service to the best customers, will be able to capitalize on what is transpiring in the market.

Well, I guess that's it for now. My next post will start to outline some of the things you can do to get more bang from your customer loyalty program buck.

In the meantime, if you would like clarification on anything, please feel free to contact me: jmc@theQgroup.com.

Until next time, remember to have fun and be prepared to “go out on a limb because that is where the fruit is.”

Jane-Michèle Clark

*This figure is hard to quantify, but Jupiter Research puts the figure at +75%, The Q Group Research says 85% and other studies show figures anywhere from 80% - 90%. Differences in regional and demographic skews account for the differences in stats, but most marketers agree that +80% is a reasonable figure.
 

8 Steps for Handling Corporate Crises

No matter how many preventative measures are taken, things go wrong in every company at some point. How your company responds in a crisis has a direct bearing on how quickly it will recover consumer confidence and sales.

A couple of posts back I listed the steps to follow when the yoghurt hits the fan. Here is a little more about each of the steps.


1) Investigate immediately

Hopefully you will have cultivated an environment in which employees at all levels are motivated to alert supervisors to problems as soon as they arise.

As soon as the whistle blows, assess the magnitude and specific nature of the problem. Try to determine why the problem has occurred/is occurring, and who is/what departments are responsible so that you can determine the most appropriate remedial action. You need to think “stop the problem, contain the damage and start making things right”. This is not the time to assess blame or point fingers in any way shape or form.

If the problem is a serious one, or has the potential to have a significant impact on the company, ensure that senior execs are alerted immediately. They need to be involved in “next steps”.


2) Activate your response plan according to what has happened (if you don’t have one, read the previous post)

If you did a good job of anticipating what could go wrong, your current problem is likely listed in the Problem Resolution Binder, along with a recommended course of action. Follow the plan… but be flexible enough to make adjustments based on the actual set of circumstances.

There should be contact numbers for key decision makers and department heads in the book. Even when the course to follow is well laid out, make sure seasoned, senior employees are involved in the implementation of "next steps" to ensure that they are indeed the correct ones for the specific problem at hand.

Although you need to respond immediately, do not confuse responding with reacting. Take the time to assess the ramifications of your solution steps before proceeding – those extra minutes of reflection, or extra calculations and discussions, can make the difference between an effective resolution and an escalation of the problem.


3) Be – and be seen to be – sympathetic and pro-active

Nothing annoys customers and average consumers more than corporate executives who appear indifferent to a problem and how it is affecting customers, employees and other stakeholders.

According to research we conducted from March - June 2010, 55% of the general adult population in North America appears to be angered by executives who treat a crisis simply as a problem to be solved, without being cognizant of, or sympathetic to, the personal toll exacted by whatever has transpired. For customers, the figure rises to 87%. The figures were consistent for all types of problems ranging from corporate missteps to more serious problems that resulted in loss of life, across all types of industries.

Of more significance to the bottom line, nearly 40% of people said they would be less likely, or far less likely, to do business in future with companies whose executives appear indifferent to employees and public opinion, especially in times of crisis.

Even though they understand that things go wrong at some point in every company, respondents explained that the way a company responds in times of trouble is a reflection of its ethics and customer service values. As one business buyer put it, “If they can’t be compassionate and caring in times of trouble, I can only imagine how my business is valued and how my people would be treated during the good time. I suspect it would not be with respect.”

Maple Leaf Foods retained its credibility along with the confidence and goodwill of the Canadian consumer when it faced the listeria outbreak in 2008 because it pro actively let people know what was going on and publicly expressed concern for the families involved and its own employees, too.

From long before the time of the Tylenol package tampering though to the BP oil well disaster, there are clear examples that show a correlation between how compassionate and concerned executives appear in the face of a crisis and how future sales have fared.

The message: Be – and be seen to be – sympathetic to the challenges faced by the people affected by the problem at hand.


4) Get the press and social media on your side

Have your media rep let the press know what has happened as soon as possible – and keep them informed about the steps you are taking to resolve matters.

Do not try to cover anything up. Tell them “the good, the bad and the ugly”. The more transparent you are, the more credible you will appear – and the less likely you are to be crucified in the press.

Make sure you keep your employees up to speed on what is happening, too. This is a good time to make use of internal newsletters, discussion boards and other communication forums. If your company employs union members, you will need to keep their reps up-to-date, too.

