Who creates the best brands: Egotistical insaniacs or market researchers?

Management guru Tom Peters, in this brief post, obviously leans towards the egotistical “insaniacs.”

Brand Trump
Brand Martha
Brand Dubai (Sheikh Mohammed bin Rashid Al Maktoum)
Brand Apple/etc./etc./iPod (Steve)
Brand California Reborn (the Guvenator)

Surely these are among the more stunning Branding/World-changing stories of the last 20 years:

How many are the product of careful market research?
How many are the results of visionary insaniac dreamers?
How many are at least partially the product of rather well-developed egos?

(Are there any market-research-driven stories of a similar magnitude? Starbucks???)

I have to agree with Peters on at least one of those stunners: Steve Jobs. His ferocious focus on “insanely great products” has certainly produced some hot, “world-changing” brands: Mac, iPod, iPhone, Pixar.

No one is saying that market research — especially listening carefully to customers and their wants/needs/desires — is useless. But clearly a “visionary insaniac dreamer,” who drives his staff to create “insanely great” products, can produce not just incremental improvements but far more dramatic results that leapfrog the competition.

Intelligence Briefs

An eclectic collection of discoveries:

It’s not easy being green. The race to adopt wind energy systems is being slowed by a shortage of wind turbines. And green-minded homeowners who install solar panels and other unaesthetic-but-eco-friendly features are getting flak from neighbors, homeowners associations and historic-preservation boards. — The Wall Street Journal (9 July 2007 and 12 July 2007, subscription required)

Citizens of Eastern Europe have acquired (or reacquired) a taste for brands, rock bands and television programs of the Communist period. The craze is known by the German word Ostalgie (“nostalgia for the East”). — The Chronicle of Higher Education (15 June 2007, subscription required)

A new majority (60%) of working moms in the U.S. would be happiest in part-time jobs, with fewer seeing full-time work as an ideal.— Pew Research Center / The Washington Post (12 July 2007, registration required) 

McDonald’s Corp., in an energy-saving initiative, plans to use a new power-line networking system to more efficiently monitor and control fryers, grills, milk-shake machines, air conditioners and lights. The network, which uses the restaurant’s electrical wiring as a communications pathway, allows the devices to be programmed via the Internet to reduce energy usage during lulls in demand. — press reports / Echelon Corp.

Getting ROI from a competitive intelligence program

The goal of a competitive intelligence (CI) program isn’t to create a library of reports sitting on the shelf; it’s to boost company profits. That may mean obtaining highly targeted nuggets of information that can be acted upon profitably, rather than voluminous data. Sometimes less is more.

Here’s some sensible advice from Christopher Dalley at Primary Intelligence Inc.: Ask yourself whether your CI program is delivering:

Top-line revenue
Will this intelligence create new revenue opportunities?
Will we take away sales from the competition?
Will our existing accounts stay longer and be more profitable?

Bottom line
Can we be more efficient or learn best practices?
Are there better ways to manage our processes?

Application
How easily will we be able to act on the data?

Finally, Dalley notes that “reactive CI” doesn’t constitute a useful CI program. (See my post on forward-looking, anticipatory intelligence.)

CEOs need a “sensor network” to anticipate disruptive competition

Competition can pop up in many unexpected places, including college dorms, startups, Asian outposts and various disruptive technologies. A new study of the intensifying competition in high-tech industries finds that companies are OK at identifying market-altering changes but aren’t as good at anticipating such changes or acting on their observations.

My personal view: Companies need forward-looking staffers — some combination of futurists, competitive intelligence professionals and strategic planners — to help them anticipate their future business environment and get them to think beyond their traditional competitors and core markets.

The joint study by Deloitte Consulting LP and the Business Performance Management (BPM) Forum includes a survey of 181 company strategists (e.g., chief marketing officers, top strategic planners) in the high-tech industries (semiconductors, electronics, telecom, IT and Internet). The summary is here, and the downloadable report (.pdf) is here.

