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Another article in a short series on de-coding commercial growth and performance metrics, this one's on the poster child of the 'Loyalty Advocates', Net Promoter Score or NPS. It's a metric developed by Frederick F. Reichheld, a Bain & Company Consultant and Partner. He was inspired by Andy Taylor, then the CEO of Enterprise Rent-A-Car, at a CEO conference a few years before Reichheld published his seminal article in the December 2003, Harvard Business Review called, "The One Number You Need To Grow". Since publication of the HBR article, popularity and adoption of NPS has grown considerably. Some reports suggest that two-thirds of Fortune 1000 companies use NPS. Its advocates attest to its motivational benefits, its simplicity, correlation with revenue and growth and its value as an indicator of loyalty. However, despite widespread adoption of one form or another, questions are now being asked about its reliability as a predictor of growth, the empirical evidence that backs it up, its accuracy and even the value of it as a useful business metric, let alone an indicator of loyalty. Some respected academics have gone so far as to say it's 'fake science' and does not predict growth and research has not supported claims that it's capable of predicting future performance (Sharp, 2008; Keiningham et al.,2007) What is NPS? NPS is essentially a satisfaction metric, it 'tests' the propensity or likelihood of customers to recommend an organisation to a friend of colleague. The central question, "How likely is it that you would recommend [organisation X] to a friend or colleague?", is often accompanied by more open-ended or 'driver' questions about, why or what's driving the response in that way. It's expressed as an integer, calculated by dividing responses to the central question into promoters (score 9 or 10), passives (score 7 or 8) and detractors (score 6 or lower), based on a response score to the central question between 0 and 10. The NPS score is the number of promoter minus the number of detractor responses. There is no weighting by response score and 'passives' are not factored into the calculations. Variability by industry It's no surprise that NPS results vary by industry, just as other customer satisfaction indicators do. There are many reasons for this, but differences start with the different perceptions and the more positive or negative images that B2B and B2C customers have of the businesses in different industries or sectors. In B2C, department stores and banks are perceived differently, in B2B suppliers of cleaning and janitorial services are perceived differently from professional services, or infrastructure and utility suppliers. Many benchmarks have been developed with different average industry quartile scores. But even within an industry, perception is still a factor, there are differences in sub-sectors and so it's not clear, what good really looks like. What's the value of inter-company comparison? Does an NPS of +63 mean that we can generate more growth and revenue than our closest competitor with a score of +52, even though they already generate two times our revenue? So you have a score of +63, so what? What does that actually mean, based on this score, what are the immediate next actions you should take? Maybe a different non-industry segmentation would be more useful? Variability by respondent Respondents perceptions and proclivity are important, but not factored into NPS scoring and the probability of them actually recommending your products and services is likely to be lower than you'd like. From a practical point of view, people just don't have a lot of time to go around recommending all the companies, products and services they like at any given time, even ones they score highly in an NPS questionnaire. Just because they say they will recommend, does not mean they will. We all know that what people say and what they do are often quite different. Sometimes, on reflection, there's just not enough in it for them, they may be prevented or constrained in what they are allowed to recommend, there's no opportunity to recommend or no ones interested or listening. And then of course, things fade from memory, and without stimulus any promoter, even passives can disappear. All this means that intention to recommend, doesn't really mean a lot and it's actual behaviour and action we should focus on. Good customers and promoters In some quarters there's an assumption that promoters are good customers, they help drive growth and revenue, and detractors are bad ones and that actions should therefore be predicated on the 'good customers', the promoters or conversion of all customers into promoters. This is a dangerous assumption. Do promoters have a higher cost to serve, are they less sophisticated buyers, are they more promiscuous, in actual fact less loyal than they say. Are detractors, detractors for good reason, do they have legitimate concern, is there perception correct and something that should be acted upon? Do detractors or passives need to become promoters to be good customers, no they don't. There's no real evidence that promoters are good customers or that detractors are bad ones. Untested relative over-focusing on promoters and their perception could be a mistake. Interpretation of the question On a scale of 0-10, how would you respond to: How likely is it that you would recommend [organisation X] to a friend or colleague? What is it you are recommending? Who are you recommending to, which friend, what colleagues? Why are you recommending, what are you recommending? It's not clear from the question what is, or why a recommendation could or should be made. Understandably, many respondents won't think that much about this, they'll just take a stab at the answer. However, that's a problem for those who have to interpret and act on the results, especially if the business intends to act on the results. Extent of, and manipulation of the sample As with all sample based assessments the size and nature of the sample can have a profound affect on the results. Arguably for NPS to work as a predictor of future growth there has to be a 'Whole Customer', sample, a partial or random sample of the customer base isn't enough. Who identifies and selects participants becomes an issue if sales are involved in selection and are at the same time incentivised by NPS scores. Behaviour vs attitude It's long been assumed that attitude drives behaviour, but more recent marketing studies suggest this might not be the case and that behaviour drives attitude. In any event, what people say an what they do can be quite different. The correlation between attitude and behaviour in a survey is roughly 0.4 (Kraus 1995) and that's for 'very regular behaviour', NPS and voluntary recommendation is not regular behaviour. Promoters may not need or want to buy more, they may be able to influence colleagues to buy, but will they, can they influence other people or companies to buy, when will they have the opportunity to do so? There are too many variables to predict. Repeat purchase vs loyalty vs recommendation Repeat purchase is not a definitive indicator of loyalty and recommendation does not necessarily follow from loyalty. In consumer and corporate environments there is a natural loyalty, but it's not exclusive, it's polygamous. Even when given a wide choice, consumers and businesses select from a few alternatives. They're loyal to the extent that it simplifies their lives. This kind of natural loyalty is not a indicator of potential or actual recommendation. If loyalty is not a predictor of recommendation then the assumption that NPS provides insight into loyalty and consequently recommendation is wrong. Alternatives There are a few alternatives to consider, Customer Satisfaction Score (CSAT) and Customer Effort Score (CES). Other include analysis of Positive Word of Mouth (PWOM) and Negative Word of Mouth (NWOM), and its impact on intention to purchase. What questions should you ask? An improvement to the standard NPS question would include a range of tagged responses rather than just a scale, for example: "How likely is that you would recommend [organisation X] to a friend or colleague?" - answer very unlikely, somewhat unlikely, neutral, somewhat likely, very likely. Better still, as "Have you ever recommended [company X] to a friend or colleague?" - answer, yes in the last 3 months, yes but more than 3 months ago, no. A better test of loyalty would be "In the past 3 months have you considered leaving [company X] or switching to an alternative supplier?". Even a straightforward 'happiness' index might be better, two questions: "Are you happy with [company X]?", answer, yes very happy, happy enough, neutral, not really, not happy at all. Summary It's important to see NPS for what it is, it's an indicator of 'recommendation intent', perhaps a test of sentiment, at a point in time, from a sample of customers. It's not an indicator of behaviour, of loyalty, not a predictor of repeat purchase, retention or actual growth. Arguably NPS has some tenuous relationship to prospective growth through intended positive recommendation, but any correlation to actual revenue growth is much weaker than suggested, probably non-existent. It may be one of many metrics that a businesses uses to understand its commercial performance, but it should be treated with some caution as the assumptions around it and its evidence base as a predictor of loyalty, recommendation and growth are not proven, consequently its use or misuse, could be misleading and in the worst case damaging. Like any other customer satisfaction metric, it's helpful in focusing attention on customers, if well managed it could be an indicator of growing or lessening propensity to recommend, that's something that might be good to know, but that's about it. NPS is certainly not 'the one number you need to grow'.

