Businesses are Consumers Too

Business-to-business technology marketers might want to spend a few minutes reading "Thriving in a World of Consumer Control," by Boston Consulting Group authors Sebastian DiGrande, Dominic Field, Dan Jansen, and Holger Wenzky. The article provides insight around the issues caused by new forms of media creation, distribution, consumption, and monetization in consumer markets — in the style of portals, the iPod, DVRs, satellite radio and other disruptive innovations. The article notes that although a lot of money is changing hands, shareholder value lags in many media-related companies -- although that is certainly not the case with Apple.

One reason for this lag, the article suggests, is that many companies root their value proposition in technology rather than brand differentiation. I would argue that you need both, and that, furthermore, the combination must make intuitive sense to the buyer. Sony has great technology and has had great brand leadership, but its recent digital rights fiasco demonstrates a clear frustration at not being able to make that combination work.

The BCG article makes many interesting observations and three key recommendations to media companies (content, hardware, and software):

• Discover your core customers
• Reconceptualize your products
• Rethink your role in the value chain

But I think that many of these lessons apply equally well, if not more so, to B2B technology providers -- not just media companies catering to consumers. The same technology at work in consumer markets is at work in B2B, and buyers there are asserting the same kind of control in how value is sliced and diced.

Look What's Back: Sustainable Competitive Advantage

Industry watchers from CNBC's Jim Cramer to eWeek's Peter Coffee have declared that tech is back in 2006. So too apparently is sustainable competitive advantage according to an article in the current McKinsey Quarterly. The article is titled: "The next revolution in interactions -- Successful efforts to exploit the growing importance of complex interactions could well generate durable competitive advantages." The authors are: Bradford C. Johnson, James M. Manyika, and Lareina A. Yee with an introductory note by Scott C. Beardsley, James M. Manyika, and Roger P. Roberts.

"Technology and organizational strategies are inextricably conjoined in this new world of performance improvement."

--McKinsey & Company

To many readers, that may seem a bit odd, given that competitive advantage has been all too fleeting recently in the face of what many see as tech-driven commoditization. Recent tech-based advantages have not been sustainable, the authors claim, because technology is easy to copy. (Once Wal-Mart does it, everyone does it -- so where's the advantage?) Technology's real impact has been to level the playing field (or flatten the world, as Thomas Friedman says).

That's the point. Technology is the playing field, but it is not the game. What you do on the playing field is a function of creativity, intuition, judgement and -- most importantly -- how you interact with others. Organizations that take a cookbook approach to interactions will commoditize themselves.

I can see how this would apply to even something as simple as a web page, one of the most common tools organizations use to interact. Every company has the same access to the same technology for making web pages -- from css style sheets to data mining solutions. That means the only thing that's left are the "uncodified patterns" (McKinsey's words) to which human beings respond. It's a lot harder to produce a desired human response than it is to produce technically competent web pages. You can't just be great at producing web pages, you also have to be great at getting people who know how to produce great web pages.

And that advantage is one that is a lot harder to copy.

Making Marketing Content Count

A recurrng problem in marketing is making content that counts. Even if you do have great technology marketing writing -- i.e., writing that's clear, technically accurate, gets right to the point, appropriately applies a large toolkit of rhetorical devices, and so on — that may not be enough. The difference between marketing content that is technically flawless (in both senses) and content that has traction can be huge.

Part of that difference is knowing what to write about. The best writing won't "work" (even if persuasive) if it focuses on the wrong value. That's not an issue of style or grammar or how you organize your headings -- it's about target selection.


Here's an example: In the months before my client, Acterna, was acquired by JDSU (last August), I was asked to write Acterna's corporate slide deck -- the company's presentation of its core value proposition.

That value proposition was Acterna's leadership in products that test and measure IP network infrastructures from the physical media on up. The value target Acterna wanted to select was what I call "the fundamental truths": better customer service, better performance, and so on. I convinced them that doing a good job of saying what everyone else says might not be the best way to go. Instead, focus on what's truely unique about Acterna that delivers on those fundamental truths.

In Acterna's case, I boiled it down to a single line: "To win anywhere in broadband you first have to win everywhere.

In othe words: If IP service providers don't have it all in terms of network test and measurement, then they remain competitively disadvantaged because what were previously separate technologies have now become interdependent.