Don’t forget about social networking sites either. If you don’t already have a social media manager, now would be a good time to bring one in on contract to work with your PR people to monitor and shape the cyber-chat.

Make sure you add a section to your company’s homepage that lets people click though to learn more about the problem and what you are doing to solve it. The addition of video messages from the CEO can be helpful in some cases – and puts a personal face on the solution, which is important for many consumer segments.


5) Apologize as appropriate; be sorry for what happened, even if it’s not your fault.

Don’t think there’s much that needs to be said here, except “Be sincere.”


6) Do not deny culpability at the outset when it is not your fault; get a 3rd party to exonerate you.

According to consumer research expert J. Armstrong, “30% - 55% of North Americans aged 18 – 65 would be less likely to do business with a company in the future if the company’s first response to a problem is denial of culpability.”

Even if the problem is not one your company caused, your response should be something along the lines of, “We are truly sorry that this has occurred and we are doing everything we can to determine exactly what happened and how to make it right.”

With this kind of a response, you appear responsive and caring, yet have neither accepted nor denied responsibility for what transpired. In essence, you have bought your company the time it needs to investigate.

When it turns out that the problem was created by another entity, let the press report this. Disseminate reports from the police, trade associations, government agencies or whoever is appropriate for the situation ,using social media and traditional PR channels.

Add the information to the front page of your website in the same spot where you have been keeping consumers informed about the problem resolution progress.


7) Go the extra yard to make things right… be perceived to be doing the “right thing”

Avoid getting into long, drawn-out lawsuits. Settle up fairly and quickly – and do whatever it takes to make it right. In the long run it will cost you less money, use less time and will help your reputation from being tarnished.


8) Use the ‘incident’ to make improvements, and even become an industry leader in some areas – but do not use this as a PR tool!

Maple Leaf used the knowledge it gained during its eradication of listeria from its plants to improve food handling safety procedures and now willingly shares this intelligence with others in similar industries.

Johnson & Johnson used the Tylenol tamperings as the catalyst for the introduction of tamperproof packaging.

Hotels regularly use “service incidents” as teaching tools and opportunities to put new processes in place – some of which are shared between properties and chains.

As important as it is for the next steps in problem resolution to be future avoidance of similar situations, it is even more important that you not use this to pat yourself on the back. The likelihood of public backlash is huge because most consumers will believe that the processes should already have been in place to have prevented the problem from occurring in the first place.

I hope you found this information useful, but more so, I hope you never have to put any of these suggestions into play.

If you would like clarification on anything, please feel free to contact me: jmc@theQgroup.com.

Until next time, remember to have fun and be prepared to “go out on a limb because that is where the fruit is.”

Jane-Michèle Clark

4 Simple Steps for Preventing Problems – Planning for the “Unexpected”

Hi. I promised last time that I would fill in some of the details on the process to follow when the yoghurt hits the fan. I will do that the next, but realized that it makes more sense to first talk about you should be doing long before things go off the rails.

1) Ensure that your company has processes in place for all regularly-performed jobs…
and that people are trained in the right way to do things. There must also be checks and balances in place to ensure that the correct process is followed... and there need to be consequences for not following the established routines or employees tend to get lazy and develop their own short cuts.

This may sound obvious, but it’s surprising just how many companies fall short in this area.

Most manufacturing and processing companies, especially those dealing with food and hazardous material, are pretty vigilant, but other types of companies are often too lax. Or think that there is no real need.

Even in a marketing communications company we need to have processes. For instance…

• A contact report must be written for every client contact made. That way nothing gets forgotten, agency and client are clear about any changes in direction given, etc.

• Recruiting specs for any type of research must be vetted against the research objectives and by the people who will be using the research findings – and signed off on by the client. You also need to double-check the profiles of the people recruited prior to starting the work to make sure that your specs were followed accurately.

• You never go to press without getting client sign-off on a “size as” printer’s proof.

• You must always include seed names in your mail files of people living in the target area – and these names must be given to the data processing firm for insertion, not to the lettershop company.

• etc.

Seemingly little things, but I’ve learned that things only go wrong “the one time” we don’t follow a set procedure.

We conducted research with +100 other firms in multiple industries to confirm what we suspected – that no company can operate without established ways of doing things. We spoke with all kinds of companies from bakeries to hairdressing salons to automotive repair shops to data processing firms to research labs to architect firms to convenience stores to... well, let’s just say there was a good cross-section of companies.