Issue No.5 by Geraint Holliman and Will Wright PRESSURE ON BUDGETS IS BACK What to do with commercial budgets when inflation is high and recession looms? Some reach for the short tern tactical leaver and start cutting back, first to go - marketing, brand building and a campaign or two? Well not for market leaders, that is businesses that have had the opportunity to take time and prepare during the pandemic. In fact there are a number of things which we highlighted in a previous post, 'Sense. Rethink. Activate. Renew' about preparing for the challenges ahead. Not least amongst them was adapting to 9 facets of a 'New Normal': Building resilience and adaptability Adapting to new markets and new customers New work-life balances Disconnection and dissonance Remote, low contact commerce New economic and social policy New borders Corporate responsibility New forms of differential advantage The only one of 9 that hasn't really emerged to the extent we thought, is new economic and social policy. That's still needed, but doesn't seem like there's any semblance of a plan coming any time soon. All these are facets part of a 'new normal' and part of preparing for the economic and social challenges that are taking place right now. Of course each downturn and recession is different, each has it's unique combination of challenges, and the challenges now, coming out the back end of a pandemic are perhaps some of the most challenging. As HBR said in 2009, 'How to market in a downturn': During downturns, marketers must balance efforts to pare costs and shore up short-term sales against investments in long-term brand health. Streamlining product portfolios, improving affordability, and bolstering trust are three ways of meeting these goals. But, back to budgets. Now is not the time to slash commercial budgets, now is the time to ensure long term commercial investment in brand awareness and customer relationships is protected and short term expenditure is wisely targeted on convertible prospects and existing customer spend. That means maintaining marketing spend, but ensuring it's targeted and driving the right commercial outcomes. It's about tailoring strategies and tactics, and positioning for recovery, just as it was through the pandemic. This in turn means that the right metrics and measures need to be in place to assess commercial impact. As Mark Ritson explained in his Marketing Week article 6th April 2020: The best marketers will be upping, not cutting, their budgets - It may seem like a paradox, but recessionary periods actually provide fertile grounds for marketers to grow their brand's market share if they're prepared to think long-term. Byron Sharp and the Ehrenberg-Bass Institute for Marketing Science agrees to a large extent, see 'A Marketing guide: What to do in a recession' highlighting resilience of consumer behaviour, pricing strategy, advertising spend and new product lines as potential sources of 'relative gain'. Spotlight The bottom line... It's impossible to have a discussion about commercial metrics and measures without reference to the modern day godfather of marketing metrics, Tim Ambler. According to Wikipedia 'Tim Ambler is a British organizational theorist, author and academic on the field of Marketing effectiveness. Ambler featured on Marketing's list of the 100 most powerful figures in the industry. He is cited by the Chartered Institute of Marketing as one of the top 50 marketing experts in the world'. We met a couple of times many years ago to discuss early models of marketing discipline, process and measurement that ultimately led to Adaptomy DNA. In a seminal work: Marketing and the Bottom Line, (FT Prentice Hall, first published in 2000), the marketing metrics to pump up cash flow, Tim Ambler explains how to create the measures of success. If you are a marketer, or a commercial manager and you have not read this book, get a copy now and read it. It clearly show how marketing is connected to financial operations, revenue and cash flow and management of many of the intangible and intellectual assets of a business. It also explains the need to connect internal and external marketing efforts. From the very beginning of the book, in the executive summary there is a clear challenge: Is your metrics system good enough? In our experience the answer to that question is more often than not, no. It's a sad indictment of current commercial practice that performance and or impact metrics and measures are all too often seen as scorecards, tables and spreadsheets rather than systems, disciplines and processes. More often than not, it's not clear what's being measured, which disciplines and processes, or why we are measuring, what objectives, which outcomes, or how to balance long and short term measures of success. There's a lot more to commercial metrics and measurement systems than the metrics and measures themselves. Even in today's data rich, digitally soaked marketing, the book provides guidance toward the metrics and measures that really matter to the business, no vanity metrics, just solid connection to financial operations and quantified business models. 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 (#TOVAG): No.7: Need for Quantified Value Propositions, QVP's In what must be the most unsurprising news of the week, US-based free grocery delivery start-up, Fridge No More, shut down yesterday. Offering free delivery of any grocery item, or items, regardless of order size, anywhere in New York City it started up in October 2020 and within 18 months was gone. Taking untold investor millions with it, no doubt. https://lnkd.in/esaQVCTX Accused of having "no pathway to profitability" by one supply chain expert, who also called rapid grocery delivery “the worst business model ever created”, Fridge No More was clearly funded on simply a hit and hope basis. They were too eager to please, without understanding either the value of what they delivered (literally, in this case), how customers put a value on it nor what they’d be prepared to pay for it? To quote my favourite Jurassic Park character, Dr Ian Morris (Jeff Goldblum) “they were so preoccupied with whether they could, they didn’t stop to think whether they should.” If start-ups, or any business, don’t set out with a clear, quantified value proposition then how will they begin to substantiate the value they want and expect customers to pay for? A properly quantified value proposition is also the fundamental basis for any systematic business plan and forms the primary input to every pricing plan. No.8: Quantified Market Opportunities, QMO's By now most marketers are aware that Quantified Value Propositions (QVP's) are key to understanding the exchange of value between suppliers and buyer, they're instrumental in pricing strategy and critical to brand building, positioning and ABM. However, how many of these well-crafted propositions are based on Quantified Market Opportunities (QMO's)? In our experience not many. We're not talking here about TAM, SAM and SOM which should have some quantification, though the vagaries of TAM, SAM and SOM are another subject. No, we're talking here, about clear understanding of how much opportunity there actually is, who's actually willing to buy, when are they willing to buy, what will they pay, how much budget do they have, which budgets can be targeted, what are the costs to acquire (CAC) in specific segments, which sectors and segments are commercially viable, what the prioritisation strategies are, and why. We're talking about putting an opportunity value on each target sector or segment. For example, are enterprise software companies of more value to your business than enterprise semi-conductor companies? Are larger customers worth more than mid-market or SME? Should you target MarTech or Demand management budgets in broadcasters or major movie brand development budgets? Effective quantification matters in all these circumstances. We find, all too often, this work is not a sophisticated or complete as it needs to be, and that's a problem. If market opportunities are not quantified, it's difficult to understand how QVP's could be developed, even harder to understand how strategic priorities are being set, let alone downstream processes like brand building, pricing, GTM, and ABM. QMO's are not 'a nice to have', they're essential. They cut the costs of strategy, GTM and down-stream processing. They focus resource and effort and help target the best opportunities. They help the business stay laser focused on customers and market dynamics and they enable QVP's. Just by way of a footnote, QMO's aren't static, they evolve, morph and change like any market. They need to be continuously monitored and updated, they are an essential discipline of strategy and marketing. Unfortunately, not always baked into strategy, marketing and sales thinking as an analytical and commercial discipline as much as perhaps they should be. Put pretty simply, if you can't quantify specific market opportunities, it's debatable if any down-stream processes are really working. No.9: Nearly Ideal Customer Profiles, NICP's There's something cathartic about going through a process to identify your Ideal Customer Profiles, (ICP's). There's value in the process itself, it's a process of discovery and learning, identifying truths, unmet needs and lots more. However, prospects and customers that fit the ICP's are rare, like unicorns or pots of gold at the end of the rainbow. If you're lucky there will be a few. What's arguably more interesting and important are the many 'Nearly Ideal Customer Profiles', NICP's, those prospects and customers that aren't quite ideal, slightly imperfect. The interesting and important part is how many of these NICP's can be engaged, converted and retained. Where are they in their journey, what are their needs, what would it take to get them on-board. In our experience strategies and plans to address and or target these NICP's are under-developed. The first step of qualifying and quantifying just how far away these NICP's are from ideal isn't systematic, for example what are the relative Costs of Acquisition for each NICP segment? It's a kind of sub-segmentation or analysis, a prioritisation of prospect and customer opportunity that's really valuable but can be easily missed in the pursuit of ICP's. It's sometimes recovered in ABM and KAM, but that's too late in the process, potentially leaving 'money on the table' in target markets. The stark truth is that customers and prospects that fit the ICP's, don't really need marketing and sales, they are already in the perfect position to buy, they need and love your products and services! They should be a breeze to acquire? They should have low CAC and significant LTV NICP's aren't quite there yet, they need marketing to, and they need selling to, they are a little way 'off the line'. It might be that they don't have the need yet, they have the need but don't know you have solution, they're just not ready yet, it's bad timing - you've heard it all before. Businesses can win markets by understanding better than their competition, how to convert prospects and customers in 'close' NICP segments. The smartest businesses understand the relative CAC and LTV of NICP's compared to ICP's and use this as a form of differential advantage. NICP's are more often than not your real prospects and potential customers, they are why you have marketing and sales, they are the reality, the main market, they are not ICP's and there needs to be a clear strategy to manage them as prospects and customers. Growing pre-investment assessment and post-investment scale-up and growth Our new approach to CDD - systematic pre-and post-investment commercial strategy and operations capability and capacity assessment is getting traction from VC|PE investors and their portfolio businesses as well as direct approaches from scaleup and growth businesses looking for systematic ways to drive commercial success. We believe Commercial Due Diligence should be the accelerant to post-investment strategy and growth but too often it focuses on just historical risk and market sizing. We see commercial due diligence, as current and future state opportunity, strategy and operational assessment. It is the starting point for scale-up planning, integration, and growth - all delivered as one programmatic process. Over the past 5 years we have developed and implemented Adaptomy DNA, a model to systematically improve commercial strategy and operations. We’ve used it to shape Growth Roadmaps for Private Equity and Venture Capital companies and their portfolio businesses that are committed to systemic outperformance of the norm. Our investment, scale-up, and growth advisory focuses on the systematic assessment of any business’s commercial opportunity, its capability and capacity to deliver projected strategic outcomes, and a 100-day runway plan to accelerate post-investment growth. And, with a fully flexible, modularized approach and pricing model, that puts the investor in control, we can provide depth and scale across a variety of industries, timescales, and geographies to meet the needs of investments from £3million to £50 million. Footnotes: things you might have missed Commercial Due Diligence: adapting to the new landscape A great piece from Unquote of the changing nature and resilience of CDD, and a great case for Adaptomy's more systematic, structured and integrated approach to CDD and post-investment scale-up and growth approach which consolidates rigorous pre-investment and execution. In fact, it's harder to make a better case for our per- and post-investment scale-up methodology, adaptomy DNA and the diagnostics and tools that support it. Throughout the period in question adaptomy has delivered numerous CDD and post-investment acceleration projects across a wide range of businesses. In all cases we have seen the benefits of using systematic approaches that go well beyond the normal scope of market validation and commercial strategy to include structured assessment of commercial capability and capacity. We are now working with partners to develop a new form of DD, integrated from the ground up to eliminate inefficiencies in current DD practice. Behavioural Economics The behavioural econimics guide 2022 - A review of emerging trends in self-control and goals, introducing the FRESH framework. A very useful, and free download of frameworks, applications and resources. For anyone involved in design, attention, decision and outcome economics, this is a useful document. Is the key to the attention economy personalisation? Great article in Forbes: Sick Of The Attention Economy? It’s Time To Rebel about the counter-attention economy. Interestingly it suggests that commoditisation of attention is not the answer, but personalisation might be. That's true personalisation, not generalist compliance to a persona or ICP, but personalisation developed through real understanding, perhaps dialogue, even. Imagine, developing real dialogue. We worked recently with one of our customers in this interesting area of 'engaging narrative', consumer-led narrative and personalisation through dialogue and content. Given the decline of cookies, these kinds of more sophisticated conversations between businesses, prospects and customers will likely develop further. The State of Marketing Budget and Strategy 2022 Insights from Gartners Annual CMO Spend Survey 2022. The survey fuels CMOs and Marketing leaders with top-line marketing budget, marketing strategy and martech investment trends to watch for. Following record lows in 2021, this year’s marketing budgets as a percentage of company revenue have climbed from 6.4% to 9.5% in 2022 but still lag behind pre-pandemic spending, according to Gartner’s Annual CMO Spend Survey 2022. It outlines: how CMOs are prioritising their marketing budgets in 2022; which industries are seeing the biggest changes to their marketing budget; how fiscal and geopolitical uncertainty is impacting overall marketing budget trends; and how talent and capability challenges are impacting marketing’s resource mix Quote of the moment... Marketing metrics inspire certainty and confidence. Cannabis has much the same effect. Tim Ambler Have a fantastic weekend! What we're reading Winning the room by Bill Franks Revolutionize your data-driven presentations with this simple and actionable guide. In Winning The Room: Creating and Delivering an Effective Data-Driven Presentation, analytics and data science expert Bill Franks delivers a practical and eye-opening exploration of how to present technical data and results to non-technical audiences in a live setting. Although framed with examples from the analytics and data science space, this book is perfect for anyone expected to present data-driven information to others. The book offers various specific tips and strategies that will make data-driven presentations much clearer, more intuitive, and easier to understand. Readers will discover: How to avoid common mistakes that undercut a presentation's credibility Instructive and eye-catching visuals that illustrate how to drive a presenter's points home and help the reader to retain the information Specific and actionable techniques to dramatically improve a presentation's clarity and impact Ideal for anyone expected to present to managers, executives, and other business leaders, Winning The Room is required reading for everyone seeking to improve the quality and efficacy of their data-driven presentations and communications. Selling value by Mark Stiving, Ph.D Mark Stiving provides deeper insight into how to win more deals at higher prices. His book has 3 parts. The first part unravels the ambiguity of what value means. It explores how buyers use value to make decisions. Chapter 4 that describes value tables, a technique companies can use to document how buyers value their products. The second part is about actions salespeople can take once they understand value. It introduces value journeys, how a buyer goes about learning about the value of your product in order to make decisions. Once salespeople can recognize the value journey their buyer is on, they are able to communicate more effectively by focusing on what’s important to the buyer. Understanding and recognizing value journeys will help sales in many of their activities. The third part is about how the rest of the company can help sales. It provides many ideas for several different departments. Product people can build product with more value. Marketing people can communicate about value. Sales management can incentivize salespeople to hold prices, while still discounting when necessary.

