It’s been reported multiple times (here, here and here) that Pepsi will not be advertising in this year’s NFL Superbowl.

Pepsi had been a major advertiser during the Super Bowl. According to TNS, the company spent $142.8 million on the 10 Super Bowl ads from 1999 to 2008, second only to Anheuser-Busch, which spent $216 million.

The nation’s second-biggest soft drink maker is plowing marketing dollars into its “Pepsi Refresh Project” starting next month as its main vehicle for Pepsi. The project will pay at least $20 million for projects people create to “refresh” communities.  A Web site will go live Jan. 13 where people can list their projects, which could range from helping to feed people to teaching children to read. People can vote starting Feb. 1 to determine which projects receive money. (sports.espn.go.com)

Still, CBS said in November that it had sold about 90% of its advertising spots during the game. (CNNMoney.com)

There is more going on than the savings.   When you unpack this story you reveal a truth about differentiation and the power of value-disruption.

First, unpack advertising at the Superbowl.  It’s a premier event watched by millions world wide.  Your brand picks up prestige: success, top of the game, toughness, etc.  However, it remains a passive medium.  The consumer/viewer watches and may or may not assimilate the message.  Which is why so much is spent on execution.  You need to capture viewer’s attention.  But behaviorally, there really isn’t anything that different compared to other adverting, other than scale, scope and prestige.  They are all passive.  The viewer behaves the same way whether they see your message at the Superbowl, or on the latest show of Desperate Housewives.

Compare that to the new connection they are going to make.  Viewers are transformed into users.  They interact with the site.  They put in ideas. They make comments.  They vote on other’s ideas.  They are part of a system that helps others.  They engage.

In this case the consumer’s behavioral construct is deep, multifaceted, and more emotionally relevant.  Their relationship with Pepsi has changed from passive to active.

The result?  The second largest advertiser of the Superbowl has left the Superbowl.

Going Nowhere

Opps….. Superbowl advertising just became a commodity.  Not because someone came up with a bigger and better event.  No, because they were value-disrupted by a technology (web 2.0) and an associated interface (voting system)  that enabled a new behavior to emerge.

And that, my friends, is the key to how you differentiate.

You can learn more about value-disruption in earlier posts here and here.

Thank-you for visiting www.ennova.ca

It’s all about uncertainty

In a world of increasing commoditization we are forced to consider ever more ambitious and outside-the-norm ideas.  With that comes greater ambiguity and risk.

In an earlier post we discussed types of  risk.  It’s time to return to that topic and discuss ways we can reduce risk when implementing change in projects which contain heightened ambiguity.

The knowability of risk

The conversation in the previous post asserted that not all risks are equal.  Some risks we know a lot about.  For example, a cola manufacturer producing another flavoured drink pretty much knows the risks involved in launching the new product.

Risks such as:

• expected market demand,
• packaging alternatives,
• amount of required marketing spend,
• distribution strategy,
• etc.

have been solved in the past so they know the kinds of questions they need to answer and how to best find those answers.

Having done it many times they have developed standardized procedures for asking and answering these questions – standard roles and procedures that speed them to optimal results.   In cases such as these, the risks are largely knowable.

Knowable Risks

What we will explore now are situations where the risks associated with change are unknowable.  For example, imagine the same cola manufacturer now wants to allow consumers to help suggest and select new cola flavours through a web 2.0 application like this one.  The company has never done anything like this before.  It’s a new experience for them.  Consequently, they have little knowledge to draw upon to accurately identify and assess the risks and rewards.  No procedures exists.  No standard list of important questions to answer has been developed and vetted overtime.  They don’t know what they don’t know.  The risks themselves are uncertain.

Uncertain Risks

Organizational reaction to new ideas

Many organizations when faced with an outside-the-norm idea reject it.  They do so for any number of reasons.  In our experience the reasons boil down to a risk-reward calculation and the certainty, or in this case uncertainty, attached to it.

1. They have no experience to draw upon so they have a hard time assessing the benefits.  While they can clearly imagine the benefits, (customer selected products increase probability of launch success) their lack of experience makes them uncomfortable that the imagined benefits can be realized.  By comparison to other projects, they are uncertain about the benefits.
2. We are predisposed to focus most heavily on the risks of a new situation rather than the rewards.  Our evolutionary history (defenseless apes in the Savannah) selected for high risk-sensitivity.  When confronted with a new situation you’d better proceed cautiously.  That’s as true in the boardroom jungle as it is in the Savannah.