Before the investigation we asked a panel of business students which of the targetted firms needed to have processes (other than financial) in place to success. They believed that less than half of the firms needed to be process-driven. They were wrong.

Here’s what we found. Companies fell into one of two categories: 1) Process-oriented companies that function relatively smoothly and 2) Ones that fly by the seat of their pants and spend as much time putting out fires as they do performing revenue generating tasks.

The ones with processes in place

Each and every company that fell into this category – without exception – echoed the sentiment expressed by this one entrepreneur from a consulting firm:

“We have rules for how things should be done. Whenever we take a shortcut and skip a step, that laziness usually comes back to bite us in the butt.”

A caterer said: “Whenever we deviate from our established processes, it’s only dumb luck that keeps the wheel from coming off the bus.”

In many cases, the establishing of set procedures followed a series of small setbacks – or was implemented after a really major screw-up that threatened the very survival of the business.

Interestingly, each of these firms was profitable – and reported increases in both revenue and profitability of anywhere from 10% to 30% in the first year in which process were introduced and actually followed.

The ones without set procedures

Each of the companies that operated without established practices for everyday tasks had the following in common:

• They spent anywhere from 25% – 50% of their work week solving problems - most of which were a result of employee error.

• Their profitability was lower than the average for similar-sized firms in their industry – sometimes as much as 60% lower.

• The business did not have a written business plan and was growing like an unpruned bush – out in every direction but up.


2) Create contingency plans

Gather people from all areas of the company. Ask them to think about all the things that could possibly go wrong in their work day. Encourage employees to submit ideas for solving the identified problems as well as for improving safety and productivity in their work area.

From this input, create a written game plan of the process to follow when the yoghurt starts dripping on the proverbial fan.

Make sure that there are at least two copies of this binder – and if the operation is a large one, that there are a couple of copies in each key functional area of the company. Employees should all know about the binder and be taught that when things go wrong they need to...

• Call 911 (in cases of physical injury, fire, etc.)
• Alert their supervisor
• Get the binder and follow the recommended steps as appropriate


3) Cultivate a Culture of Trust and Open Communication

This is just good business practice – but can prove invaluable in times of company crisis.

If there is already good dialogue between senior executives and the rank and file, it makes it easier to communicate with employees if there is a serious problem.

When Maple Leaf Foods experienced its listeria outbreak, CEO and President Michael H. McCain was able to inform his employees about the steps being taken through an internal communication tool. Prior to the incident he updated employees weekly through a personal e-mail message. Employees had come to know and trust him and, as a result, were reassured by the postings during the crisis.

More importantly, in this kind of environment employees will be quick to alert colleague and/or supervisors to potential problems, rather than covering things up because of fear of reprisal.


4) Court the Press

Companies that maintain cordial relations with members of the press are more apt to be portrayed in a more sympathetic light when things go wrong – provided they do the right things to address the problem, of course.


And as for the details on the process to follow (see below), I really will fill in the details with my next post. In the meantime, if you would like clarification on anything, please feel free to contact me: jmc@theQgroup.com.

Until then, remember to have fun and be prepared to "go out on a limb because that is where the fruit is."

Jane-Michele Clark

If you mess up, ‘fess up

When things go off the rails (and face it, they often do in business), I believe in telling the truth...and taking accountability. When I said this once, someone added (more than half seriously), “or as much as you can without jeopardizing your relationship with the client”. Not a good idea.

My advice: Always tells the truth – especially to your clients. In my experience, if you’ve been doing a good job, then you will never get into trouble by saying, “We made a mistake. These are the ramifications and this is what we are going to do to make it right.”

This includes accepting responsibility for an error made by any member of your team – from a more junior employee to a third party “supplier/ subcontractor/ vendor” (I avoid all these terms as I find that by treating people as members of the same team, that the working relationships are better and the work more effective, but that is grist for another article mill). After all, you hired them. The client doesn’t care whose fault it is; they just want it to be fixed, and fixed properly. Now.

This will include paying whatever charges are necessary to make it right. It is important to let the client know what is being done to solve the problem, and to keep them informed along the way. Once you’ve explained how you will correct matters, it’s important to ask, “Is there anything else you would like us to do to make this right?” I have yet to have a client come back and add anything unreasonable to the mix. More often than not they have offered to contribute financially to the solution, or have suggested ways in which we can correct the problem more quickly and/or less expensively.