Issue No.4 by Geraint Holliman and Will Wright INFLATIONARY IMPACT vs 'PRICING POWER' AND QVP'S No one is immune to inflationary pressure, or at least the prospect of increased margin pressure except perhaps those who have systematically gone about building 'price equity'. That is, making systematic investment in pricing strategy, long-term. As warren buffet famously said: If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. We'd cavate that by saying, if you've built up price equity and can raise prices without saying a quiet prayer you probably know your worth, and value to customers. And, customers know what you're worth too. It's likely you have Quantified Value Propositions driving your pricing strategy and over time you've accumulated enough credit with customers to raise price when required. This doesn't make any company immune to inflation, just that some will be less sensitive than others. McKinsey have a great article on Pricing Power, which sheds some light on 10 pricing levers that can help and another, more detailed pricing strategy article on Winning the Race with Inflation, which is well worth reading. McKinsey top 10, in 3 groups: Set the right price Attribute-based pricing (ABP): set price based on product performance and other attributes Fixed-ratio pricing: reprice spares and consumables as percent of base unit Set configuration pricing: align base unit based on attributes and adjust configurations Value-based pricing (VBP): quantify lifetime benefits vs the next-best alternative, such as labour productivity, footprint, and throughput Optimise discounts and rebates Reset discount structure: based on distributor performance and product differentiation Reset commission structure: based on value added (eg, demand generation or qualification vs fulfillment) Deal scoring: guide new deals using dynamic deal scoring to provide right discount Manage leakage Change order as profit center (COPC): institute process to price and charge for change orders driven by customers Closed-order variance (COV): minimize cost increases arising during project execution, identifying and fixing root causes Pricing-performance management: monitor risk, compliance, and value-capture metrics, clear delegation of authority (DOA), etc There's another interesting perspective from and investment point of view from Intrinsic Investing which builds on pricing equity and value creation: Pricing Power and Inflation They make a simple assertion, which we'd wholeheartedly support: As long as our companies continue to deliver superior customer value propositions, we have no concerns about their pricing power or ability to manage through challenging economic times. Spotlight Are silo's really all that bad? Despite never-ending discussion on the damaging effects of silo's, how many of us take a close look at them? Have we really thought through whether they're required or not, whether specialisation is a good thing from time to time or whether we're actually damaging our businesses? A good starting point to get a grip on silo's, good and bad, is 'The Silo Effect', an anthropological study of silo's by Gillian Tett, Moral Money co-founder, author and journalist with the Financial Times, chair of the editorial board and editor-at-large USA. Silo's are often built with good reason, deliberately, to drive or accelerate production, penetrate a target market, go to market with a new product, they can have immediate beneficial effects. The challenge for most organisations, is when these silo's become an end in themselves, too permanent, protected, myopic and in some cases impenetrable. It's worth remembering that silos are organisational, operational, cultural and psychological. To an extent they are part of every day life, a way to compartmentalise, to structure and focus. To break down silo's you first have to understand how and why they were created and how they work. From a psychological point of view that means listening like an 'insider-outsider', from an organisational point of view it also means encouraging multi-disciplinary, diverse discourse and collaboration to better understand and integrate new ideas and structures. Arguably, Silo's are not necessarily bad, they can have a purpose, what's perhaps missing is conscious deliberate decision-making about how and when to use them, and when to change or eliminate them. 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: Intellectual Capital We all know that intangible assets often represent the majority of business value, sometimes up to 80%. Arguably we, as commercial leaders are responsible for managing many of the most valuable of these, such as brand, customer relationships, experiences, reputation. Why is it then, that so much of our attention as commercial leaders is directed toward managing the P&L rather than the assets of value in the business? Do we have reliable, systematic approaches to quantify differential advantage in our customer relationships and experiences, do we know the asset value of our content our, key commercial processes, know-how and disciplines. ISO 10669 went some way to help value brands using six tenets: transparency, validity, sufficiency, objectivity, financial, behavioural and legal. But, that's just scratching the surface, what about all the other commercial disciplines and the intellectual capital embedded in them? We've defined 47 commercial disciplines, each of them represents intellectual capital and or an intangible asset, collectively they represent a significant portion of business value, to date we have not found a company measuring their unique contribution. Do you think the C Suite would be interested in understanding how to manage each of these 47 levers of value? If you do, as commercial leaders what can you do about it? Thoughts on Value and Growth: Pathways to profitability In what must be the most unsurprising news of the week US-based free grocery delivery start-up, Fridge No More, shut down yesterday. Offering free delivery of any grocery item or items, regardless of order size, anywhere in New York city it started up in October 20920 and within 18 months was gone, taking untold investor millions with it, no doubt. Accused of having no pathway to profitability by one supply chain expert, who called rapid grocery delivery “the worst business model ever created”, Fridge No More was clearly funded on just a hit and hope basis by investors. They were too eager to please without understanding the value of what they delivered (literally, in this case), how customers put a value on it and what they’d be prepared to pay for it. To quote my favourite Jurassic Park character, Dr Ian Morris (Jeff Goldblum) “they were so preoccupied with whether they could, they didn’t stop to think whether they should.” If start-ups don’t set out with a clear, quantified value proposition then how will they begin to substantiate the value they want and expect customers to pay? A properly quantified value proposition is the fundamental basis for any business plan and forms the primary input to every pricing plan also. Footnotes: things you might have missed Most hated unethical marketing practices Keeping on the subject of brands and purpose, from last week’s bulletin, today we came across the publication of a recent report on the seven most hated unethical marketing practices …. and some of the unexpected big brand culprits perpetuating them! With SEO firm Semrush reporting at 287% increase in online searches on ethical marketing over the last year, the New Statesman/Lead Monitor polled senior UK marketers and business leaders to identify what are those most unethical marketing practices. Included in the report are examples of some high-profile, and surprising, brands using each of these techniques. See for yourself who some of the embarrassed brands were! In ascending order of most maligned: 7. Newsjacking – aligning with current events or cultural issues to gain advantage of heightened news awareness 6. Greenwashing – over-inflating a product or brands eco credentials 5. Collaborating with unethical influencers – aligning with influencers who are (or subsequently become) toxic to the brand 4. Clickbait article headlines – luring in readers with spurious or lurid promises not fulfilled by the content 3. Non-transparent data use – using data gleaned from consumer sin ways which were deliberately obscured from them 2. Concealing important information – omitting key details about offerings to make them appear attractive than they really are And the very worst - 1. Targeting the vulnerable – targeting consumers who least need or are able to afford the product or service. Marketing often uses emotional messaging but the report suggests that some brands stretch the bounds of acceptability and this can very easily spill over into exploitation as evidenced by some of these reviled practices. No brand can claim to be perfect but these hated practices are eminently avoidable. Quote of the moment... "The moment you make a mistake in pricing, you're eating into your reputation or your profits", Katherine Paine, CMO News Group. What we're reading Neuromarketing, understanding the 'buy buttons' in your customers brain, Patrick Renvoise and Chris Morin How many sales messages do you think you see a day? 100? 500? 1,000? In this digital era, it could be as many as 10,000. This fascinating book seeks to understand how neuroscience and the study of how the brain works can impact on of the effectiveness of marketing efforts and help you sell more! The authors identify the six principal stimuli that impact on the part of the brain that actually makes decisions by processing both rational and emotional inputs. They call it ‘the Old Brain’ (or ‘First Brain’) – ‘old’ because, in evolutionary terms, it’s been part of human neurology the longest – for over 45,000 years! The stimuli that work best on the Old Brain are: Self-centred. Messages must clearly state the benefit to the recipient, sometimes called the WIFM (what’s in it for me) principal. Contrast. A clear distinction or contrast (before/after, with/without, etc) – in the storytelling world this is also known as binary opposition. Tangible Input. Ironically, Old Brain is no good at processing words, particularly complex ones – it prefers concepts and ideas expressed in clear, simple terms. The beginning and the end. Another core storytelling concept. Old Brain likes to anchor situations with a start and an end, almost ignoring what happens in the middle. Visual stimuli. Old Brain is hardwired to process situations visually much quicker than those expressed as words. Emotion. Emotional messages flood the brain with hormones that accelerate synaptic responses between neurons creating stronger emotional attachment and making them easier to remember. The authors then consolidate this learning into four steps to successful selling messaging: Diagnose the pain. Differentiate your claims. Demonstrate the gain. Deliver to the Old Brain. The rest of the book deals with tips and hints on to speak to the Old Brain using a series of building blocks and ‘impact boosters’ to deliver messages in the most appropriate formats that the Old Brain can process. This is a great book for any marketer, the information is succinctly delivered and laid out in a very usable format. Easy to read and even easier to listen to as an audiobook.

