Strategy 2012
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How ‘caring about the world’ is changing the way corporations market to consumers
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By Don Fenton, January 3, 2012
The world’s most valued brands are Apple, Google, IBM, McDonald’s, Microsoft, Coca Cola, AT&T,Marlboro,ChinaMobileand GE, according to a report from Ogilvy, the global marketing agency. *
Each one has continued to thrive despite the most challenging global economy in several decades.
Why?
The answer is threefold: leadership, strategy and careful branding delivered through marketing.
These global brands are also adherents of many of the ideas of three leading strategists – Michael Porter, Philip Kotler and Jack Welsh.
So what can we learn from them?
Porter is a Harvard professor and an authority on strategy and competitiveness. Large corporate CEO’s follow his advice, as do leaders in the sphere of politics.
Kotler is the author of ‘Marketing 3.0’ the latest of many books. He’s kind of a godfather in the field. He says that social media and a social conscience have changed marketing forever.
Welsh is the former Chairman and CEO of General Electric, a practical man who’s advice to managers is to strive to be number one, “fix, close or sell” and “change, before it’s too late.”
What strategy is – and isn’t
Michael Porter says “If we’re going to have a good strategy we have to think clearly about what strategy is. And we’ve got to separate strategy from the other kinds of goals and objectives and issues that managers often think about.”
Here is what he calls the big mistakes in terms of defining strategy.
My strategy is to internationalize
- My strategy is to consolidate my industry
- My strategy is to ramp up my R&D budget
- My strategy is to outsource more of my production
Porter asks “Is that a strategy”?
“No, those are steps that your organization might want to take. They may be good steps, they may be appropriate steps.
They aren’t a strategy.
The strategy is ‘what unique position will we be able to achieve?’ What’s our advantage going to be at the end of the day as we take these steps cumulatively over time?
That’s the strategy part – how are we going to be unique, how are we going to have an advantage, how are we going to sustain that advantage over time.
The steps we take are not the strategy.”
Porter adds “You’d be surprised how many companies get themselves fixated on a particular action that they want their organization to take and that becomes the strategy and it literally drives the company off the cliff because they don’t understand why their doing it and when they should stop doing it.”
Six Sigma
Here’s a direct quote from Jack Welsh “I see a six sigma company as a company whose management understands that variation as evil, that serving customers with what they want and when they want it is in fact the winning game.
“Will six sigma companies get more valuation in the marketplace? Not unless they produce results. You can’t put a slogan up and say I’m a six sigma company and think the P/E is going to move. But what will happen is you will gain more of a customers mind because you will be in fact driving that customer’s productivity. You’ll have it in your bones to get outside your internal focus to your external focus. And everything you do internally will be thought of as how is it going to impact a customer. You have to be customer centered, a customer focused company. Six sigma drives you in a methodology to be one. All you’re doing is driving out variation, driving better new products that are right the first time they get them, they’re not experiments.
“A six sigma company has a leadership from the top down that understands that and doesn’t allow or tolerate people that don’t get it from a fundamental way, not from a customers are good way, from a fundamental understanding, it’s in the leadership bones.
“That’s what a six sigma company is and where the understanding is deep in the organization and broad in the organization.”
The mantra of marketing
Philip Kotler says marketing is about creating, communicating and delivering value to a target market at a profit.
He says creating value is product management and it used to be inside but is now outside the organization with open innovation.
Communicating value is called branding, that’s brand management. Kotler says it used to mean packaging, a name, a logo – today it’s what you are about, it’s everything you do, it’s a promise to the customer, the way you act, it’s emotional, and it’s a new direction.
He says what used to be about mind share and heart share is now ‘spirit share’ – something more about your own interests. A firm that is civic, caring and wants to be appreciated for caring about the shape of the world – corporate social responsibility – creates an emotional relationship that’s more than limited to the person’s own nurturing of his or her own ego.
Company’s today communicate excitement and differentiation.
To deliver value is customer management – so now we are in three businesses – product, brand and customer management.
Kotler says “customer management is more than a database – reaching them through email, direct mail – now we want to meet them beyond the database – we want to get their help to co-create products – even co-create our advertising – we want their help in creating ads for us – this is a radical change in marketing.”
New media uses new tools for the small to medium size enterprise. Online word of mouth becomes buzz to get our customers to recommend our product. Then we use samples and buzz about them
Kotler says we can use the Internet and an effective website, one that cares about six sigma, cares for employees, is easy to use, easy to buy and lets people customize your product.
He’s a promoter of marketing automation, sales automation and niches.
In niches there are riches. Kotler says “Be a multi nicher”.
Finally, brand power creates confidence, trust, corporate image, market power and presence.
Great Brands
Great brands have ten things in common.
A winning idea
- The right business plan
- An effective structure for raising capital
- Solid operations
- A strong plan for going public
- Successful share offering
- Expansion internationally
- Strategic partners in new markets
- Value added services
- Robust market capitalization value
Research into 160 companies and 200 management practices such as supply chain management, customer relationship management (CRM) and information technology (IT) revealed no direct relationship to success. *
What did work for these companies are their strategy, execution, culture and structure.
Excellence in all four of these can lead to superior business performance.
For example, a focused strategy might include a limited product offering, branding and good pricing
- flawless execution through continuous improvement and decisive management
- a culture of leadership development, employee motivation and profit sharing
- and a simple, flat structure with empowered employees.
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