In terms of traction, this value target has several benefits that the fundamental truths (by themselves) don't:

• It speaks to current day customer challenges
  
• It sells whole solutions rather that just point solutions
• It sets up barriers to competitors who can't sell whole solutions
• It demonstrates thought leadership (i.e., brand equity)
  
• Even given all this, it still sell the fundamental truths, but without being a cliché
  

The presentation was delivered as a PowerPoint that included a short video at the beginning. You can stream the video (it works in both QuickTime and Windows Media Player) by clicking here. You can download the rest of the presentation (as a PDF) by clicking here.

Liquid Data

Too often what passes for great insight on strategy firms' websites is simply a rehash of previously published material using different words. What is too often lackng is new truth that when said for the first time is something most people intuitively understand, yet recognize as breakthrough thinking. That doesn't necessarily take a lot of empirical research -- as the late Peter Drucker proved. He was famous for saying great original truth and he did it without the resources of the big research firms who often end up just reinventing the same old stuff over again. (When asked how he learned, Peter Drucker responded, "I listen." Which after a short pause was followed by, "To myself.")

"But the Web is not the Internet. The Internet itself is a simple, elegant, extensible, scalable, technology-neutral networking system that will do exactly what it was designed to do for the indefinite futue. The same cannot be said of the Web, which is essentially an application running on top of the Internet. It is hardly the only possble Internet applcation, nor is it the most profound one conceiveable."

-- Harbor Research

I bring this up because I am again impressed by the quality of the writing at Harbor Research. I previously posted on their October HBR article, "Four Strategies for the Age of Smart Services." The article was about a very obvious idea that yet seems to be missing at a lot of companies which are inexplicably leaving a big share of customers' wallets on the table. (An example of a smart service is the BMW phoning home to say it's time for an oil change.)

A month earlier, HR wrote about something that I think will be much bigger and that is the idea of what's next after client/server, the web, web services, middleware, and virtualization. It's also pretty obvious, once you think about it. You could probably sum this up in (my words) as liquid data. That's information products that are as easy to move around and to reformulate into different products as, well, liquids.

The idea is genuinely original, although not with Harbor Research. However, HR is probably the first to tie together all the various elements on which that idea is based. As a writer I appreciate that this could not have been easy to do. The liquid data idea is a force that will flatten the world in ways that even Tom Friedman doesn't talk about -- and maybe technology-based organizations ought to begin factoring it their strategies. (Talk about disruptive innovation!)

Rather than be guilty of rehashing myself, I'll direct you to the original paper at Harbor Research. It's entitled "Desiging the Future of Information, the Internet beyond the Web." You can download it from this page.

It's a real treat for the Holiday Season.

Booz Allen Hamilton's Global Innovation Study

"There is no discernible relationship between [R&D] spending levels and most measures of business success."

--Booz Allen Hamilton

Wow, I just put down the 2005 BAH study of the world's 1000 top R&D spenders ("Money Isn't Everything: Lavish R&D Budgets Don't Guarantee Performance"), and it's a great read. The authors are Barry Jaruzelski, Kevin Dehoff, and Rakesh Bordia. The study takes aim at the notion that the more companies spend on R&D, the proportionately richer they'll become. Except at the extremes (companies who deviate way outside industry averages) the authors found no such relationship. What mattered more than the size of the budget was the ability to coherently integrate R&D efforts with strategy -- in other words, not to innovate for the sake of innovation, but innovate to capitalize on a clear marketplace advantage, either one that exists already or one that has a reasonable chance of occurring.

Examples cited include Toyota, which is only the third highest spender in the auto industry, yet has a market cap bigger than its next three competitors combined. Another example is Apple which at 148, ranks well behind Microsoft, which is number 1 (but, many would argue, is not ahead of Apple in its ability to turn innovations into profits).

A couple of observations: First, I would have been interested in hearing what the authors have to say about inovations like Motorola's Razr -- which -- if press reports are to be believed -- succeeded precisely because it was not on people's radar screen at Motorola at the time it was being developed and therefore could not have been part of the master plan. I think that a lot of the really successful innovations happen despite rather than because of official policy or strategy.

My second observation is that what this really boils down to is values. Toyota cares passionately about the quality of its cars. Apple cares passionately about the user experience of its customers. Those values drive everything else. If company leaders are only passionate about growth, they may not be as personally invested in the value proposition that drives growth. That's when -- as with Razr -- innovation success is a one-off that happens because someone outside the leadership got passionate about something that mattered to the customer.

A third observation: The authors say that scale is an advantage because big companies do better by spending proportionately less on R&D. But the authors also say that what ultimately counts is good ideas and that, happily for smaller companies, scale does not give big companies a lock on ideas. Witness Google, which is big now, and is casting about the industry to buy small engineering-driven companies (what Google use to be) so it can refuel its innovation engine.