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'. Spotlight 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

Issue No.2 by Geraint Holliman and Will Wright WOMENS DAY, EVERYDAY This week saw International Women’s Day mark the achievements of women across the globe. Whilst it’s great to call out those achievements and raise awareness of gender bias on a specific day, we prefer to acknowledge the incredible achievements/work of women every day. We are privileged – yes, privileged – to work with some truly astounding women who are both inspirational and admirable day after day. As fathers of daughters ourselves, we hold these women up as true role models for what women can, and do, achieve on a daily basis. Whilst none of them would seek the limelight, we would celebrate Emma Fisher, Emma Bowkett, Aileen Ryan, Francesca Ecsery, Heather K Margolis as just a small sample of the brilliant women whom we work with, and are perennially grateful for the opportunity to do so. Spotlight Stop playing the bureaucratic game.. Gary Hamel, Wall Street Journals No.1 business thinker, author and lecturer reminds us, yet again, to think differently, innovate and build new management and organisational models fit for purpose, today. His new book Humanocracy, co-authored with Michele Zanini is a 'must-read', for anyone interested in different ways to operate a business, (we've just added it to our reading list). Successfully navigating the future will depend on people and organisations that are fast, flat, free and fearless. This doesn't sound like the rhetoric of stability, 'steady-as-she-goes', conformist bureaucracy, and it isn't. Given the magnitude of todays global challenges and opportunities, Hamel says, we need a radical management overhaul that needs five things to happen, and happen soon: Motivation - whole-hearted commitment to building organisations that are 'human-centric' New mind sets - personal strategies to rid ourselves of old bureaucratic thinking New models - learn lessons from businesses that have already replaced bureaucracy Migration - new management structures, systems and processes founded on new management principles Mobilisation - pro-change constituencies, wherever they are, to hack the management model 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.... Metrics that matter - cash flow We so often see a complete obsession with ‘revenue’ as a success metric. However, not all revenue is necessarily ‘good’ revenue. Difficult customers requiring excess servicing, late payers or heavily discounted pricing can all contribute to make revenue less valuable than the really important metric – cash. It’s critical for marketers and sales to understand how the cash flow into, and out of, the business can sustain and build growth. For more detail on this and the thorny issue of DCF versus APV(!), read the Adaptomy blog on Cash flow here: Metrics that matter and those that don't - Cash flow. Thoughts on Value and Growth: Quantified Value Propositions (QVP's) Another one in the series of 'nudges' posing some questions about commercial activity, assumptions and measurement. This one's on QVP's is questions what we really do with the quantification of value, do we really measure value created?. No one can fail to have noticed the profound impact that Quantified Value Propositions have on commercial operations and outcomes. But how many of us actively monitor the value being generated by each proposition? Are the ambitions of our propositions being met? Read the 'nudge' and join the conversation here: Linkedin Post - Thoughts On Value and Growth No. 2 - Quantified Value Propositions Footnotes: things you might have missed Nick Mason, CEO, Turtl, one of the best and most innovative young CEO's we know, is forging ahead with new ways to create and publish content. He just posted an interesting point of view on 'neuro-economic' marketing, something we've been working on with him for a while. Definitely more to come on this, it's a vast and topical subject that combines social sciences, psychology and economics to drive marketing. You can read the article here: How neuroeconomics will transform marketing over the coming decade. The ‘Keynote Speaker Season’ has started again with Geraint speaking at a number of industry events across March on all matters Content Marketing as part of his contribution to the academic study of the content marketing field. Occasionally amusing, but always useful, he is speaking at the MMC Learning Content and Conversion Marketing Online Summit on 16th March, find out more visit: MMC Learning Content & Conversion Summit Quote of the moment... "For most of history, Anonymous was a woman." Virginia Wolf What we're reading Marketing Due Diligence - Reconnecting strategy to share price by Malcom McDonald, Brian Smith and Keith Ward We undertake a lot of commercial due diligence for PE & VC investors and it was interesting to find this book, which we hadn’t come across before. Originally published in 2007 its key as relevant today as it was then, if not more so. As one of the key exponents of the quantified value proposition you’d expect Malcolm McDonald to be a keen proponent for the creation of shareholder value by marketing activities. And he does not disappoint in this book. Fundamentally, the authors believe that marketing is very rarely treated as a proper investment, with the same standards, rigour and approaches that would apply for any other business investment. The authors pose a framework for evaluating and planning marketing investments around three key questions: Does the promised market exist? Will the strategy deliver the market share it promises? Will that market share actually create shareholder value? A great read for any marketer wanting to understand the key drivers of marketing as a true investment and achieve a far greater level of accountability for their marketing actions.

Issue No.1 by Geraint Holliman and Will Wright THE HUMAN TRAGEDY IN UKRAINE Clearly there is nothing we can say that will alleviate the suffering of the people of Ukraine. Ordinarily we would offer an opinion or perspective on a world event, or try to assess its impact on our world, but in this case we cannot. Whilst our and corporate clients are all desperately attempting to help their own local contacts in Ukraine, of whom there are many, we can only offer support and hope sanity prevails soon. You can provide support through many channels, the Disasters Emergency Committee Ukraine Humanitarian Appeal is one. Spotlight Adversarial collaboration and a lesson in humility Daniel Kahneman, Nobel Laureate, and widely feted professor of Psychology and Public Affairs at Princeton published an incredibly useful podcast on adversarial collaboration, an approach which could be very useful in business to test assumptions and belief. He also confessed that he may have been wrong regarding research on 'behavioural priming' and the primacy of scientific evidence that only supports your own beliefs. A humble confession from such an eminent thinker is a lesson in humility for us all, it is refreshing to hear. Even the most brilliant minds get it wrong sometimes: so, there is still hope for the rest of us! Listen to his excellent video blog here: Edge Foundation Podcast, Daniel Kahneman - Adversarial Collaboration 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.... Metrics that matter - Marketing ROI MROI is probably the metric that causes most heated debate in Casa Adaptomy. Marketing expenditure is treated as a cost, not an investment, not an asset and cannot create a ‘return’ in the true accounting sense so is there any value in Marketers hanging on to MROI as a measure of success? Read the Adaptomy blog here: Metrics that matter and those that don't Thoughts on Value and Growth: Are MQL’s more than the name would suggest? As a kick-off to this regular feature we pose the question does MQL have a value beyond sales pipeline and revenue? There is a growing debate on qualification of leads, what they qualified for, how they should be scored, assessed, prioritised, and managed and how leads of all kinds contribute to value and growth, or not. Probably more to follow on this one we think! What do you think? Read the ‘nudge’ here: Linkedin Post - Thoughts On Value and Growth No.1 Footnotes: things you might have missed Bynder buys GatherContent. Bynder has always been one of the leading lights of the DAM (Digital Asset Management) space and this link up with one of the most highly regarded content workflow management platforms feels like a good fit. Read more about it here: GatherContent joins the Bynder family ContentCal acquired by Adobe. Our friends at ContentCal have been doing a great job helping businesses and creators publish content that audiences love, since 2016. Silicon Angle reported that "Adobe Inc. has acquired social media marketing ContentCal for an undisclosed price, although Bloomberg reported today that the deal was for more than $100 million". Read more here: Silicon Angle Article on ContentCal Acquisition Quote of the moment... "The problem is the ratio of ears to mouth is completely out of sync", Global CEO on the power of active listening. What we're reading Confessions of a Pricing Man by Herman Simon Actually not reading but listening on Audible. Entertaining, full of useful tips and tricks, this book is a fountain of knowledge for all marketers. As one of the fundamental 4Ps, pricing is the most undervalued tool in the Marketers armoury. Definitely worth reading (or listening)! Hat tip to Mark Peacock pricing coach for the recommendation. Converted by Neil Hoyne, (Chief measurement strategist at Google) A great, very easy to read insight into how data can drive long-term relationships through conversation. If you want to avoid ‘spaghetti-to-the-wall forms of digital marketing’, build stronger relationships with customers and create real competitive advantage using data, this is a great introduction - best chapter, in our mumble opinion: Listen to the right voices. Get in touch Any comments, queries or counter-arguments? What are your views on Systematic Value and Growth? Feel free to contact us contact@adaptomy.com we'd love to hear from you. Follow Adaptomy on LinkedIn https://www.linkedin.com/company/adaptomy

