Tuned In: Uncover the extraordinary opportunities that lead to business breakthroughs.

Get Real or Go Home?

Leaders and analysts from all perspectives have begun to emerge and add their own two cents about what business leaders should do in this economic environment.

For a particularly dour assessment on the outlook for venture backed, debt heavy small firms, check out the Sequoia memo. In a presentation to Silicon Valley CEO's in their portfolio they laid down a pretty painful assessment of the current marketplace along with a roadmap for survival that depended on deep cuts, becoming cash flow positive quickly, lowering risk, eliminating debt and building a runway that will last five years or more because financing alternatives are dried up. One of the CEO's we talked to had a quick assessment of where all of this is heading. The charter:

1. The day you are funded it's grow, grow, grow. 
2. Now it's stop, stop, stop and cut, cut, cut. 
3. About a year from now it will be why didn't you focus on value?

For a more tongue in cheek view of what a 'dead man walking' scenario sounds like, checkout Guy Kawasaki's view on how to tell if your CEO is clueless. Guy provides his version of a Letterman Top Ten list with the 16 things you hear a CEO say that lets you know how close it is to the time you need to update your resume.  

Here's my question. Both of these contain lots of needed tough love for business leaders that give you some powerful ammunition to swallow deep and make the tough decisions on cost because their businesses are misaligned for today's market. But, in only two statements from Sequoia and one from Guy do they even come close to addressing the real issue that we should all be focused on: 

How can we make our business more relevant in today's market?  

The issue now more than ever is do you have products and services that resonate?  Is your portfolio full of must have's or nice-to-have's. While now is not a good time to find out your behind, the focus on creating, launching, marketing and selling quality solutions to problems people have is the ONLY thing that really matters. You can't save your way to market leadership or even survival. While the pragmatic leader will conserve cash to live to fight another day, you still have to have a plan for what you will do on that day that adds value!

Our little project to study how Tuned In leaders are putting their plans in place to Win in a Down Economy is much needed. Without it, we may unwittingly be setting our businesses up to make this downturn fatal. 

Canada Post and eBay Canada co-branded Flat Rate Box

Since we started researching and writing about Tuned In organizations, we frequently heard how government agencies and postal services are particularly tuned out.

So it is with some excitement that we share with you a product offered by Canada Post, an organization that tuned into two particular personas – eBay sellers and eBay buyers.

The eBay and Canada Post co-branded Flat Rate Box, introduced in mid-2008, is available exclusively through eBay and allows people to send items at three convenient flat rates: Regional at C$9.99 and National at C$12.99 (for shipments within Canada), and to the USA at C$17.99 (for shipments to the United States). The shipping boxes are supplied for free.

"Canadian eBay users ship millions of parcels through Canada Post each year," says John Swettenham, general manager of parcel strategy at Canada Post. "That makes the eBay community an extremely important customer base. Canada Post saw an opportunity to improve our service offering for eBay Canada's users, adding to our role in the growth of e-commerce in Canada."

Interestingly, the Flat Rate Box will also benefit buyers as well as sellers because eBay listings may include exact shipping costs, making it more likely that a potential buyer will bid.

Canadians spent more than $1 billion (US) on eBay in a recent 12-month period and eBay is the number-one visited retail site in Canada, visited by almost one out of every two Canadians online. 

So there you have it. Not all postal services around the world are tuned out.

Winning in a Down Economy (Step 2 of 10)

On October 11th, we introduced the idea that Winning in a Down Economy does not start with blindly cutting costs. Instead we outlined a strategy for tuning in that market leaders have adopted. In ten weeks that follow, we're going to cover the ten steps to getting your organization aligned quickly to a new market reality. This post is the second of ten. Steps 1-3 address the areas of assessment and increasing the reliability of your decision making. A key starting point is to accept that no matter what you've done or not done in the past, today you are tuned out.    

Step 2: Understand the New Buying Environment
"Only buy something you'd be perfectly happy to hold if the market shut down for 10 years." - Warren Buffet

If you don't believe in trickle down economics, you'll have to at least acknowledge trickle down fear. The fear that permeates Wall Street is trickling down to your buyers ... faster than we'd all like. The conversations that you will have with them in the coming months and years will almost certainly have a new beginning, middle and end that can only be described as vastly different from the ones you've had in the past. In this environment, it would be foolish to assume that past techniques, messages and perhaps even your products work anymore. 

