Trouble is if the distributor has not bought into the relationship it’s not going to do anything meaningful for you and that’s why you do actually have to sell and market to the distributor. But you’re not selling products your selling the relationship. And before you start to think about that just make sure that you’re not in violation of rule 3  which says ‘don’t expect your distributor to do anything for you of it won’t make money as a result’.

If your distributor is going to do well by and for you then  you’ll need to challenge and support it in equal measure. But in order for this challenge and support to be effective you need the distributor to be receptive. It needs to have bought into the relationship which calls for a little one-to-one marketing and since you’re not selling a product (you’re selling the partnership) you’ve got to think beyond the 4Ps.

But before going onto Ps 5-7 what are the 4Ps when it comes to selling the relationship?

• P1 product is just that: the relationship;
• P2 price is the time and resource commitment that you’re asking of the distributor;
• P3 place is direct sales; you are going to be selling to the distributor through your distributor management; and
• P4 promotion is mainly personal through face to face contact and communication (but not exclusively)

Ps 5-7 relate to the marketing of intangibles. To some extent they are an extension of P4 and that definition works pretty well in this case. They add the substance which enables an intangible to be experienced and, as a result of the experience, bought into. Ps 5-7 are people, process and physical evidence.

• P5 people means that the relationship is experienced by the distributor through the behaviour of the people with which it interacts;
• P6 process means that it is reinforced by the processes whereby the elements of the relationship are delivered; and
• P7 physical evidence means that it’s not fully appreciated unless there’s some lasting evidence that you are delivering.

Many companies do this naturally but in a world where there’s competition for a share of the distributor’s mind (rule 3 is relevant here) all companies should be mindful of the state of the relationships with their distributors and what they can do it to improve it. If a distributor is failing it may be because it’s not buying into the partnership and that maybe because you’re not selling to it.

It’s worth considering your approach to distributors. Do you market to them and/or do you market to ‘your’ end-users? Companies who do both well are successful. Those who only market to the distributor are detached from the market and are surprised by distributors which are seemingly unable to sell. Those who only market to end-users  fail to engage and become frustrated with distributors which do not respond. Those who do neither, and there are many, fail miserably and deservedly so!

Check out the matrix.

Here’s an excerpt:

A San Francisco cable car holds 60 people. This blog was viewed about 2,500 times in 2011. If it were a cable car, it would take about 42 trips to carry that many people.

Click here to see the complete report.

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With the news of Steve Jobs stepping down as Apple CEO, the media has been full of reviews of the man and his company.  When I was researching the “Marketing Secrets of Silicon Valley”, one of my interviewees in San Francisco reminded me that Steve Jobs wasn’t a techie or a designer but “the greatest marketer in Silicon Valley”.  Looking back on some of Steve Jobs’ quotes I found the following.

“You can’t just ask customers what they want and try to give them that.  By the time you get it built, they’ll want something new.”

And there you have not only the Apple philosophy but the key issue for all high-tech marketing.  By the time your customers can articulate their needs in a way you can act on, they are already dreaming of something new and better.   So how do you invent future products and services without a series of random guesses or divine inspiration?

Apple co-founder, Steve Wozniak said “You need the kind of objectivity that makes you forget everything you’ve heard, clear the table, and do a factual study like a scientist would.”

We have three techniques that may deliver part of the solution.

• Scenario planning.  Think through and identify the most impactful futures and start designing products and services around these.  Scenario planning doesn’t give you the product but it does free up your mind in a structured way to think about how the world could look.
• Conjoint analysis.  What is more important, a €20 reduction in price or an extra 3 hours battery life on your next smart phone?  What would you like more in your new office, free broadband or an extra 5 square metres of space?  Conjoint analysis allows you to ask your target customers to rate the relative merits of all the key attributes of your next product, even before it is designed.  You can create the perfect combination of the variables.   It may not support a revolutionary design but it could support a dramatic evolution.
• Strategic planning with outside people.  Great teams of experienced, educated people can sometimes slip into “group think” where some ideas are “givens” and others are taboo.  These invisible walls can limit creativity so external input from Non-Executive Directors, industry experts, Trade Associations, new hires and others is important to stay open-minded.