The second article in a short series on de-coding commercial growth and performance metrics, this one's on Cash Flow, discounted, positive and free cash flow, often not given the attention it deserves, it's value can be under-estimated, but why is it important and when should it be used? Someone once said 'Revenue is vanity, profit is sanity, but cash is king' - hard to argue with if you own or run a business, any business, of any size! Hard to ignore if you are a commercial strategist or marketer. Although revenue is often seen as one of the primary metrics with regard to growth it only accounts for the up-side and not 'money in the bank'. It doesn't help us understand margin pressure and in extreme cases, somewhat hidden trends toward persistent operating loss. The bottom line is that not all revenue is good, some sales can be unprofitable and in worst case scenarios can kill the business. "We were always focused on our profit and loss statement. But cash flow was not a regularly discussed topic. It was as if we were driving along, watching only the speedometer, when in fact we were running out of gas" Michael Dell, founder and CEO, Dell Technologies While it's important to know that there is a steady or increasing revenue pipeline, it's critical to know there's sufficient cash flow to sustain and build the business. Arguably, while sales should definitely be focused on winning revenue, commercial strategists and marketers may need a wider remit. Their challenge is how to generate 'good revenue', perhaps by driving other business outcomes like cash flow. ROI vs DCF for marketing campaigns Rather than ROI, Discounted Cash Flow (DCF) is arguably a better metric for measuring the value of an investment, a campaign or promotion - how much money will be generated in future, based in an investment today? It relies on estimated future cash flows, (which need to be accurate - that's a challenge), and takes into account Discount Rates or Weighted Average Cost of Capital (WACC), that is the rate of return (interest rate and time), expected by the business. So, why then if DCF is a better weighted, future predictor of investment value, do many commercial analysts and marketers still revert to ROI as their metric of choice? Although arguably better than ROI as a measure of investment value, DCF was designed in an age when commercial and financial markets were more stable, returns were possibly more predictable or at least, less volatile. It's been around, at least in principle for some time, perhaps as early as 1700, and is still popular today. Initially promoted by John Burr Williams in 1938 in his "Theory of Investment Value", it became popular in the 1980's and 1990's. But, DCF has it's challenges. Not least amongst them is variability of projected future cash flows and 'inappropriate' adjustment of the Discount Rate. APV and the credibility of DCF The introduction of Adjusted Present Value (APV) method introduced in 1974 by Stewart Myers is one way to try and overcome some of the challenges of traditional WACC based DCF. Unlike WACC in DCF it separates the cost or debt and equity. However, APV is still essentially a DCF calculation and while more useful for business valuations it still has its problems. For more about APV, read the Harvard Business Review article "Using AVP: A better tool for valuing operations". There's a great article on the credibility of DCF, in the The Columbia Law School Blue Sky Blog: "Time to trash Discounted Cash Flow as a Valuation Tool", by Arturo Cifuentes, Ph.D and Adjunct Professor of business in the Finance & Economics Division of Columbia University and in his detailed paper: "The Discounted Cash Flow (DCF) Method Applied to Valuation: Too Many Uncomfortable Truths" Essentially we should all be looking for more probabilistic characterisation of cash flows rather than deterministic manipulation of discount factors. Positive cash flow Positive cash flow from a business or project shows that the business or project is producing liquid assets. Free cash flow of FCF, is the cash flow after deduction of capital expenditure, (investment in assets - offices, machinery..). For a business comparing cash flow to free cash flow gives some insight into where cash is being generated and how the company is managing investment and debt. For a 'time-bound' commercial project or campaigns, directly tracking project, net or operating cash flow can be a useful indicator of liquid assets generated from the project. Understanding the patterns, structure and distribution of cash flow within any project can inform tactics and build insight for future campaign effectiveness, product and brand management. It's not just about the overall cash flow but the variation of cash flow within a project or business, it's about understanding and managing the dynamics of cash flow. For commercial management, project cash flow can help quantify the productivity of resources being used on the project and determine more accurately, contribution to businesses liquidity. Profit matters, cash flow matters more... Commercial strategists and markets need to understand and monitor cash flow, from projects and as a whole for the business, they need to understand the impact that commercial operations have on cash flow. Building insight into the profile and patterns of cash flow within projects, from products, brands and throughout the business can only help inform commercial strategy, pricing and marketing. Cash flow is a critical business metric, more useful than ROI or revenue alone, and even though it has it's challenges it should be considered a priority metric for all commercial strategies and marketers. Cash flow is not a complex metric, some of the variations have some complexity, but it's normally a pretty straightforward calculation. It's therefore surprising that it doesn't have such a high profile with commercial strategists and marketers, perhaps that needs to change? Many businesses, especially in the burgeoning SaaS sector buy cash-flow as a loan or investment. But, that doesn't mean because the working capital shortfall or losses are covered, cash-flow isn't important. In the SaaS scenario where their is arguably an unhealthy obsession with ARR, cash-flow is even more important. It's an indicator of the underlying health of the business, it's ability to build and sustain commercial returns. Identifying opportunities to accelerate existing customer cash flow or originate new cash flows, from new customers and new markets could negate or reduce need for loans or investment. Sooner rather than later a business must generate positive cash flows, otherwise, there is no future. "Entrepreneurs believe that profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most." Peter Drucker, management consultant, educator and author. How marketing can drive cash flow Here's a few things, that marketers and commercial strategists can do to drive cash flow: Drive 'good revenue', there's no cash flow without revenue, but there is 'bad revenue', cleaning leads with an 'accelerated cash flow' lens might be a good place to start. Target market opportunities that provide faster cash flow, existing customers for example or new markets opportunities with shorter decision making processes or sales cycles Incentivise enterprise sales cycles, 'buy a pilot', stage payments, are payment terms factored into revenue opportunity analysis? Focus on upsell and cross-sell opportunities, loyalty benefits, work with existing customers to understand buying behaviours and optimise sale to payment processes Use your pricing strategy, test pricing against speed of decision making, monitor price 'drop-off' points, provide incentives for early payment, discounts for volume purchase, rebates and retrospective discounts, employ the psychology of pricing to accelerate buying decisions Modularised offer portfolio, bundling, 'get started' packages, easy to buy add-ons, clearance discounts to shift old stock Here's a few things that will kill cash flow, the don't do list: It might sound ridiculous, but don't give away products or services that customers are willing to pay for - ever! Astonishingly, many do, especially start-ups, scale-ups and many SaaS companies that don't properly manage their services portfolio and intellectual capital. Selling to customers or accounts where costs of acquisition or cost to serve are too high, or where short term churn could eliminate cash flow, or where the lifetime value just isn't good enough or retention costs are too high Absurdly long payment terms - avoid these like the plague! Not monitoring invoice collections, something that's left to accountants, that marketers should be interested in, overdue invoices can be an indicator of 'bad revenue', sadly Dunn & Bradstreet estimate that just 54% of companies pay on time. Not monitoring cost of returns or suffering from post-pilot cancelation when costs are already sunk Slow sales team ramp up - for smaller businesses, start-ups and scale-ups getting the sales team up to speed, winning 'good revenue' is critical, bad hiring here is a killer! Marketing can help accelerate targeting, focus on high value accounts, direct sales toward 'fast-turnaround' quantified opportunities and much more...but that's another blog. The bottom line - things are changing The future of cash flow analysis is likely to be in probabilistic modelling, correlation, risk tolerance and a more adaptive characterisations of cash flow. Probabilistic cash flow differs from DCF in that it's not deterministic, it provides forecast based on a range of different potential outcomes rather than a single-threaded forecast. It's based on analysis of 'what we know' about future cash flows, behaviours, propensity and willingness to buy. There may also be stochastic models that are more useful in helping predict cash flow over time. This will inevitably mean more data, accurate data, especially for forecasting the patterns, structure and distribution of cash flow from projects and throughout the business. Ideally, marketers and commercial strategists along with data scientists and statisticians should be working together to provide more predictive, probabilistic projections of cash flow. The bottom line is that commercial strategists and marketers need to pay more attention to cash flow as a way to understand how marketing and commercial operations contribute the health and well-being of the business. Planning to increase revenue is one thing, but planning to avoid cash deficit is arguably more important. Even if you know there's a shortfall, and you plan to take on debt, you still have to work back toward a positive position sooner or later and to do that you need to understand and forecast positive cash flow. As Ralph Waldo Emerson, essayist, lecturer and philosopher once said: "Money often costs too much" Some final thoughts It may be that while the mantra of sales should rightly be revenue, revenue, revenue, the tactical (there is an alternative strategic one..) mantra of marketing should be cash flow, cash flow, cash flow! Remember - revenue is an accounting concept, it's not actually real, what's real is cash in the bank! Here's another thought - how many businesses or marketers are managing a 'cash-flow pipe' rather than, or in parallel with a revenue one - that is, cash flow attached to leads, what could you learn if you had one of these? And finally, let's face it, if you want a bigger marketing budget get in tune with what really matters to the business - help the business make money - focus on cash-flow!