When Geoff Moore published Crossing the Chasm in 1991, he talked about a phenomenon that he saw in technology companies that caused them to fail in the mid-adolescence stage. He found that start-ups were wonderful at explaining breakthrough technology to visionary buyers and getting them to pay a lot of money to be the 'first to market' with a new innovation. But, as the companies scaled and their markets matured, they began to encounter more and more mainstream buyers who were 'pragmatic'.  They didn't care about innovation, they just wanted to know how you solved problems they had and who else you had served successfully so they could reference them. Many start-ups failed at this stage because they were unable to adapt. 

The environment we are in today has another similar chasm. It's crossing from speculators (those who purchased based on hope) to conservatives (those who validate everything before they buy). These buyers are not interested in improving productivity and growth anymore as much as they are focused on survival. Their mantra's.  Safety first. Proven results. Show me how I'm not going to get fired for taking this risk. Interestingly, you will likely be isolated from all of this because it NEVER comes up in direct conversation. Buyers now being the sophisticated consumers that they are have already researched online and talked to third parties before they engage with you. They're loaded for bear when they do.  

Does this sound like your market right now? 

If you are like most, you probably would agree to some degree but also have to admit that you don't know what you don't know. Which is why you need to find out right now. Don't waste another day sending a selling team out into the market unarmed using poor techniques, wasting your buyer's time and your money. Take action immediately to:

1. Analyze the decisions made in your market in the last 30 days and conduct direct interviews with the decision makers to find out why you won or why you lost. Was there some new threshold that your buyer encountered in justifying what was urgent, pervasive and willing to pay? Did your sales team create unwanted barriers in the decision? For the no decisions, did the problem go away? Ask 15 of them and record what you hear. 
2. Contact executives that are running the businesses in your target market and conduct an open-ended interview about how they are running their companies today. Tell them you are trying to determine what products and services to offer that would be more suited to today's economic environment and you'd like their perspectives. Ask 10-12 of them and write down everything they tell you about the culture, systems and buying process. 
3. Analyze the moves of your competitors and try to predict the likely outcomes of the strategies they are launching (or legacy approaches they continue to use).  What made them strong (and you strong) last month may be different when mapped to how buyers purchase today. Identify any openings to increase your share of the market that IS buying. 
4. Rate your portfolio of offerings for how well they produce Quick Wins and quantifiable ROI. All buyers will be looking for these things whether they express it or not as they add safety to a new purchase decision. Are you making it harder or easier for them to validate a purchase from you?
5. Open up the lines of communication. Ensure that your communications to your channel are positive and demand the same from them to their buyers. No one will buy from a desperate sales representative in this market. They'll be seeking assistance from a trusted advisor. 

When you've completed this process and charted all the results, you'll begin to see a new picture of your business. One that probably has some baggage to shed but also some real opportunities to pursue. You will only know that when you stop looking at the market from your perspective and start filtering your thoughts, strategies and action plans based on what the buyer thinks. 

Understanding the buying environment will arm you with the data you need to not only decide what adjustments to make but communicate them with enough authority to make them stick. 

Winning in a Down Economy (Step 1 of 10)

On October 11th, we introduced the idea that Winning in a Down Economy does not start with blindly cutting costs. Instead we outlined a strategy for tuning in that market leaders have adopted. In the next ten weeks, we're going to cover the ten steps to getting your organization aligned quickly to a new market reality. This post is the first of 10. Steps 1-3 address the areas of assessment and increasing the reliability of your decision making. A key starting point is to accept that no matter what you've done or not done in the past, today you are tuned out.    

Step 1: Embrace the new Reality
"A pessimist sees the difficulty in every opportunity; an optimist sees an opportunity in every difficulty."   - Winston Churchill

Your business is a different one today than it was 30 days ago. What should you do about it?  Interestingly, most will do nothing. It seems we're trained to think only in one dimension ... our plans for what we want to accomplish. We've seen this before. In less than two years after the stock market devalued .com businesses, a high percentage of them went out of business. Did they fail because their stock price went down?  Or was it when their buyers realized they had nothing of value to offer? And unfortunately, the root cause of this wasn't that they were a .com business (many did survive and thrive mind you). Rather, it was something much more sinister. 

Their leaders tuned out to a fundamental change in the market. 

Far too many .com organizations maintained exactly the same culture, perspectives on work style and outdated belief systems that traditional mechanisms of doing business would be 'disintermediated'. They failed because they never changed their perspective from inside-out ambitions about what they would accomplish to outside-in realities about how to align to their market. 