When asked which tools and processes they use to identify and analyze course-altering market changes, 95% of respondents indicated that they participate in industry forums and associations (i.e., they focus on their traditional competitors).  “A large majority also participates in an annual strategic planning process that incorporates competitive benchmarking and competitive intelligence reviews. However, these activities are not providing the forward-looking market view necessary to anticipate market-altering change,” the report says.

In an interview, John Ciacchella, a principal with Deloitte Consulting and leader of its technology industry group, told me that companies need a “sensor network” that helps the CEO discover new market entrants and new market opportunities.

The study also identifies the roadblocks to actually doing something about new market forces.

What issues prevent you from executing course-correcting actions?

1. Management focus on near-term profitability
2. Inadequate size of opportunity in the near term
3. Management focus on established businesses and customers
4. Metrics (e.g., lack of easily quantifiable business case)
5. Risk-averse culture
6. Entrenched interests
7. Management hubris or arrogance

———-
Base: 181 strategic executives at high-tech companies
Source: “Competition at the Crossroads,” Deloitte Consulting LP and BPM Forum, June 2007

What resource issues prevent you from executing course-correcting actions?

1. People (e.g., insufficient strategic planning talent)
2. Cash (e.g., insufficient funding to identify changes and assess options)
3. Information (e.g., insufficient market data, insufficient competitive intelligence)
4. Technology (e.g., rigid or insufficient IT systems)

———-
Base: 181 strategic executives at high-tech companies
Source: “Competition at the Crossroads,” Deloitte Consulting LP and BPM Forum, June 2007

Taken together, you can see that myopia — management focus on the short term, and insufficient strategic planning talent — are big concerns.

The study concludes by saying companies should ask themselves the following questions:

• Do you have the right strategic planning resources in place, in terms of people, processes and technology, to drive effective decision-making and better anticipate the changing landscape?
• Are your indicators forward-looking?
• What is your risk profile? How are new investments and growth opportunities assessed versus traditional models and business lines?
• Is your corporate culture ready for change? Does it support exploration and identification of new models and business opportunities?
• Are the processes in place, across your organization, to adequately react to change?
• How much are you willing to bet, and is your strategic-planning process designed to consider risks and opportunities at a corporate level, outside of current product lines, customer markets and technologies?

———-
Related: New CIO role: Spot disruptive technologies and help develop new products

Companies are firing their worst customers

For years now, corporations have been using business intelligence (BI) and customer relationship management (CRM) systems to identify their most profitable customers. There’s a flip side: Those same systems can be used to “fire” their worst customers. Two examples:

Sprint Nextel Corp. recently took the unusual step of disconnecting wireless customers who call customer service excessively. Sprint sent contract-termination letters to about 1,000 subscribers. The terminated subscribers called an average of 25 times per month — a rate 40 times higher than average customers — mostly complaining about billing or technical problems that Sprint was unable to resolve, a Sprint spokeswoman said.

Apparently, casino operator Harrah’s Entertainment Inc. has done something similar with a man who was having a great run of luck at the poker machines. Harrah’s analytical systems flagged him as a non-profitable customer and he was subsequently sent a registered letter saying he’d become persona non grata at Harrah’s properties, according to this account.

Adelino de Almeida, at the Profitable Marketing blog, says there are lessons for all industries:

• Monitor the profitability of your customers. Target your profitable and marginally profitable customers, and drop the non-profitable. Non-profitable customers simply aren’t [valuable] customers — you can try to migrate them to a profitable segment (probably not a worthwhile exercise) or find polite ways to drop them.
• Forget loyalty effects. There’s no point in having loyal customers if they aren’t profitable.

Marketing guru Seth Godin said something similar last year:

“Successful organizations … fire the 1% of their constituents that cause 95% of the pain. Fire them? Fire them. Politely decline to do business with them. Refer them to your arch competitors. Take them off the mailing list. Don’t make promises you can’t keep, don’t be rude, just move on.”