A short series on de-coding commercial growth and performance metrics, starting with Marketing ROI, sometimes referred to as MROI or ROMI, often used as a proxy for marketing performance, but is it useful, what does it really mean and when should it be used? Marketers are under increasing pressure to deliver value for money, to demonstrate their worth, to create value, amplify revenue and reduce cost. In response, some have turned to 'Marketing ROI' as a measure of marketing performance. Marketing ROI as a proxy for marketing performance Unfortunately, 'Marketing ROI' as a measure of holistic marketing performance isn't a calculation that has much value or even one that can be made with any accuracy. There a few reasons for this: Marketing is often poorly defined, or defined differently from business to business and often differently within a business, there is no generally accepted definition of marketing, which disciplines are 'in and which are not'. Consequently, when we're talking about 'Marketing ROI' as a general proxy for marketing performance it's not entirely clear what the investment is for or what are we investing in, the scope isn't clear enough. In theory and in practice marketing is a complex ongoing set of interconnected yet discrete process between many inter-dependent disciplines. Many of these processes are 'always-on' and have no discernible start or end. In other words, there's no 'period', no context or time parameters within which an investment can be made, no clear period within which attributable returns can be measured. Attribution of costs, expense, investment, revenue and returns can't be determined with any reasonable accuracy. More often than not effective marketing is a consequence of effort from more than just the marketing function. There are costs incurred elsewhere in the business that should reasonably be attributed to marketing success such as sales, account management and customer support. It's almost impossible to assign overall returns from marketing to specific disciplines without a clear and accepted definition of marketing and rigorous process models to support this definition. More often than not these definitions and process models are not well developed. Campaign ROI Campaign ROI is different, it's time-based or period based, there's a start and end to the campaign. There should be clear parameters defining a campaign, timelines, targets, anticipated outcomes and impact. Advances in email and digital tracking, social assignation, reach analytics have made a real contribution to the prospects of measuring campaign, even advertising (especially 'on-line') Campaign ROI a realistic metric. In short, the investment can be identified and subsequent returns measured over a period of time. Theoretically then, ROI for well planned and tracked campaigns, especially in a digital or social context where there is plenty accurate data is possible, as long as the actual costs, revenue and returns in a specific period can be clearly attributed to investment in the campaign. But why would you? If you're interested in maximising revenue, then measure that, if it's profitability or cash flow then measure that, neither of these are ROI. If you've gone to the trouble of collecting accurate, attributable information to allow you to measure Campaign ROI, then measure Discounted Cash Flow (DCF) or payback, which use much of the same information, but are much more useful metrics. Why use ROI anyway? Even where there is clear evidence that ROI could be measured, it's just not a great tool. For a start there's no reliable comparison from campaign to campaign. Just because one campaign has a better ratio than the other doesn't really mean anything as the investment, timelines, targets and outcomes are more then likely different. Unless you're running exactly the same campaign again and again ROI comparison isn't that useful, in fact it might be misleading. There's a lot of confusion about ROI and it's use in marketing. When someone talks about using ROI in a marketing context is that what they really mean? Do they mean ROI, or ROMI, or ROAS, or maximising returns, do they mean profit from a campaign, revenue less expense or do they really mean returns from an investment. Are they confusing cost and expense with investment, do they mean the point at which they get a return on their investment? As Tim Ambler said in his seminal book: Marketing and the Bottom Line, (which every marketer should read): "When people talk about ROI from marketing, they usually mean profit return after deducting the cost of the campaign: it is return minus investment, not return divided by investment...one response has been that the ratio is still useful for comparing alternative uses...in fact if the I is constant, then R-I peaks at the same point R/I does, so the ratio is redundant at best and possibly misleading because the immediate reaction to a high ratio is the supposition that more investment would produce the same ratio again" An unhealthy focus on ROI as a marketing metric can encourage a kind of short term marketing myopia, as Mark Ritson pointed out using a quote from Peter Field in a Marketing Week article: "..Field stresses that both he and his collaborator Les Binet, head of effectiveness at Adam & Eve DDB, see ROI as an “incredibly dangerous metric”. He believes using ROI as a decision metric..... is dangerous because ultimately the best way to maximise ROI is to spend less money." Where real 'marketing investment' is made ROI is a short term marketing measure at best, it may look great but the performance doesn't scale. Quite often it's more focused on P&L activity, wrongly applied and focused on costs and expenditure rather than investment. As such it can often be a distraction from brand or relationship building, reputation management and generation of capital value through marketing where true investment is likely to be being made, where returns are expected over time, where assets are being built. But, there are challenges here too, in attributing returns to specific capital assets and intellectual capital like brand. If marketers had more insight into the management of capital assets, of which they are custodians, some of these attribution challenges may be overcome. Unfortunately too much marketing is focused on tactical P&L activity, short term gain, rather than building capital value, and more often than not, the systems to effectively manage intellectual capital aren't in place, but that's another story. Donaldson Brown invented ROI to measure the investment return on capital projects; new businesses and products, truly investments, where there is a clear period where investments are made and where returns or cost savings could be expected - this is the context in which ROI works. Other than this capital reporting context it's arguably the case that accountants, treasurers and other analysis have abandoned ROI in favour of DCF and payback. ROI in marketing appears almost useless by comparison to other available measures, yet it is by far the most talked about in marketing performance management today. Outside capital management or true investment management it has little value. It's perhaps time we all started talking about better, more useful alternatives rather than the somewhat jaded notion of 'Marketing ROI'. Explaining marketing contribution through DCF, payback and capital value as part of a more informed scorecard can only help enhance the reputation of marketing and set a new agenda for commercial performance monitoring.

How are strategic disciplines unified to drive customer and commercial value? Can you maximise customer value through functional silos like strategy, sales, marketing and customer support or is a fundamentally better approach required? Progressive leaders know that silos have a value from time to time but they are now looking for new ways to configure and industrialise sources of differential advantage by unifying critical disciplines that drive growth and improve customer and commercial outcomes. 4 perspectives on growth 1. Revenue, margin and cash-flow Sustainable revenue, margin and cash flow are all critical to long-term growth and the ability to optimise operating costs is ever-present. But exactly how do existing silo'd customer and market facing functions contribute to such growth? Clearly, they should and in many cases do, but it's often not systematic and more than likely any contribution is variable and unpredictable. Evidence would suggest that some of this results from poor organisation, competing incentives and a lack of streamlined cross-functional process and team-work. Market economics, changing customer preference, political and social circumstance obviously play a part, but there are new ways to systematically improve growth prospects and engineer improvements in specific customer and market facing capabilities and operations. 2. Customer economic value What specific levers, processes or disciplines drive economic value for customers? Many companies don't even measure the benefit premium to customers, That is a function of the value customers attribute the product or service minus the price paid, the benefit premium or value add*. But economic value customers receive is a little different. That's the differential benefit they could enjoy with your product or service, over that which they currently have or which any competitor could provide. Simply, put as the value customers need to switch from some other product to yours, estimated as being at least as much value (benefit premium) they are currently receiving plus a 'switching or transfer premium'. Customer economic value can be delivered through a wide range of disciplines including: innovation, customer experience, relationships and service. The trick is to know how to manage these disciplines and which ones deliver more or less differential advantage to specific customers. This was once the domain of 'gut feel' and intuition, but that's no longer good enough, it's science, evidence-based decision making, process and particular capabilities that will 'win-out'. The first step is to understand and build capability in key strategic disciplines, then systematically improve them. 3. Intangible assets and intellectual capital Sustainable revenue, margin, cash flow, cost reduction and economic customer value delivered are important measures of growth, amongst many, that can be managed more effectively through inter-connected disciplines rather than functional silo's. However, intangible assets and intellectual capital, which collectively represent most of the value of any organisation, need much more attention. Arguably these are the assets which should pre-occupy strategy, sales and marketing, sadly, all too often front-end operations focus on short-term tactical gains rather than disciplines to increase the value of capital assets like these. This only contributes to the divide between C-suite expectations and front-end functional silo's. 4. The levers of value Many market leaders are already abandoning redundant functional organisational models to find differential advantage in new operational models drive by commercial and customer outcomes, not internal organisation. They know that there are different kinds of value and different ways of managing them. They can see that shorter term P&L focuses metrics are important but also that customer and longer term intangible value and intellectual capital measures are also needed to steer the business in the right direction. The is the job of unified, cross functional disciplines and teams. It's not about tactical versus strategic, it's about 'always on' strategy and smart tactics, systematically developed and delivered using a 'shared operating model'. The same disciplines contribute to strategic and tactical success, they drive short-term and longer-term commercial and customer value and they provide the levers for intangible asset and intellectual capital growth. ​ There are at least 38 disciplines supported by a unified operating model that collectively provide the levers for accelerated capability building and sustained growth. Unified commercial engines How unified operations can unlock new growth, customer and commercial value Read this article

Is it time to suspend belief in rigid functional silos that are destroying value in your business and focus on more innovative management of commercial and operational disciplines required to adapt and grow? Driving relentless, systematic growth and rigorous execution at scale doesn't happen by accident: it's diligently planned and managed. It's based on discipline, evidence, connected capability and unified operations. Customers don't need to understand your organisation, what they do understand is the value you create and how you deliver it. But which disciplines create and deliver value in your organisation? How do you optimise these disciplines to support seamless customer experience? Can you systematically manage them to drive change, differentiation and build more adaptive and resilient businesses? Could management of these disciplines be the key to growth of your most valuable intangible assets and intellectual capital? Most CEO's look to their 'front-end' commercial operations to drive growth, revenue and capital asset value. And, forward thinking organisations have made significant commercial gains by focusing on their customers, leveraging emerging technologies and exploiting new business models. Despite these advances orthodox functional siloes are limiting growth and commercial success. Consequently, business leaders are now re-shaping their organisations, uinifying commercial operations to provide streamlined customer experiences. There is now renewed focus on how to systematically drive cost efficiencies, revenue and cash flow throughout all customer and market facing operations. And, leaders are also placing particular emphasis on how to systematically manage capital assets and intellectual capital that drive differential advantage 'in market'. ​ New, unified commercial operations offer considerable benefits. Some estimates suggest between 5 and 15 percent growth and 10 to 30 percent reduction in marketing costs alone. To realise these kinds of benefits there are two key questions to answer: ​ In each of your target markets what are your sources of differential advantage? How do you systematically industrialise these sources of advantage to drive cost efficiency, revenue, cash flow and most importantly capital value? 