Strategy ⁽¹⁹⁾

Matt Mayfield 28 Feb 2010

Is Marketing the Next Finance?

Rory Sutherland at Ted Talks helps me understand the value and cost of customer loyalty

Tube videos and blogs on this Olgilvy "Ad Man", I found myself stuck on one of his minor theses: "Is marketing the new finance?" (quoted from Guy Phillipson). He argues that every new corporate initiative in the last ten years has created the all-important spreadsheet analysis that carefully laid out shareholder value, including an analysis of the perception of the company by the financial community. How about using the same care in analyzing how the customers feel about the company and its products? From Rory's perspective, business is simple: Find something that customers want to buy and then remove the barriers that keep them from buying it. I think he is on to something. He proposed that this current financial emphasis should be replaced by a real solid marketing emphasis. Continue reading...

Matt Mayfield 22 Jan 2010

Importance of Coffee

Strategic Coffee

I truly enjoy taking my Slovene colleagues on business trips to the US and UK. Inevitably, a local business partner will invite us for a coffee and then proceed to lead us as we walk, talk, and drink our coffee. Walking and drinking coffee is a most ordinary activity in the US, but in much of Continental Europe, this borders on being an acrobatic exercise. The resulting business consequences are quite revealing. For many years I worked in a Slovenian office with two cafes in the building. We would refer to the lower cafe as the "Decision Center" as a partial joke when we walked new clients around the building on a tour. American customers would envy this "luxury" and soon we also began to see this as a luxury. As we expanded, our new buildings were made more efficient by replacing the cafes with machine equipped coffee areas. The theory was that employees should not have to waste company time getting coffee. Now, based on my observations on coffee in the corporate culture, I am prepared to make some bold conclusions on "optimal coffee behavior" in the workplace. Continue reading...

Matt Mayfield 3 Dec 2009

The Falacy of the Total Addressable Markets

The Chinese Market fallacy in business planning....

Most every guide to a business planning process includes a section that describes the need for identifying the potential market size, sometimes called the total addressable market. The exercise usually starts with some governmental or Gartner-like information source to identify a global or regional segment. The planner is then instructed to make some assumptions that better restricts the addressable market, but typically the remaining market is still huge. Based on this information, inexperienced (or deceiving) business champions will compare their first few years cost against some percentage of this huge market as justification for proceeding with the business plan which I believe results in the common market penetration mistake I call "Chinese Marketing". This is a term that I intend to push into the business vocabulary: "Chinese Marketing" is the fallacy that you can create a successful business based on getting a very small percentage of a huge market. Continue reading...

Matt Mayfield 18 Oct 2009

Practical Sales Outsourcing

When you have a great idea, but the world will not come to you...

I was recently invited as a guest speaker and panelists for an entrepreneur development group. My fellow panelist, Charles Leadbeater (a recognized proponent of innovation and Web2.0 thinking) started with a call for more collaboration and cited amazing successes and fantastic creativity. While I agreed with his thesis, I could not help but recount the many initial business (tech initiatives) failures caused by an improper reliance on collaborators for their sales channel. Charles was right to highlight a new paradigm of collaboration as a significant opportunity for small entrepreneurs, but for the sake of the technical entrepreneurs in the audience, I found myself taking a contrary position and highlighting the limitations of collaboration.

: Author Charles Leadbeater

Engineers have a serious defect-- they cannot resist solving a problem. The reason I call this a defect is that it keeps getting in the way of sensible business. For the most naive, they normally worry about things like manufacturing, on-line order taking systems, and future developments, but dismiss the challenges of path to market by either assuming customers will come on their own (once they recognize the brilliance) or they assume that they will outsource sales through resellers. The truth is that many people have very successful businesses using resellers and OEM relationships, but this will not be possible at the same time as you are just entering the market. (See earlier, related blog post "Production vs Prototype Sales"). I wish it were possible to simply outsource initial sales the same way you can outsource initial manufacturing-- in truth, I am a "recovering engineer" (an addictive and life long disease) and would likely have stayed a happy engineer if it were not for this unfortunate truth.

Matt Mayfield 29 Sep 2009

Selling Risk Management

Definition of Experience: A rich history of the many horrible mistakes one never wants to repeat

I touched on this subject in "Lawyer Rant No. 1" -- Get paid for the risks you know you are better able to manage or at least are perceived to be better able to manage. Let's break this down a bit more and see what insights it brings.

In a market-based economy we sell products and services to willing buyers. These could be as simple as an apple by a street vendor or as complex as an enterprise-wide information system. But in its elemental form, I suggest that you can only sell a combination of five basic things:

Raw materials such as iron and oil mineral rights
Labor
Expertise as in intellectual property and knowledge transfer
Economies of scale
Management of risk.

The first three are obvious and the fourth, as it applies to the first three, is also obvious. Let's consider the last two in their pure forms. Continue reading...