How do you accelerate this perspective shift?  Get passionate about embracing the new reality. One of my colleagues at Pragmatic Marketing, Jim Foxworthy, offers this simple suggestion ... go discover what it really is by getting out of the office and talking to some of your buyers.  In a recent post to his clients, he emphasized that it's more important now than ever. 

The Most Valuable Person in the Organization

The nightly news is obsessed with the downturn in financial markets. Pundits talk about a financial “nuclear winter” and advise business leaders to pack away a year’s worth of cash – perhaps in a mattress.

With all this negative news, it occurred to me that many of you will be thinking about your role in the organization, and worrying about the stability of that role. Should you lay awake at night and wonder if you will lose your job? Will “they” cut your pay? Maybe YOU are “they”, and you are wondering how to lead in such difficult times.

How do you know what creates the most value for you and your organization? How do you play a role to ensure the future of your organization?

Like many difficult questions, the answers are simple. Not easy – simple. Because the most valuable person in the organization is the one who represents the voice of the market.

Let me repeat that: the most valuable person in the organization is the one who is in touch with the market. The one who leaves the building and listens to your buyers, then brings that critical information back inside so others can make better decisions.

The most valuable person in the organization is not defined by title, but by task. And the single most valuable task in times like these is to re-establish your intimate understanding of your buyers and their problems.

At Pragmatic Marketing, we often echo the words of Peter Drucker, who wrote: “The aim of marketing is to know and understand the customer so well that the product fits him and sells itself.”

Folks we talk to sometimes scoff at this quotation, telling us that “marketing” doesn’t do that in their organization. “Marketing” is the department that builds the web site or produces the collateral.

But Drucker is not talking about a title. He is talking about a task. Who in your organization is seen as the one who “knows and understands the customer”?

THAT person is the most valuable asset in troubled times. As money flows tighten, and credit becomes less available, each and every expense decision will become more critical to your organization. Which means that each and every expense decision must be grounded in data not opinions.

Who is the most valuable person in the organization? In times like today, it is the messenger of the market.

Are you that person? Would you like to know how to become that person?

Jim is spot on here. Discovering and embracing reality is Step 1 and it's not just the job of the leader. It's the first action all of us should take to develop a plan that will work. Without an accurate assessment of where your business is perceived right now, you are out of date and potentially out of touch. The data you have now is highly suspect because it's based on the past. The data your organization craves is a real-time assessment of what the changes in the market really mean and what leading indicators they should follow.

Will there be bad news in what you find out?  Sure. But there will also likely be some new opportunities that will emerge that you'll find your organization can uniquely solve. They may just be the ones to get you through this downturn. Or, they might even be your resonator.

Go find out what they are!

Winning in a Down Economy

We live in interesting times. The rapid changes that thrust Wall Street into a tailspin these past few weeks has created a business environment that is far different from anything we've seen in the past. The panic on Wall Street has rippled quickly from the investment community into the executive suites of all of organizations and down the line to each and every employee. Everyone is talking about how to react. What are the impacts to our nation? Our economy? Our business? Us?   

Towards the end of the week we began to see the first salvos on recommended action from leaders in the technology sector. One that caught my eye was The Tech Downturn: How long and how bad? from Jim Kerstetter at CNET. It started off with the usual prognostications for a long downturn and quoted several VC's who are advising their clients to "hunker down, cut costs fast and deep because those who do will be in the best shape to survive." 

This is where things start to get really stupid really fast.

We don't want to debate the financial realities of running a business right now nor the right of the investment community to counsel in ways that protect their investments. But, we've seen this act before and it ends badly. Companies whose very first action it is to cut often cut the wrong things and position themselves weaker than when they started. Why?  Because the moves they make are all based on the past and not the future. They're tactical and not strategic. And if there is one thing we know for sure, it's the future is going to be a far different environment than we are in today. You need a strategy that aligns you to where you are going, not where you've been. 

How many times have you seen a death spiral started by these actions? Making decisions without a complete and accurate view of what your strengths and weaknesses are in the world you will be living in for the next several months and years is nuts!  Yet, that's exactly what many companies will do in the coming months. They'll guess, assume and then tell the world they've made the changes to keep them healthy through this downturn when in reality, they have no idea whether they really are or not.   

We think there is a much better way, a more pragmatic approach to dealing with the situation that you and your business are now in. And we're going to take the next 10 weeks to talk about it in this blog and then package it together in an e-book and webinar for delivery in December. We're calling it Winning in a Down Economy: A Pragmatic Guide to Getting Tuned In. It will cover the top 10 things you should be spending your time on right now that will prepare you for a healthy 2009 and beyond.