The only exception: When your client is partly to blame, you need to have a heart-to-heart with them and figure out an appropriate way to share related costs from the get-go.

Once the matter has been resolved, apologize one last time and move on. Do NOT bring it up again in the hopes of getting kudos for how you handled the problem. After all, you or your team made the mess; it’s only right that you were the one to sort it out.

The same advice holds true when you are the one who had screwed up at work. Own up to it, apologize and fix the problem and manage the fallout.

I was once asked if there is a process to follow when the yoghurt hits the fan. There is. The fleshed out version of this will be the subject of another blog, but here are the bare bone basics:
• Investigate immediately.
• Activate your response plan according to what has happened (and yes, this means you must have one!).
• Be – and be seen to be – sympathetic and pro-active.
• Get the press and social media on your side.
• Apologize as appropriate; be sorry for what happened, even if it’s not your fault.
• Do not deny culpability at the outset when it is not your fault; get a 3rd party to exonerate you.
• Go the extra yard to make things right… be perceived to be doing the “right thing”.
• Use the ‘incident’ to make improvements, and even become an industry leader in some areas – but do not use this as a PR tool!
I’ll fill in the details with my next post. In the meantime, if you would like clarification on anything, please feel free to contact me: jmc@theQgroup.com.

Until then, remember to have fun and be prepared to “go out on a limb because that is where the fruit is.”

Jane-Michele Clark

Blue Ocean: One of 15 Business Strategy Pillars

Blue Ocean, Red Ocean. Why all the fuss? And how do we look at strategy development from a Blue Ocean perspective? And why do we even want to?

This may be old news for some, but I was recently asked about Blue Ocean Strategy, hence this post.

There’s nothing new to report here – just as the concept wasn’t new when it made the news when Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant was published in 2005.

W. Chan Kim and Renée Mauborgn, authors of the book, articulated something that good marketers have always known.

Specifically, that an excellent way for companies to realize strong growth and achieve above average profits is by carving out a new niche for themselves and creating demand in what may, for a while, be uncontested market space.

Kim and Mauborgn dubbed this Blue Ocean Strategy. Red Ocean is the term they associated, somewhat disparagingly, with the more traditional approach of competing head-to-head with direct and indirect competitors for a larger share of a fixed size pie, (i.e. known customers in an existing industry). This traditional approach should not be dismissed out of hand, however, because many organizations achieve excellent results the Red Ocean way by offering a product or service that has a higher perceived value than other market options, and marketing it creatively.

Red Ocean Strategy is viewed as a zero-sum game where one company’s gain reflects another company’s loss. “Stealing market share” is a key element of this approach – and in some cases is the right way to approach the problem at hand.

There are times, however, when it’s tough to steal share and to realize sufficient gains to achieve double digit increases. This is especially tough when…
• the market is saturated,
• consumers are bombarded with too many choices,
• supply exceeds demand and prices plummet, etc.

In these circumstances, the only way to leap ahead of the pack is to challenge the underlying assumptions in the industry – and for senior executives to question the way their company competes in their vertical and how it conducts business in general. Unfortunately, this happens all too infrequently.

In this kind of tough market situation I advise clients to….

• Look beyond their current market boundaries – to see if there are complementary industries that could use their products or services (perhaps with a little tweaking.

• To focus on ways their products can solve myriad consumer problems (retail or corporate) – not just the ones of the current target audience.

• Determine if there are easily-incorporated changes to the product that could stimulate demand in the existing market segments.

• Pursue a reasonable cost strategy (it’s necessary to offer the perceived value – it is not necessary to be the lowest cost provider.

For many companies this will highlight ways of doing business, and identify previously ignored markets. Creating strategies to successfully sell to these segments will usually represent a paradigm shift... and this is really what the Blue Ocean approach is all about.

Over the past 100 years or so (as I said, the concept is not new), it was this kind of thinking that led to...

• Ford introducing the Model T in 1908
• Sunflight Holidays giving Canadians cheap Caribbean holidays with charted flights in the 1970s
• Fred Smith founding FedEx in 1971 and brining the world overnight delivery 2 years later
• CNN bringing us in 1980 with 24/7 news in 1980
• Starbucks giving us coffee bars and the +$5 cup of joe to go
• Cirque de Soleil with its sold out yet lion-less circus acts

Not to mention mutual funds, cell phones, discount retail, minivans, snow boards, home “video” and more.

