Adaptomy Bulletin 18th March 2022
Updated: Oct 10
Issue No.3 by Geraint Holliman and Will Wright
THE STARK REALITY OF BRAND 'HIGHER' PURPOSE
None of us have been immune to the shock of recent geo-political upheaval. But, has the crisis in Ukraine and the associated sanctions on Russia exposed the challenges and conflicting objectives around 'brand purpose' for some companies, some who were either unfortunately unprepared or perhaps more worryingly from a brand perspective, somewhat ambivalent? Whilst many businesses have ceased to trade with Russia, a significant minority of multi-nationals brands have not. It's difficult to understand why some of these companies, which include familiar names and some which have popular branded products in their portfolio, have not spoken, or taken any obvious action to date.
It may be that they are 'undecided', that their leadership is divided, they may have contractual or legal obligations or are concerned about their staff well-being. However, while nearly 400 multi-nationals have exited Russia, the 'silent' few, listed by Yale School of Management, have not: Over 400 companies have withdrawn from Russia, but some remain. One can only assume that these companies have either good ethical reason to stay, a brilliant brand management strategy to cope with the fall-out or they simply think they can 'ride it out'. But, their silence and inaction calls into question their brand voice and perhaps more importantly the reality and truth of their brands 'higher purpose'.
Re-inventing the role of managers in a new world of work...
In their recent article in the Harvard Business Review: Managers Can't Do it All, Diane Gherson (former CHRO IBM, lecturer HBS)) and Lynda Gratton (Professor of Management Practice LBS, founder HSM) highlight why it's so important to the investor community to pay close attention to human capital management in corporations. In fact, there are many lessons for all of us involved in commercial operations performance to understand shifts in power, skill and structure.
They walk through four defining business movements that have impacted organisations: process re-engineering, digitisation, agile and the accelerated emergence of flexible working. They look at three different company approaches:
Building new skills at scale (Standard Chartered)
Re-wiring processes and systems (IBM)
Splitting the role of the manager (Telstra)
We'd argue that the lessons in this article are perhaps more relevant then ever to commercial operations, where the pressure on marketing and sales to out-perform the norm have never been greater. There are also important lessons for those smaller companies designing their commercial operations, to get it right, early.
Stuff we're thinking about
Just a few things from recent blogs, our 'nudges', thoughts on value and growth and the kind of stuff we're thinking about, an endless stream of topics and points of interest....
Thoughts on Value and Growth: ARR and cost to serve..
We all know Annual Recurring Revenue (ARR) is important to SaaS businesses. But with an increasing number of these businesses incorporating a 'post-sale' service component, how many are properly recording the Cost to Serve, or, more importantly leaving services revenues 'on the table'? Many young businesses we engage with are eager to please their customers. The product is great, customer love it. On-boarding is 'going well', customers can't believe the value they getting. But, the services catalogue is not well structured, customer support are run ragged, over-servicing customers, giving away high value insight, incurring costs that directly affect customer profitability. Read the nudge and join the conversation here: LinkedIn Post - Thoughts on Value and Growth No.4: ARR is Important..
Thoughts on Value and Growth: Differential Advantage..
There is a constant drive to find differential advantage in what our businesses do, but how many of us really know what the sources are, and where they get traction? Which ones drive price premium, cost and capital efficiency and which ones are network economies?
There's a useful reference on this in Valuation, McKinsey 7th Edition where 10 sources of competitive advantage are listed in three categories. Price premium includes: innovative products, quality, brand, customer lock-in and rational price discipline. Cost and capital efficiency includes: innovative business method, unique sources, economies of scale and scalable produce or process. The final one. network economies - increasing returns to scale, (more value to customers with scale).
However, the most telling comment is that "It's important to understand that competitive advantage is enjoyed not by entire companies, but by particular business units and product lines...and therefore different returns on invested capital" Read the nudge and join the conversation here: LinkedIn Post - Thoughts on Value and Growth No.5: Differential Advantage
Formalizing marketing strategies
Whilst presenting at the Content & Conversion Summit this week a poll of the attendees determined that a mere 29% had a formalised, written content marketing strategy. Whilst this seems a perilously low number, in our experience even this figure is probably an ambitious overstatement. Even the respected Content Marketing Institute in its recent annual global study of the content marketing industry can only rustle up a 40% figure for all global content marketers. And this isn’t simply a content marketing problem – it’s a marketing problem.
Very rarely are we presented with a coherent, well formulated document describing the marketing or communications strategy when requested. At best we receive a spreadsheet of budget allocations (with little or no justifications for those allocations). How are marketers managing the execution of strategies if they don’t have a formalised reference point against which they can measure and justify progress? If you want to understand more about the relationship between strategy and execution just read the excellent 2010 article The Execution Trap from HBR. A strategy’s purpose could be said to produce exceptional results. By formalising and articulating a strategy it allows you to:
Crystallise and focus thinking on to the priority objectives
Identify how actions and tactics can be measured
Helps to differentiate the business from others
Gather commitment from stakeholders in the strategy
Efficiently allocate resources to achieve the strategy’s goals
Measure and evaluate progress towards the stated goals
Socialise the projected outcomes of the strategy
Whether the strategy is for content marketing or anything else, capturing it, documenting it and clearly communicating it must be mandatory requirements for all progressive managers.
Footnotes: things you might have missed
Nuala Walsh, CEO MindEquity wrote a really interesting article on how envy destroys leadership decisions. Nuala says "It's more common than you think but unmanaged envy can cause toxic issues in any workplace. It doesn’t have to. Whether you're the envied or the envious, I share how to both identify and reduce this in yourself and others by using simple behavioural insights." It's a great short, 5 min read. You can access the article here: Council Post: I want what you've got - How envy destroys leadership decisions
Start with Why, end with wire fraud - why 'starting with why' is a charter for corporate self-delusion, and the important of saying 'nay', by Nick Asbury. Not one for the Simon Sinek fans, "One problem with Apple’s ‘The people who are crazy enough to think they can change the world are the ones who do’ is that it is believed by a lot of crazy people." Worth a read if you want to join or terminate the now, tiresome debate on 'brand purpose'. You can read the article here: Thoughts on writing: Start with why, end with wire fraud
Quote of the moment...
"The greatest danger in times of turbulence is not turbulence; it is to act with yesterdays logic", Peter Drucker
What we're reading
Valuation - 7th Edition, Measuring and Managing the Value of Companies, McKinsey - Mark Koller, Mark Goedhart and David Wessels
We work with many companies of different sizes in different industries. The proverbial challenge in our strategy, brand, marketing, commercial operations and due diligence work focuses on value creation and delivery, how companies are doing it, and how they could do it. That's why we developed Adaptomy DNA. It's a road-map for commercial value creation and delivery.
This book is a challenge to read, but, one of a number of companion guides that provides insight and practical guidance into the kind of measurement required to really understand the value companies create. It remit is much broader that 'commercial operations' but there are plenty lessons to be learnt for commercial leaders, strategists and marketers. For example, sources of competitive advantages - see recent post: LinkedIn Post - Thoughts on Value and Growth No.5: Differential Advantage