For those of us impatient types, here are the cliff notes. The game plan will focus on three macro ideas:

1. Accept that you don't know what you don't know right now. Get real and increase the reliability of your decision making by gathering the data your organization craves about the market ... the thoughts of your buyers, their likely actions and your most valuable solutions to their problems. 
2. Develop a conservative plan of attack. The filter for your strategies needs to be built on a solid foundation ... a real connection to what the market needs now and what your organization has a unique ability to deliver and execute flawlessly.  Focus your action plan on that core. 
3. Overhaul your marketing engine. Now more than ever, you're going to need to be able to create an authentic relationship with your buyers that are based on a solid understanding the realities they face and how they want to do business with you. Provide a more flexible mix of services vs. hype that builds an experience that they'll appreciate.

Here's what many of you will find. There are great opportunities for you and your business ahead. They are just different than you envisioned them three months ago. That's neither a good nor a bad thing necessarily, just a reality. Deal with it and move on. The process of aligning should only come after you've tuned in. Otherwise, you'll find yourself aligning and aligning over and over again for the next several years. Until you align yourself right out of business. 

We look forward to the conversation over the next ten weeks. Enjoy the journey!   

100th post today ... and just getting started

We started this blog almost exactly a year ago to talk about the many things we were finding in our research that led to Tuned In. A lot has happened in the past year. We've analyzed a plethora of new product launches, spoken with hundreds of business leaders, witnessed the ups and downs of the market cause dramatic shifts in the buying environment and hit the road this summer to talk to the media about all we'd learned. We were lucky enough to be able to publish and launch a bestselling book while everyone was still listening and interested in new thinking.

We've talked often about the six steps that comprise the Tuned In process in this blog and how it impacts three key areas of business. Today, I'd like to reflect back on the three key aspects that are the foundation learning's of our work:

1. To create products people want to buy, start with a problem worth solving. Of all the products we've reviewed, there was a glaring gap between those that succeed and those that failed. When you look at the iPhone, the Flip or Zipcar, you see a product or service that addresses a specific need that buyers have and a solution to the problem that is a high quality experience. For products like Cuil, Peek and a number of the recent ones from Sony, you look at them and ask 'why'?  We discovered many reasons why people skip the critical phase of talking to the market first rather than second ... falling in love with being innovative, letting revenue drive decisions or just listening to one customer were a few. They create good excuses for failures but if we've had any impact on you this past year, please start yours with a problem!
2. To launch market resonators, build authentic connections. Leaders of companies wonder all the time why their marketing is ineffective. They're surprised to hear that the answer is pretty simple ... it's because marketing is not about hyping you! When you look at the awesome launches of products, services and people, there is a simple premise that connects them. Whether it's the TheatreChurch, Papa John's social media service, Barack Obama's campaign or Costco's packaging strategies, the difference is in authenticity. Douglas Karr made it even simpler. Check out your website through our Tuned In calculator and see how many times you talk about yourself vs. the challenges faced by your buyers. David's Gobbledygook Manifesto adds on the number of times we use meaningless phrases like industry standard, best-in-class, mission critical, and cutting edge. Stop it! It's time to get real with our buyers. They'll listen if you do.   
3. To build a sustainable leadership strategy for your business, leverage your distinctive competence. In 2008 alone, we've probably seen half a million new businesses launch and a similar number go out of business. For those who failed, like Sharper Image, it's easy to diagnose one aspect of the problem. Who were they really and why would you buy from them? For those who had to initiate a rough transformational agenda like Starbucks, the issue is much the same. When you get bigger, you tend to start doing things that are outside your ability to execute and not related to why people chose to do business with you in the first place. For those who nail it, like Best Buy and Southwest Airlines, they build a service that sustains itself because it aligns to both the markets interest and their own distinctive competence. Make sure yours is clearly defined and use it as your sole decision filter. When Southwest Airlines makes a major decision, you can still hear Herb Kelleher asking 'how is this better for the customer experience?'

As authors, we feel privileged to be able to have this conversation with you. We've often remarked to others that none of the three of us could not have created Tuned In on our own. In truth, we could not have done it without the tens of thousands of participants to this blog, our research and the Pragmatic Marketing community.  Thanks so much for all of your insights and contributions.  We look forward to continuing to serve you in 2009 and beyond with more.