There are multiple benefits to having this “new mover advantage” (a.k.a. "first to market" advantage). Among them:

• Higher margins in the early days;
• An opportunity to become the dominant player; and
• The opportunity to set the standard (think iPod, iPhones, etc.).

The principle of looking for the sweet spot where your company’s products and/ or services are truly differentiated from those of anyone else doing business in the sector, is simply one of the key pillars for developing good business strategy.

What are the other ones? From my perspective, there are 15 business strategy pillars:

1. Being consistent in what the brand represents – or making one major change to the brand’s positioning, and being prepared to stick with the new image (i.e. don’t destroy your brand by repeatedly changing what it represents.

2. Acting with integrity and in keeping with a set of established core values.

3. Developing a long range vision based on customer input, internal and macro-environment assessment and trend analysis.

4. Being brutally honest about your company’s strengths and weaknesses.

5. Actively formulating and exploring options that break with industry tradition. (The Blue Ocean part)

6. Finding the sweet spot where your company’s products and/ or services are truly differentiated from those of anyone else doing business in the sector. (More Blue Ocean)

7. Being willing to take calculated risks and go out on a limb. (Even more Blue Ocean)

8. Being open to the tried and true (sound like a contradiction, but both approaches are needed to develop sound strategy.

9. Getting input from experts outside your company and industry who have faced similar challenges (different industries tend to solve problems in different ways, and can provide valuable insight.

10. Getting input (and buy-in) from all key functional areas of the company as the strategy is developed.

11. Ensuring that the methods/ path chosen to achieve the vision are sustainable over the long term.

12. Modelling the ‘best’, ‘worst’ and ‘most likely’ scenarios – and making sure that each assumption in the model is based on research, not pure gut.

13. Testing the bold idea before bringing it to market.

14. Making sure all company personnel are brought up to speed on what is happening (good internal communications and training are essential here.

15. Promoting the change(s) creatively in ways that have impact (impact and marketing vehicle choices.

Going back to the original question, I would have to say that Blue Ocean strategy is not a new concept, but the authors of the book labelled what has always been a sound business practice, making it easier to a) explain the concept and b) get corporate buy-in.

How you go about finding your Blue Ocean/ Sweet Spot will be the subject of another post.

In the meantime, if you would like clarification on anything, please feel free to contact me: jmc@theQgroup.com

Until then, remember to have fun and be prepared to "go out on a limb because that is where the fruit is." Jane-Michele Clark

Steps for Creating Corporate Strategy

I'm often asked how we go about helping clients determine their best point five years out on the horizon.

Here are the steps we follow... and the ones I teach my MBA students, too.

1. Conduct a preliminary assessment of your company's internal strengths (look at everything from supply chain to operations to distribution channels, to the product or service itself, to its market position and positioning, to the marketing of it to consumers and through the distribution chain, to customer service... and everything in between).

2. Assess the strengths of your competitors.

3. Determine what your customers want now and are likely to want in the future.

4. Find out why your competitors' customers buy from them and not from you... and find out what it would take for them to start doing business with you (i.e. to buy their products and/or services from you).

5. Examine the trends unfolding in your industry... and in complementary industries.

6. Assess the macro environment, paying close attention to the economic climate, locally, regionally and globally.

7. Take time to really think hard about the direction in which your industry is heading and what it will take to succeed down the road.

8. Start to consider where the industry growth will be occurring... and where declines are expected. Really understand the "why" behind this.

9. Determine where a company such as your should position itself for success down the road based on what you are seeing.

10. Then - and only then - go back and re-evaluate your company in the context of what you have learnt.

Ask yourself the questions below as a starting point.

• Is this a market position that our company can occupy?

• Do we have the right core competencies? If not, can we acquire them through acquisitions, alliances, outsourcing or any other kind of partnership?

• Do we want to?

• How big a change will it mean for our organization?

• Will it be worth it, not simply from an ROI perspective, but in terms of what it means for our future growth?

• What obstacles will we need to overcome to get there?

• What will we need as an organization to leap these hurdles?

• What are the right milestones to achieve on this new path?

There are many more questions to be asked... and these will be part of the next post.

In the meantime, if you would like clarification on anything, please feel free to contact me: jmc@theQgroup.com

Until then, remember to have fun and be prepared to "go out on a limb because that is where the fruit is." Jane-Michele Clark