So, it’s entirely understandable that outside-the-norm ideas are regularly dismissed.  So that begs the question, in today’s world of increasing commoditization when the need to innovate is great, how do we start and run projects that deal with highly ambiguous situations?

Tips for dealing with ambiguous projects

Here are some starter tips for running projects that contain high ambiguity.

1. Manage uncertainty – not time-lines.  Start by recognizing that these kind of projects are different than the norm.  It’s much more about mapping the uncertainties and learning about them than it is about managing time-lines and milestones.  When you don’t know what you don’t know, well articulated and detailed project plans are not going to help (too many critical assumptions factored in).  Creating a reasonable starting point of what you know and don’t know, and then running low cost experiments to learn about the uncertainties (what you don’t know) is how to get started.
2. Embrace diversity.  Learning accelerates when people with diverse opinions and experiences are brought to play.  In the example above, the company could and should include existing consumers as part of their team.  They will provide insights about what they, as consumers, would want to experience.  Diversity keeps you from spending too much time going down false trails.
3. Go fast and slow at the same time.  When running experiments to uncover the answers to critical uncertainties get out there as fast as you can.  A good rule of thumb is 60 days.  Test roughed-out ideas with real people very fast.  Counteract that with the expectation that overall, the project will likely run slow.  It can take many months and iterations before the real answers surface.  Hence the need to test rapidly.
4. Review learning.  Finally, keep the momentum high by running regular (weekly) learning reviews. Sharing the learning on a regular basis keeps team members focused and makes each individual’s contribution that much more robust.

Questions business owners and executive team leaders can ask

Here are some question you can ask of yourself and your team.

1. How comfortable are we in discussing ideas that fall outside the norm of our experience?  How quick are we to judge?  Is our judgement focused too heavily on the risks?
2. How well do we as a  team or company deal with ambiguous ideas?  Do we devote sufficient time in exploring the uncertainties that arise from it?
3. What is our capacity to develop and execute low cost experiments?  Do we have procedures in place?
4. When dealing with uncertainty how well do we embrace diversity?
5. How well do our habits in selecting team help us in creating a wide range of potential solutions?
6. How well do we balance between aggressive targets for completion with sufficient allowance for learning and prototyping?
7. How well do we create and maintain momentum?   What is our capacity for tracking and sustaining project implementation?
8. How well do our reviews focus on learning?  Are we too focused on time-lines at the expense of managing risks through learning?

We’ll expand on this topic of implementing ambiguous projects in future posts.

Thank you for visiting www.ennova.ca

Unpacking stories to find the truth that lies underneath is always fun.  Here’s a story about a janitorial firm in Cincinnati Ohio that is both inspiring and, reveals how to escape commoditization by differentiating.

First the story.  The basic facts are these.

• They are a janitorial firm (since 1972) that service office buildings over 100,000 sq. ft.
• Like companies in the industry, their employees were largely immigrants looking for a first job that could lead them somewhere else.  After all, who wakes up thinking of cleaning toilets as a career?
• They like everyone else suffered from massive turnover – 400% a year (Yes, that’s 100% every 90 days.)
• You can imagine the turmoil and the low, low margins this level of turnover would create.
• So they implemented a bold idea.  They provided a Dream manager for their employees (all of them).   The dream manager met monthly with the employees and helped them articulate their dreams, plan for it, and because a financial component was usually involved, helped them save for it.

Think about the boldness of this idea for just a moment.  How crazy is that?  A dream manager?  Who has ever heard of such a thing.  A company that spends money helping you achieve your dreams?

Back to the story.

• The Dream Manager Program worked. It slowly gained momentum as employees started achieving their dreams.
• It really took off when Rita bought a house.  Then everyone saw that they too, could realize their dreams. (A car, a good education for their kids, a proper Christmas, a vacation back home, simple things many of us take for granted.)
• The results were (are) incredible.  In five years, 2,785 significant dreams were realized, turnover fell to 4%, gross revenue tripled, profits rose every quarter.
• Their costs are lower. Their client satisfaction tops everyone else (As you can imagine, their employees are very loyal and willingly work very, very hard). No competitor can match them.  They are differentiated.
• BTW, there are now 11 full time dream managers on staff.