Corporate Writer's Block

It's December, so I am spending a big portion of my time looking back over my old marketing ideas and campaigns. One campaign caught my eye as being especially relevant to a blog devoted to the nexus of technical marketing communications and business strategy.

A couple of years ago I did a survey of 1000 Massachusetts-based computer and telecom companies to see how many of them published case studies on their websites. The answer was about 60%. So, of course, I immediately did a direct mail campaign to the other 400, suggesting that case studies are almost de rigueur in any marketing communications program. The reasons are obvious, so I won't bore you with them here. Anyway, the response was meager. I suspect that the reason these companies weren't writing was not because:

A) The idea of writing case studies had not occurred to them previously

or

B) A sufficiently adequate writer was not available

I also think that if I did a survey on white papers or other kinds of marketing documents, that a lot of companies aren't writing those either -- or they're not updating them as often as they should.

I think what's going on here is a sort of corporate writer's block -- something that goes beyond budget issues or writing technique or finding a qualified writer. I know a lot of frustrated marketing managers who would like to see more stuff get written, and who also have the resources in place to do the job, but for some reason it doesn't happen, or happens far too little.

A company that can't express itself has a handicap -- but where does it go for help? Writers and writing coaches help organizations write. Strategy consultants help organizations think great ideas. But who helps an organization make the leap between ideas and the marketplace?

This topic, by the way, very much relates to my last blog item, "Taking Strategy to Market," which I have expanded into a mini-white paper. You can download it here. You can also hear me read it via MP3 stream (my first). That's at this link.

Taking Strategy To Market

Nowhere is the importance of strategy content to marketing more visible (literally) than in IPTV -- as Adventis illustrates in its white paper "How Telcos Can Win at IP-TV," written by Ford Cavallari and Keith Cole. Firms must not only have a strategy, they must also convey the strategy successfully -- to customers, technology partners, and internal stakeholders. Winners thrive by using those strategies to attract support, both politically and technologically.

"Most Telcos face a credibility gap due to their lack of experience in the media and entertainment world. . . . If Telcos are going to launch TV offers . . . then appropriate skills, infrastructure and board-level support must be secured early on in development."

--Adventis

It makes sense, then, that if you want to sell technology to those IPTV providers you must do more than just enable the delivery of advanced services. You must also lead by example -- by articulating the vision of what these services mean in the new competitive environment. For an example, see the brochure I wrote for SeaChange. SeaChange supplies the IPTV technology to companies that include Microsoft, Comcast, and Time Warner.

This is a lesson that applies well to other technology areas besides IPTV. Convergence is everywhere. And strategy content is the glue that binds previously disparate interests (like IP servers and entertainment) together.

Motorola's Lesson in Disruption

In this age of specialization, Clayton Christensen's strategy consulting firm, Innosight, uniquely positions itself two ways: 1) as focused on the disruptive opportunities of rapid innovation; and 2) by a close association with Harvard Business School where Dr. Christensen teaches and on whose sites content from Innosight's Strategy & Innovation Newsletter is frequently republished. He and his team are prolific writers and tech managers should take a look at both the Innosight website and articles republished in HBS's own Working Knowledge newsletter. The recent article, Motorola's Bet on the Razr's Edge, is a good example.

(Creative disruption, by the way, is very much at the center of Tom Friedman's book, The World Is Flat, but clothed in different language that makes these themes more accessible to a wider generalist audience. Marketing communicators take note: there are lessons here on retargeting strategic messages. In fact, similar messaging can be found far earlier, for example, in Tom Peters' 1987 book, Thriving on Chaos, which says things like: "Constant change by everyone requires a dramatic increase in the capacity to accept disruption." (page 277))

What Clayton Christensen does that is exciting is give readers the play-by-play in various arenas as this disruption battle actually plays out in real time.



The Motorola case shows how companies can deal with disruptive change, by creating some of their own. In Motorola's case, this was done by essentially disrupting (by going outside) Motorola's own product development system. The Razr team made it seem like the project was no big deal -- just an experiment -- not a potential industry disrupting event, which is exactly what the team had in mind from the start. Interestingly, in an article in this week's Working Knowledge, Motorola CEO, Ed Zander, doesn't say whether he was part of the conspiracy -- nor acknowledge that a little dishonesty was at the pivot point of the company's recent turnaround. The article does say that one of Zander's first acts as CEO was to "fast track" the Razr project -- perhaps by helping it fly below the radar.

The real drama will be watching Motorola try to internalize this recipe for success so it becomes manageable and repeatable -- in other words, disruptive without being disruptive. Stay tuned.