Sean McCoy shares an older but always relevant post on why marketing departments need to align marketing spend with direction.
The CFO says to the CMO, “Let’s boost marketing spend by 1% this month. Where should we spend it?” The ability to answer that question is true north for Marketing departments in B2C industries.
With big data and analytics radically reshaping the marketing function, CMOs now have the power to answer the CFO’s question almost instantly down to the specific market, message, channel, and product. Today’s analytical tools also allow the CMO to state with accuracy the expected incremental sales and profit from that incremental marketing spend.
That level of analytical prowess and business intelligence is true north for marketing departments. From our experience helping B2C firms with marketing strategy and marketing analytics, some marketing departments are already there, but most are somewhere along the journey. When we look at how Marketing departments can create growth and value now, the immediate priority for many companies is to develop a robust Marketing Analytics capability.
For firms we have seen at the beginning of the Marketing Analytics journey, achieving true north by building a best-in-class ROMI (return on marketing investment) tool and acting on the initial insights improved their marketing effectiveness by 10-25%.
Knowing is half the battle
The first step in this journey is the recognition that the old ways of doing things are fading. The old adage that “half of my marketing spend is a waste. I just don’t know which half” doesn’t hold up today when consumers can be tracked through their digital customer journey and digital decision-making process.
The second step is to build out the systems and processes to measure customer acquisition and retention at a detailed level. The entire marketing and sales function, including vendors, agencies, and IT departments must work together to understand and measure the journey; from prospect, through lead and first purchase, and finally repeat business.
Key points include:
- Building systems and processes
- Consumer behaviors and expectations
- Tracking the customer journey
Read the full article, Marketing’s true north capability, on McCoyConsultingGroup.com.
In today’s accelerated pace of business, there are benefits to going slow on strategy execution. In this post, Sean McCoy explains why.
Leaders of all types of organizations – businesses, non-profits, government departments – often want their organizations to move faster. Once leaders develop clear vision and strategy, they want the organization to move as fast as possible in executing the strategy.
We have worked with numerous organizations across various industries on their “speed of execution”, and some patterns have emerged. We have seen 10 common reasons why organizations execute strategies slowly.
Layers – More layers mean more time is spent delegating and not doing. Once work is finally completed by frontline staff, each layer means another step of review. Also, each layer in the org has its own interpretation of the strategy, so more layers means more degrees of separation from the CEO’s original strategy.
Gaps in responsibilities – A CEO provides a clear vision and strategy to achieve that vision, yet organizations can still move slowly because work slips through the cracks. This usually happens because the division of labor for an activity was not clearly defined.
Overlapping responsibilities – When multiple people think a decision or activity is in “their lane”, the organization slows down while ownership is sorted out. Too many organizations are familiar with the turf wars that often ensue.
Unclear communication – When a CEO brings a new strategy, everyone silently asks themselves “what does this mean for me?”. Unclear communications make it difficult to answer this question. As a result, the organization develops a reluctance to embrace a course of action with unclear consequences.
Key points include:
- Culture mismatch
- Excessive hand-offs
- Speed not measured
Read the full article, 10 Reasons Organizations Execute Strategies Slowly, on TheMcCoyConsultingGroup.com
Sean McCoy shares a concise post from his company blog that identifies six levers to influence behavior.
Our third article in a series about incentives. Incentives are powerful levers for business leaders to change behavior. Sadly, incentives are often under-utilized and mis-used tools.
Employee behaviors are a crucial element to every aspect of a business. In some regards, the only way to implement a CEO’s strategy is to change behaviors. If behaviors are not changing, plans are not being implemented, and strategic goals are not being achieved.
Executives have at their disposal a set of integrated, inextricable levers to influence employee behaviors to achieve operational, financial, and strategic objectives. The framework illustrated in Figure 1 captures major drivers of employee behavior. In our experience, we have seen this approach work in settings as diverse as Fortune 500 firms, start-ups, governments, sports teams, military units, and nonprofits.
Key points include:
- Learning and growth
Read the full article, The Levers to Influence Behaviour, on mccoyconsulting.com.
Sean McCoy identifies key steps a business may take to alter the operation model and improve productivity.
We are in the initial stages of a productivity mega-trend. Forced by wage growth and enabled by technology, leading companies are already redesigning their operating models to make their people more productive.
The forces creating the productivity mega-trend
Wages are rising and look set to continue rising. Labor’s share of GDP is at a 90-year low, and we are seeing a reversion to long-run historical averages. 20 states raised their minimum wages in 2018, impacting 17M workers, over 10% of the country’s workforce. New technologies are radically re-shaping the processing of data and the interacting with prospects, leads, and customers. Repetitive work is being automated, and customer engagement is going digital. Extend the evolution of these two trends, wage growth and new technologies, and a firm can expect to experience one of two outcomes over the next business cycle: margin dilution or productivity growth.
How to join the productivity mega-trend
The first step to participate in the productivity mega-trend is to understand which of your business functions will be impacted. Functions with large spans of control and a large share of entry-level positions will be affected the most by wage growth. Functions where “data shuffling” is a common activity will be affected by automation technologies. Customer-facing functions will be impacted by the new customer-experience technologies. When listing functions that meet two or three of those criteria, at the top are functions such as inside sales, customer care, and customer service, and corporate functions such as Accounting, Finance, and HR.
Key points include:
- Wage increases
- How leads and customers interact with business
- Shifts from strategy to execution
Read the full article, The Productivity Mega-trend You Can’t Ignore, on McCoyConsultingGroup.com.