What does this all mean?  Should we all hire dream managers as part of our business model?

No, not necessarily, but it does teach us an valuable lesson about how to differentiate.  It starts with a new phrase - value-disrupt.

A rose disrupts the moment. To differentiate, disrupt behaviour

Greatness has always disrupted the norm.  From fire to electricity; from writing to the iPod; different objects, different models, different ideas all inspire latent behaviours to willingly emerge that create new value.  (That’s they key!!)

Let’s unpack the story and discover the formula for differentiation.  As we go through the story we underline the elements.

1. Jancoa recognized a human motivation that existed in their target group.  In their case – the motivation of their employees to dream, to hope for a better future.  (While this motivation is universal for most of these immigrant employees they had long since stopped dreaming.  After all, life taught them they would never reach their dreams.)
2. To enable that motivation to express itself they created a disruptor – (The combination of a resource and associated interface)  = the dream manager with the monthly meetings.
3. The value-disruptor provoked a latent behaviour to willingly emerge.  Employees articulated their dream, planned for them and with the help of the dream manager, monitored progress a monthly basis until the dream was realized.  They did so without being coerced.  They wanted to do this.  A latent behaviour willingly emerging is the KEY.  It’s a new behaviour that a target group willingly adopts that causes a disruption to occur.
4. It disrupted the relationship between the employees and the company.  Duh Yeah!  I don’t just clean toilets here.  I make my dreams come alive.
5. That value-disrupted their markets.

So there you have it, the formula for differentiation.  I’ll return to this value-disruption concept in future posts.

Tips on disrupting

1. Focus on the new behaviour you wish to emerge.  As a result of changing your offer will they do different than they did before?
2. Test it for willingness.  Why will the target do it willingly?  To answer this question think about how easy it will be and how strong the motivation is.
3. Finally, remember that technology by itself is useless.  What is the work process that surrounds it that makes it useful?  Fire by itself just burns.  When you have a work process to control fire you have something useful that will value-disrupt.

Many thanks to Alex Manu who introduced me to this concept.

Thank-you for visiting www.ennova.ca.

You can buy their book about their experience here.  It’s a great holiday gift.

The recruiting industry has always been lucrative. With 35% of a recruited individual’s annual salary as a typical fee it certainly paid well. Except there’s a new kid in town and he’s good and much cheaper.

To understand the disruption you first need to understand the basics of the recruiting industry. It’s fundamentally an arbitrage play. Recruiters typically have deep relationships in either an industry sector, (e.g. manufacturing) or a functional area (e.g CEOs).

They use these assets to find the right person for the job – their core value proposition. While they perform many valuable activities along the way: Job posting, advertising, screening, interviewing, etc., it’s their ability to FIND the right candidates to put through the process that people are paying for. And that’s based on experience and relationships and networks. The best of the best always had the right connections and networks and that’s what you paid for. Hence the “pay a percentage salary” versus paying for time spent.

But what is LinkedIn but a network of relationships of 40 million professionals around the world? And for a measly $500 per month you can have access to them all. And what’ s even better, the recommendations on each profile are real. They can’t be faked. So, combine access to the information of 40 million professionals, inexpensive geo-targeting ads, with an ability to read and follow-up on recommendations and you have not only replicated the recruiters network, you’ve taken it to a whole new level.

Take this asset and put it in the hands of a former HR professional and magic occurs. The revenue models are changing to a time based fee versus access to the network base fee. And with fees 1/3 to 2/3 less than what traditional recruiters charge serious disruption is going on. Add that to a recessionary economy and now is not a good time for recruiters to say the least.  They are being commoditized.  How will they escape?

So what lessons can we learn?

• Social networking sites are huge repositories of personal and professional information. (no kidding)
• Prior to these social networks, industries had high costs to access specific types of this information and so their revenue models reflected that. (Recruiting and professional experience and recommendations)
• With cheap access to this information on a massive scale, new much cheaper revenue models become available, disrupting the old industries.

So what does the future bring?

Here is another industry that this massive information storage could disrupt. Personal behavioral information and the personal insurance industry.

What other industries do you think could be disrupted based on access to previously expensive information about people?

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