Whilst no-one can guarantee that these approaches will deliver breakthrough designs, they allow you and your company to think about future customers, future needs and future markets in a structured and factual way.  It will help to set a long-enough time horizon so that you can get ahead of your customers and build something they will want in the future rather than something they wanted yesterday.

There is an alternative.  You could just hope that there is a person in your company who is the next Steve Jobs, but that is a bit of a long shot.

If you want to talk through the situation at your company then give Nick a call on +44 1473 636710 or send him an email and you can go from there.

To find out more about what Milner does, click here to visit its website.

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I shouldn’t have to say this but I’m sure we all know instances where the budget is an accounting exercise. It’s run by the accountants to deliver a cost budget. The sales budget is either set by senior management or based on numbers from the sales force but then massaged to fit. End result no ownership and probably poor performance through the year as every review meeting ends up as a fight over who’s responsible for the poor performance vs budget.

It doesn’t have to be that way so here’s a few ideas about how to avoid it.

1. if you’ve got a strategy communicate it. Make sure everybody in the organisation knows what it is, why it is what it is and what it means for him or her. That’s a job for directors and senior managers and they should be measured by how effectively they do it.
2. rescue the budget from the grips of accounting. This is not a criticism of accounting: it’s filling a void left by the rest of the company. But make sure that the budget is ‘owned’ by the directors and senior managers of the company. If the ‘budget pack’ is to be sent out by accounting, sensible enough because it will do much of the later number crunching, let it be made clear that this is on behalf of the MD et al.
3. make it a bottom up budget. This should not be a problem because most budgets are but make it clear to the people who provide the numbers that they are their numbers and they will be responsible for them.
4. tell the organisation what the budget is all about and what’s expected of it. This should be straight forward because it’s well-informed about the strategy (see 1 above) but make it clear what the business situation is today and what the business environment is likely to be like during the budget period. Then tell it what’s expected.
5. plan with some granularity but not too much. Don’t go for infinitesimal detail. That takes too much time and provides apparent precision but which is generally useless. But don’t go for no detail either otherwise you won’t have the data you will need to manage the business.
6. test the budget which comes back against expectation. If you’ve done 1-5 right you should be OK. If not be careful. The organisation is intelligent and is telling you something. Maybe business is tougher than we’d like, maybe the strategy isn’t understood, maybe there’s no appetite for ‘one more push’. Whatever the reason understand it then respond rationally. Don’t just force a revision.
7. communicate. Cascade the budget back down the organisation and make sure that everyone understands what it means to him or her.
8. begin to manage performance against the budget before the budget period begins. For a calendar budget that means do a Jan forecast in December. Don’t wait until you start the new budget period because that will mean you will lose maybe 2 weeks of management impact. And that’s the best part of 5%.
9. manage by month and by product. The annual budget is made by making every monthly budget. And the total budget it made by making every individual budget (that’s what granularity is for).  Manage budget performance in detail and continuously.
10. if the directors and senior management want upsides let them have them but that’s their responsibility. Leave the organisation to deliver the budget and reward it accordingly. If it’s a budget for strategy it’s all that you need.

The obvious lessons in the business world would seem to relate to brands: building them and destroying them. My opinion for what it’s worth is that the longer term casualty will be News International  and that the News of the World could have survived. It does seem that this title was sacrificed in a vain attempt to save Rebecca Wade and I believe that given the depth of News International’s pockets it could have been supported through its advertising crisis and be reborn.

Another lesson would seem to relate to assurance and reassurance (click here for a recently related blogpost). At least two people/bodies simply seem to have accepted statements at face value without subjecting them to any sort of scrutiny. First there was the chair of the Press Complaints Committee excusing its lack of action in an earlier investigation because it was presented with no evidence. Please: next time if there’s smoke go looking for the fire.

And second there was diddy David Cameron saying that he gave Andrew Coulson a second chance because he’d reassured him that he was clean. I’m all for second chances but (a) dig a little first; and (b) do it somewhere a little less critical. When you do risk registers (click here for more about them) you evaluate both likelihood and consequence and Mr C seems to have done nothing to mitigate either.