5 simple rules to unify 'front-end' operations 1. Focus in future customers Although this sounds obvious, all too often organisations are obsessed with current customers and although current customers are important there is a tendency to neglect what customers could be like in the future. Progressive leadership, vision and different strategies are required to build a more adaptive and sustainable business, aligned to current and future needs of customers. While there's a lot of talk about journeys as if they never change, there's not enough focus on how journey dynamics and customer strategies evolve over time. Although customers can often say what they want, it's true to say customers don't always know what the future could be like or what they might need in that future. There's a responsibility on businesses to help their customers to realise a better future and to explain the 'art of the possible'. In doing this, leading organisations re-shape their strategies and operations to support that better future in advance of the competition, thereby creating differential advantage through operational innovation. 2. Move from 'functional friction' to 'disciplined flow' Orthodox functions like sales and marketing are arguably redundant, and perhaps their existence is now a constraint on commercial success. Disconnects between these kinds of functional silo's disrupt customer experiences and divert attention and resource away from customers to unnecessary internal management. One solution lies in managing the specific disciplines, rather than functional silo's, needed to execute customer and commercial strategies. But first these disciplines must be clearly defined. For too long 'front-end operations' have lacked precise definition, that's no longer the case. These disciplines and processes are now clear enough to systematically engineer improvements, to design, execute and measure performance, improve operations and deliver differential value to customers through seamless experiences without the constraint of traditional organisation. There are at least 38 discrete yet connected disciplines associated within 'front-end operations'. These can be grouped into 'engines' supporting discovery, leadership, activation in market, enablement and performance improvement. The engines are fuelled by new adaptive operating models that provide connectivity, cohesion and flow. These are all part of our modular methodology: adaptomy DNA Learn more about redefining 'front-end' commercial operations in your business? 3. Embrace evidence-based change Increasingly leading edge businesses are driven by evidence. Not just data, but qualified, quantified facts. Intuition, creativity and innovation are still vital, but the days of 'gut feel', hunch and untested assumption are long gone. Change requires creativity and imagination but is has to be backed by evidence, commercial and behavioural insight, data and science. To systematically improve strategy and operations there needs to be proof and to consistently engineer and deliver differential advantage to market there has to be evidence. To help people believe in change there must be measurable benefit. Evidence-based change, transformation and performance improvement in customer and market facing organisations is now a fact of life. Sharing the insight and analytics that drive customer behaviours and operations will inevitably help diverse teams understand the need for, and impact of change. ​ Any change carries an element of risk and the effort and commitment required to build new unified commercial operations should not be underestimated. It takes time, resilience and tenacity but the commercial and customer benefits far outweigh the pain. 4. Measure what matters Maintaining focus on key metrics and measures is at the heart of any commercial operation but knowing which metrics and measures are strategically and tactically valuable has never been more important. To build credibility with the CFO commercial managers must learn to operate with a financial mindset. That means focusing on revenue, cost, margin, cash flow and knowing what key financial metrics really mean. It also means helping the CFO manage capital value, intangibles and off-balance sheet assets like brand and intellectual capital. It means understanding process performance measurement, resource effectiveness, utilisation and productivity to help improve operations. It means searching for lead indicators and proof to ensure that measures like NPS and customer satisfaction are actually meaningful and true. It means embracing advanced analytics, artificial intelligence and machine learning to decipher complex behaviours and the trends that inform commercial decisions in ways that drive competitive advantage and customer value. 5. Build new behavioural models Delivering systematic growth through more commercial and customer value depends on unified operations and the people involved in doing this need to be incentivised to behave as an integrated team. This means changing culture and how people are recognised and rewarded by shared goals and outcomes and team-wide KPI's aligned with individual compensation. It means creating a clear sense of shared purpose, transparency, accountability and acute focus on customers needs. Deeper understanding of team capabilities, individual behaviours, motivations and preferences is essential to make unified operations successful. This means psychometrics, emotional intelligence, effective management of mental health, development of new capabilities and new organisational models built around disciplines not functions. Managing the levers of value How key strategic disciplines are unified to drive customer and commercial value Read this article

Whether it is going to be the ‘new normal’ or ’next normal’ or some other soundbite confection, the fact is that it will be the new reality for all of us. Many of us will have to face up to uncertainty in markets and business, at least in the short term. Quite simply, every business will face its own unique challenges and no one knows what the future looks like. The best practice we used before the crisis is not likely to be good enough going forward, we need different, more insightful and flexible practices. Whatever the landscape may now look like in your market, progress and success can only be delivered through new insight, ingenuity, relentless, systematic growth and rigorous execution at scale. With so much uncertainty prevailing in every market each business will be faced with difficult decisions as to what strategies and actions to undertake to respond to the changed landscape. A new manifesto for smarter thinking, systematic execution, value delivery and growth post-COVID operations is needed. __________________________________________________________________________________ The challenges ahead Although the crisis has affected different businesses in different ways, the speed and depth of impact on many businesses was profound, forcing short-term emergency action for many. But how have you used the post-impact time to prepare and address the key issues facing your business now? Are you able to answer these four simple questions about the challenge ahead? Are you clear about the economic and emotional value you offer your customers now and in the future? In each of your target markets what will be your sources of differential advantage? How will you systematically industrialise these sources of advantage to drive cost efficiency, revenue, and most importantly, capital growth? Are your propositions sustainable and is strategy execution able to consistently deliver commercial and customer value? Delivering truly differentiated value to customers will be critical to navigating your way to success in the short, medium, and long term. But how will your customers have changed? What will constitute ‘value’ in their minds? How will that assessment of value change as the world returns to some kind of balance? And, if customers have changed during the COVID period, will your business be fit to meet their demands in the new landscape? Inevitably, some aspects of every market will revert to pre-COVID behaviour yet some other aspects will have change irrevocably. So many previous assumptions, based on gut feel and guesswork, will be swept away and we will all need to learn to behave differently, more evidentially, more systematically in order to not only survive current and near term disruption, but also to thrive and grow. Transition to the new landscape will require a profound re-think for many businesses about the markets and customers the serve and how their business operates. The priority is, of course, to survive, but building-in resilience now to insulate against potential future market stresses and generating new growth by systematically executing new strategies for new and emergent markets will quickly become differential advantage. Organisations, both large and small, will have to think through the ‘bigger picture’ as well as become more socio-economically and market aware. __________________________________________________________________________________ 9 Facets of a 'New Normal' What facets of the emerging economic landscape should businesses consider in their post-COVID strategies? Here are some that you should consider: Resilience and adaptability. Smart organisations that can survive short-term pain will be planning market re-entry and the smartest of these will embed new resilience, performance management, and operating systems. New markets, new customers. Business will have to adapt and re-position to address uncertain future markets and evolving customer behaviours. Orthodox best practice may not be enough to overcome the challenges in unpredictable markets and may be replaced by emergent and novel management practices. New work-life balance. What is work in a post-COVID world? As people re-evaluate and re-prioritise what’s important and what’s valuable a better work-life balance will emerge as a high priority. Disconnection and dissonance. Distancing has created a sense of disconnection and at the same time many have found new ways to stay emotionally connected and engaged but there has been profound disruption to the way we work and live we will be living with the consequences for some time to come. Remote, low contact commerce. As many more people become accustomed to new forms of remote digital commerce the race toward ‘low contact’ e-commerce is truly on, but for many local, personal contact and quality service will still be valued although this, at least in the short term, may also be a different experience. New economic and social policy. Economic and social policy will shift toward mitigating catastrophic risk and increasing national resiliency and government intervention in industry and business is likely to increase. New borders. National and personal borders, barriers and enablers of trade and interactions are changing. International collaboration in key industries and amongst national states has increased in many respects and at the same time nationalism and protectionism are also on the rise. And, our personal borders have changed through social distancing, self-isolation and the likelihood of continued quarantine when crossing borders. Corporate responsibility. Fair gain, people, and the planet will likely drive future market and customer opportunity, brand building, sales, investment, and returns as customers adjust to new value systems. New differential advantage. Understanding the changed value requirements and competitive landscape will be crucial in developing capability, systematic, and adaptive approaches to build in commercial resilience which will become a source of differential advantage. __________________________________________________________________________________ Adapting to customers' changing perceptions of value Customers, that have propensity and ability to buy, will have more control and influence than ever before in the post-COVID world. It will, in the short term, be a buyers’ market in many industries, but buying behaviour and preferences will have changed, influenced by social distancing, diminished access to suppliers, and new perceptions of value. Many potential buyers have become more familiar with digital channels, locally sourced products, and self-sufficiency. Many businesses too, also have also developed new understanding of remote working, shorter, more diverse supply chains, and more efficient use of discretionary spend. Customers are changing rapidly and will have heightened expectations of seamless, ‘easy to use’, ‘always on’ services. All businesses need to respond and meticulously manage the delivery of value to current and future customers in a systematic way. Delivering quantifiable value to customers will be the critical success factor for all businesses in post-COVID world. But how will customers’ perceptions of value have changed following the current crisis? How will their perceptions of value evolve? What evidence do you have to substantiate those assessments? And how capable is your business at adapting to deliver perceived value now and in the future? Have you re-quantified your markets, are you able to articulate your new Market Opportunity? Before the crisis, the strategies, value propositions and brands of many businesses were becoming more homogeneous and undifferentiated. Many offerings were indistinct from each other. Sources of differential advantage were not being clearly identified or exploited. In the post-COVID environment undifferentiated strategies, propositions and brands will face a more uncertain and challenging future of price-based competition, cost-cutting, and margin erosion. Dismantling functional siloes Functionally focused front-end commercial operations may be obstructing the delivery of differential advantage and growth. Traditional marketing and sales functions have become siloed, fragmented, and disconnected from strategy and commercial outcomes. Customers and business leaders know that functionally defined customer-facing operations are sub-optimal. They know that these siloes make it more difficult to deliver differential advantage to market. They also know that the critical disciplines for managing the most valuable intangible assets and intellectual capital are unclear. More often than not, customer interactions are tactically driven by internal divisional and functional siloes and the goal of ‘seamless customer experience’ for many organisations cannot be realised. Operationally, siloes present unacceptable and unnecessary challenges in developing sustainable revenues, cash flow and margin, cost efficiency is sub-optimal and effective management of intangible assets and intellectual capital is almost impossible. These 'silo challenges' are likely to be magnified in post-COVID world, where customers make more careful choices and any weakness is likely to be exploited by competitors. A repeatable, scalable approach to building differential advantage and asset value For growth to occur businesses must now, more than ever, align customers and companies through