Sean McCoy shares an article that explains why most post-merger integrations fail.
Most mergers and acquisitions fail to achieve their intended synergies and deal rationale, because most post-merger integrations (PMIs) fail. Most post-merger integrations fail because they did not beat The 4 Clocks. There are 4 clocks counting down in PMI, a clock each of the four major stakeholders in a PMI: employees, vendors, owners, and customers. The clocks also largely parallel areas of synergies. The name of the game in PMIs is to complete the integration and achieve the synergies before the clocks hit zero.
The Employee Clock
The Employee Clock measures the opportunity for two key synergies, internal synergies through consolidating excess capacity and external synergies via retaining top performers. Human capital and physical capital are under the microscope of the Employee Clock. Integrations often create excess physical capacity, e.g., plants, locations, and a common source of synergies is consolidation of physical plant.
The human capital element is a race against a brain drain. Top performers from both companies will typically stay on board to see where they fit in the new company. But, they will not stick around forever. The Employee Clock hits zero when top performers decide to move on. Losing top performers is perhaps the most damaging impact to the long-term strength of the integrated company. The high stakes for talent retention are usually why most PMIs begin with determining everyone’s role in the new organization.
The Vendor Clock
The Vendor Clock counts down the opportunity to capture cost efficiencies. A common source of synergies is the consolidation of vendors and systems. The cost of two systems becomes the cost of one system, but beyond that obvious savings, the new company has greater bargaining power with vendors, due to the larger volume of the integrated company. The starting time on the Vendor Clock is usually higher than on the Employee Clock, but vendor and system integrations also take longer, leaving no time to delay.
Key points include:
- Source of funds
- Revenue synergies
- Customer churn
Red the full article, Post-merger integrations are racing against The 4 Clocks, on McCoy ConsultingGroup.com.
Sean McCoy shares a blog post from his company website that presents a case for and against spending resources on ‘innovation’.
Innovation is hard. Most companies do not do it well. Long is the list of established market leaders that were The Disruptee instead of The Disrupter. But firms are not to blame. Most innovations fail period, regardless of who is doing the innovation. Innovation is a high-failure sport.
Nevertheless, conventional wisdom holds that large businesses should be more innovative. It’s even a famous imperative: Innovate or Die. But why should a firm that is organized around low-failure productivity embrace high-failure innovation? Why should a large company make innovation when it can buy innovation?
The argument against ‘Make it’
There are many reasons why a large firm making its own innovation might not make sense. Finance departments balk at the lost capital that could have been allocated to a known winner. HR departments can be reluctant to promote high-failure entrepreneurs, knowing how poorly that will be received by those that receive the opposite treatment for a string of failures. Audit, Compliance, Legal, and Quality Assurance departments usually do not take kindly to bug-y minimum viable products, nor to operators who move fast and break stuff.
Innovation at a big firm is equally difficult from the perspective of the innovator. The large number of stakeholders slows down decision-making. Once decisions are made, the work itself takes longer than entrepreneurs would like, because a company’s processes involve many hands, and innovators want speed.
Points covered in this article include:
- Making innovation
- Buying innovation
- Leveraging an ecosystem
Read the full post, Should your innovation strategy leverage an ecosystem?, on the McCoy Consulting Group website.
This article on Sean McCoy’s company blog explains why long-term forces and trends are forcing many heavy industries to reshape value chains, change economics, and disrupt business models.
Digital technologies are making it possible for firms to expand their offering and meet new customer needs and serve new customers. For a manufacturer or heavy industrial company, this means companies that were not your competitor yesterday are your competitor today and tomorrow. The executives at GM and Ford lose many hours of sleep wondering if and how Google and Apple will eat their lunch.
Competitive intensity is also increased by changes in the cost of resources and location economics. Those changes are drying up some profit pools, increasing competition at the remaining ones. Low-cost manufacturers in China used to win on price, and domestic manufacturers on speed. For years, low-cost manufacturers have been re-shoring production as rising labor costs in China neutralized the cost advantage. Now, low-cost manufacturers can win on price and speed. The producers that stayed domestic are finding themselves stuck between a rock and a hard place.
Even if your market is stable, disruptions in other markets can dry up other profit pools, driving competitors into your space. When oil prices tumbled and oil companies needed less metal, metal companies and mines serving the oil and gas industry looked to other sectors that need metal, e.g., construction, utilities, ship builders. As a result, the mines and plants serving those industries had to deal with price pressures and declining volumes, hurting ROA.
Read the full article, Responding to competitive pressures in heavy industry & manufacturing, on the McCoy Consulting Group website.
Sean McCoy idenfities three common denominators behind unsuccessful commercialization efforts.
After your Go-to-Market (GtM) strategy is designed and the planning is complete, it is time to move into execution. Implementation is when a strategy finally impacts the bottom line, which is why it is so vital to get the implementation right. Because Go-to-Market strategies are among the more transformational and comprehensive changes at a company, their execution is more complex, nuanced, and impactful, further increasing the stakes in implementation.
There are three major questions to answer when implementing a commercialization strategy: What is the governance? What is the rhythm? When do you scale? When companies answer these questions well, their GtM implementations are more successful. When they pass over these questions or answer them inadequately, their GtM implementations are more likely to fail.
Points covered in this article include:
- Governance & accountability
- The scaling model
- The cadence of activities
Read the full article, 3 Success Factors to Operationalize Your Go-to-Market Strategy, on the McCoy Consulting Group website.