But I suspect that the biggest lessons to come out of all this will relate to corporate social responsibility (CSR) and the extent that News International thought itself above the law.

When I lectured on Chartered Institute of Marketing course I did a module on CSR and we took a fairly balanced view of whether companies should adopt a compliance based or an integrity based stance. Those who took the former route (espoused by Milton Friedman et al) simply focussed on corporate objectives the theory being that maximising corporate wealth is good for all.

Those who took the ‘integrity’ route (championed by Mintzberg et al) looked more broadly and had objectives relating, for example, to their impact on the local environment. They reckoned that they had multiple stakeholders and that it was important to address the expectations of all of them. Increasingly this route is favoured by bigger corporations: Nike adopts a responsible sourcing model, Marks & Spencer has its plan A environmental policy and BP, post the Deepwater Horizon disaster has a 50-page Sustainability Review as a part of its annual report.

The best that can be said of News International is that it adopted a compliance stance. The real worry is not that by so doing it was out of step with the rest of the world but that it in fact went one step further and thought itself above the law. From its accusation that somehow the Guardian had no right to investigate its behaviour to the earlier refusal to appear before the select committee it’s behaved as though normal rules don’t apply. Ironically for a company which has so much embraced new media it has proved itself to be quite a dinosaur.

I was reminded about this last week when I attended an event at the BMA in connection with Cambridgeshire Community Services’ (that’s another life I have; I’m a NED at CCS) planned conversion to a Foundation Trust next year. There was a powerful presentation given by Eileen Walsh, Director of Assurance at the Oxford Radcliffe Hospitals, and she repeated that message in spades. Eileen quoted from the HM Treasure Orange Book:

‘assurance is an evaluated opinion, based on evidence gained from review, on the organisation’s governance, risk management and internal control framework’

It is not an opinion based on what somebody’s told you but one based on evidence. Simply accepting what someone else says is reassurance and often, but not always, is not enough.

Click here for Eileen’s full presentation.

So where’s the equivalent in the ‘real’ world? When I was employed in a part of the Danaher empire, absolutely brilliant and single-minded about eliminating waste and maximising performance, one of the questions which it asked about its managers related to their willingness to ‘go to the gemba’. Wikipedia tells us that gemba is Japanese for the ‘real place’ and the expression describes how good managers don’t just accept what’s told to them, they go and see for themselves.

I do a lot of business performance coaching these days. I’m not a life coach and never will be but I help people who run smaller businesses to get more out of them. And I do a lot of this through asking questions and it concerns me that the answers which I often get, from people who should know better, are simply restatements of what my contact has been told. They have been reassured about something but they haven’t gained assurance. I sometimes seem too pushy but I insist: don’t just tell me, show me; you should do the same.

If you’ve got a good team and/or you’ve got good systems which have been subject to rigorous audit you can accept reassurance most of the time. But don’t assume and if the issue’s big enough and the information is important enough you’ve got to go to the gemba and see for yourself.

In the end it’s about risk. If the likelihood is high and/or the consequence is substantial you need more than reassurance. You need assurance. It’s as true in the private sector as it is in the public sector. If you’re going to bet the company’s money on a new investment you’d better make really sure that the information you’re using is good. Don’t just ask for reassurance; assure yourself.

They happen all the time and in some organisations more than others. They are generally sincerely meant and well-intentioned; one hopes that they are well thought through and focussed on some needed improvement. They may be relatively minor and local or they may impact throughout the organisation. They are the initiatives which are rolled out, often with much fanfare, maybe a project name and a web-site, to improve or even transform some aspect of an organisation’s performance. But they often fail and that’s generally because no-one has realised that they are not just improvement programs; by their very essence they are about change and change needs to be managed.

The US management consultants McKinsey & Co developed a diagnostic tool for understanding the challenges of managing change viz the 7S model. It was based on earlier work by Richard Pascale Tanner & Anthony Athos during the early eighties (read about it in their book ‘The Art Of Japanese Management’). The model is a useful check list of what needs to be addressed in any change.