insight, innovation, and value propositions based on evidence, rather than gut feel and instinct. Growth won’t happen by accident in the post-COVID world – it must be diligently planned and remorselessly managed. For that growth to be achieved it will require new insight, relentless, rigorous execution at scale: systematic, pragmatic and measurable. The best practice that was appropriate before the crisis to handle simple and complicated challenges may not be enough. We will need approaches to overcome complex, even chaotic market conditions. What’s required are adaptive systems for delivering differential advantage, cost efficiency, sustainable revenue, and capital growth. Systematically delivering growth: the engines of success The challenges presented by the current crisis have amplified operational risks and performance improvement opportunities that were probably there pre-COVID as well as presenting new challenges driven by unpredictable markets and customer behaviour. Now, more than ever, if you cannot easily overcome these existing and new market and customers challenges you may need to think about transforming your customer-facing operations. Most businesses could begin by considering more efficient and effective engines for growth, more systematic approaches to building value for current and future customers and different ways to measure success and synchronise revenue generation, cost reduction and capital asset growth. Identifying a critical path of the most important disciplines that drive world-class customer value delivery can help guide businesses, customer and market strategy and focus investment and resource and build differential advantage. Unconstrained by 'organisational orthodoxy' and siloes a new unifying model can emerge like the adaptomy Unified Commercial Engine (UCE). This can be a blueprint for the emergent and novel management practice needed to drive sustainable business growth in turbulent market conditions. Now more than ever businesses need systematic approaches to build new capability and competency, transform customer-facing operations to deliver differential advantage and new customer value. New frameworks like adaptomy UCE provide focus and precision to manage revenue, cost and cash flow and the far more substantial value of intangible assets and intellectual capital. Embedded within each of the adaptomy UCE engines are several core disciplines, 38 overall. Each of these discrete disciplines is designed to delivery specific value. The disciplines are supported by new operating models designed to build modern, adaptable operations. Your business can us these approaches and the accompanying tools and road-maps to develop an acute focus on creating and delivering future customer and commercial value in a way that outperforms the competition and helps you to ‘win in market’. This is a manifesto to build scalable, evidence-based ‘engines of success’. It is a 'base-line' for adaptive operations design based on evidence and process. The engine architecture provides precision, focus and systematic ways to unify strategic and tactical capabilities. It provides clear road-maps to drive sustainable revenue, margin, and intangible asset value. This is not about the application of ‘best practice’ or even good practice, because the assumptions and underpinnings of those probably no longer apply in the new landscape. It is about removing waste and inefficiency and creating growth opportunities through emergent and novel management practice, building adaptive systems, operations and organisations that are more resilient and deliver better commercial returns and more customer value. 4 phases of transformation in an uncertain future 1. Sense-check your market, customers and operations The uncertainty many business leaders now face demands a different way of thinking. Firstly, a more progressive ‘sense-check’ approach is required that is quite different from the formulaic, predictable approaches used before the crisis. While some markets and businesses have, fortunately, escaped unscathed even flourished, the vast majority face volatility, unpredictability, and uncertainty. To overcome these challenges we need fresh insight, more adaptive, flexible operations, and responsive approaches to market. We are witnessing a sea change in leadership behaviour and management science. We need to make sense of new and emergent market conditions, this will not be just for the short term, it's likely yo be the case for the foreseeable future. 2. Rethink your business now to survive the immediate term The immediate challenge for many businesses now will be to reengage and retain customers. Knowing your customers and how their perceptions of value have changed will be pivotal. What do customers look like coming out of COVID-19? What is your business’s differential advantage? What’s the quantified value proposition in the changed circumstances? What is the plan of action to re-engage them? ‘Rethink’ will be the route for businesses that need to assess and bolster current-state operations and lay more stable foundations for a return to operations in the new landscape. They will need to: Re-calibrate, re-define and re-segment markets and customer opportunities, re-assess revenue generation, cost, margin, buy frequency and propensity Re-position brands and value propositions against emerging different buying behaviours and preferences and put in place new operating models for an uncertain and different future Find new sources of differential advantage and revenue opportunities in new and radically changed markets. 3. Activate core capabilities in market for short-term growth Some businesses will have adequately survived the challenges of the recent crisis but will be unprepared for the organisational and structural requirements of the evolving market needs. ‘Activation’ in the new landscape should address three key questions: Is your organisation ready to change? Can you accelerate and re-scale faster than the rest? Can you adapt and lead in the market conditions? Organisations that need to ‘activate’ may not only be seeking to capitalise on new opportunities in the market but also to create new relationships with existing customers or substitutional customers in adjacent markets that have a lower cost to fulfil or higher margin opportunity and sales velocity. They will need to: Develop new customer experiences and align channels, sales, and fulfilment with new strategies, value propositions, and operating models. Accelerate ‘engage to fulfil’, ‘cost to win’, processes and, critically, cash flow. Differentiate through experience, channel and new sales and account management practices that are designed for the new normal. 4. Renew underlying operations to build resilience Organisations seeking to build-in resilience and mitigate the impact of future commercial and ‘catastrophic market risk’ through Core Viable Business (CVB) should be asking: What is your plan for identifying, planning, and creating your CVB? How do you retain effective operations and differential advantage in crisis and economic recession? Do you have the right assets, reserves, and capabilities to compete in the medium to long term? Defining your Core Viable Business to build a resilient operating model will require you to: Introduce a more adaptive performance management systems to change, transform and pivot Reassess and renew performance management systems, build new capability, intellectual capital and flexible capacity management Define new and different intellectual capital needs to be developed in the ‘new normal’ More than 'recovery' This is more than COVID recovery’, ‘digital transformation’ or ‘sales and marketing alignment’ this is fundamental transformational change for the way business operates in market and interacts with customers. This can be the DNA of your entire customer and commercial value delivery system. But it doesn’t have to be, nor should it be, a ‘boil the entire ocean’ challenge. No business will have the appetite nor capacity for wholesale change at this time. This should be visible change delivered through a modular adaptive approach. It should develop and embed disciplines and processes that can then be diligently applied, operated rigorously and relentlessly pursued. These processes will create and sustain differential advantage, clearly leading to customer and commercial value. The future starts now. Customers need you and your business to act now. Be prepared to succeed. __________________________________________________________________________________ Leading your team virtually towards whatever comes next Creating the right conditions for virtual teams to perform. Read this article

With the necessity of spending time on crisis management and in the haste to ensure that organisations continue to operate, many leaders have not had the time to invest in their virtual teams. As the intensity of crisis management reduces, an important use of leader’s time is creating the right conditions for virtual teams to perform.  If not led well research shows that virtual teams tend towards reduced frequency and quality of communications, a lack of team co-ordination, reduced team efficiency, a lack of trust and an inability to resolve disagreements. It will be strong teams that enable organisations to remain highly focused on the goals that will serve their customers through the current crisis and move their organisation into the new normal. __________________________________________________________________________________ There are many basic tried and tested rules to setting up virtual teams that can be followed.  But very few teams to date have been 100% virtual.  And very few of those teams are at the higher levels of the organisation required to make virtual teams works productively.  There is no cookie cutter approach to follow but there are questions you can ask to help you shape how you lead your teams through this change. 5 leadership questions: 1. Are you doing the basics of  virtual team good  housekeeping? Truly connected teams require clear communications and great meetings. These can be reproduced virtually, with some thought and pro-activity. Being clear on what you use different communication channels for and good meeting management enables this. Modelling the ways of working and values of the organisation play an equally important role.  Some of the areas that take more thought are how you tap into the informal networks to understand the mood of the organisation.  Setting up new virtual traditions, such as a coffee at 11 am, regular updates and checking in on 'one to ones' may seem like nice extras but they do help maintain the psychological health of the team. 2. Are you leading what you need to and getting yourself out of the way of other work? Recognising when you need to lead and when you need to facilitate the work of others will help you to fully leverage the team capabilities.  A leader that insists on being involved in all decisions soon becomes a bottleneck.  Ensure that meetings discuss both what needs to be done and how it will be done.  Then spread the accountability of delivery. 3. Are you continuing to develop your leadership skills? At times of crisis one of the first things to take a backseat is often individual development. But virtual team-work amplifies areas where leaders are not so strong.  If you are not comfortable with conflict then it is easy to avoid it in virtual interactions.  If you are not proficient in setting and communicating team goals then your teams will feel more confused.  If you're not good at listening, teams will surely know in a virtual environment. Prioritising your own development will lead to stronger teams. 4. Have you communicated clear short-term priorities? Individual and commercial purpose and priorities of the team may have changed profoundly in recent weeks.  Understanding and meeting your customer current needs now, may have a very different focus than even a few weeks ago.  Revisiting purpose and priorities now will help leverage the team’s strengths to meet the new objectives.  Teams struggling to adapt to new working norms will already be working less efficiently and this is likely to worsen further in the short term.   Clarity over what is important will help them allocate their scarce resources to where they are most needed.  A clear mission, regular meetings and shared goals can all help maintain momentum and trust. __________________________________________________________________________________ Would you like to learn more about sense-checking, re-thinking, activation and renewal in response to uncertain future? __________________________________________________________________________________ 5. Are you looking at new ways of leading the upcoming change? The questions to date have looked at how you keep teams connected and engaged to deliver current priorities.   A more critical questions for organisations who want to lead out of this crisis will be “what might our new normal look like?” and “how do we engage a virtual organisation to deliver the change?”. The bottom line may be that we have to learn to manage uncertain futures and that 'normal' will not return for some time. The reference models and best practice that worked in the past are just not up to the job, far more progressive leadership will be required to deliver novel and emergent leadership practice. You must get the process and the tools right to enable change in a virtual organisation. The optimal process may be radically different with a virtual team.  You may need to employ different tools, for example to encourage creative interactions and engagement.  Smaller more focused interactions may be favoured over whole-day meetings. Meeting management needs to be thought through more carefully to inspire participation.   For sure, the fundamentals of successful change will remain the same and still need to be respected. As the crisis management phase starts to subside the focus now moves to delivering current customer needs and thinking about the new norm.  Creating a virtual team by replicating a physical team with the direct replacement of face to face interaction runs the risks of alienation and disconnection.   Effort spent developing great virtual teams now will repay you with teams that participate more frequently in discussions, have more equal influence and produce more unique ideas.  This will create a strong foundation for the future upon which you can change and strengthen the organisation as it moves into the new normal, what ever is next. __________________________________________________________________________________ Would you like to know more about transitioning to a different way of working post-COVID? __________________________________________________________________________________