But most important it differentiates between hard factors which are ‘easy’ to describe and change and soft ones which are more difficult to describe and a lot harder to change. This is where I’m in danger of becoming all fluffy but if VPs, directors and managers don’t address the soft factors they will end up with a new situation (strategy, structure and systems) which doesn’t work because one or more of the soft factors (shared values, style, skills and staff) have not been addressed.

I’m working with organisations in both the public and private sectors at present which need to change and they are beginning to realise how much work is going to be involved not in changing the hard factors but in addressing the soft factors. Put in a nutshell: if they don’t take the people with them all the money on the new buildings, the new systems, the new logos and the new structures will be wasted.

Which brings us back to managing change. Recognising the need to look after the soft issues is step one. Once you’ve recognised the need how do you make sure it happens? There are a number of useful determinants of successful change management:

• a trigger: people don’t understand change for change’s sake. If the change is linked to some development (internal or external) such has disastrous sales figures or a merger it can be rationalised and bought into.
• a manager: make someone responsible for managing the change (hard and soft factors) and give him or her a visible direct line connection to the boss. That way you’ve got the management and you’ve got the boss’s endorsement.
• signs and symbols: not part of the 7S model but could easily be. Establish clear indicators of elements of the old system that are to be forgotten and how they are to be replaced (but be careful about damaging heritage). Publicise the new ones.
• market the program: good marketers segment their markets and that’s what you should do here. Differentiate between people with different attitudes to change and communicate with them accordingly
• run through the tape: changes to soft factors take years to embed so don’t let up when the hard bits are done. Remain vigilant and stay on the case!

There are lots of other useful models and texts relating to change which I’ll be happy to share. But if it’s so important and there’s so much help why is it generally done so badly?

David knows AstraNet through his work on the EEDA high growth coaching program which is run by the St John’s Innovation Centre (click here for more information)  and is delighted with this success. He says: ‘there will always be the opportunity for smart, small companies with special technology to be successful in their niches. But the AstraGene product succeeds not just because of its technology but because of its attention to the needs of the user. And what’s extra exciting is that AtraNet nas more new products in the pipeline.’

Here’s the press release about AstraGene’s success.

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AstraNet Wins Innovation Award at World’s Largest Lab Exhibition

Pittcon is the world’s largest laboratory equipment exhibition and several prestigious awards are made at the exhibition every year. The most important awards for those exhibiting at the show are those for innovation. This is selected by a jury made up of the attending editors of laboratory and scientific journals: the so-called Editors Award.

AstraNet Systems Ltd, the specialist Cambridge laboratory equipment company and a participant in EEDA’s high growth coaching program run by the St John’s Innovation Centre, exhibited at Pittcon this year and was awarded an Editors Medal for its AstraGene DNA analysis spectrophotometer. The AstraGene spectrophotometer was recognized for its novel yet simple operation. Its ability to recover 100% of a tiny 2µL sample, with no risk of contamination or operator hazard, was highlighted.

Mike Mills, Managing Director of AstraNet, commented: ‘this was a fantastic achievement when considering the huge number of exhibitors at the show and the many significant multi-national companies that were also nominated in this category’.

Ray Wood, Business Development Manager at AstraNet added: ‘the AstraGene spectrophotometer is a special product. It uses fibre-optic coupling and a CCD array detector to eliminate all moving parts so increasing reliability and reducing maintenance to an absolute minimum. This effectively eliminates the need for any re-calibration. And furthermore its novel sampling accessory makes AstraGene a powerful tool for handling small and precious samples’.

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For a video about the AstraGene spectrophotometer go to http://bit.ly/f3BP19 or http://bit.ly/gMYX59

I’ve recently rediscovered the value chain. Actually I’ve never lost it but I’ve found it increasingly valuable as I work with more start-ups and small companies through my work with CUE and the St John’s High Growth Coaching program. It’s a simple way of taking people through the analysis of what their companies need to be doing and where they needed to be focussing their management time.

I first came across the value chain in the mid 80s when it was fashion of the day at one time at Dow Chemical where I spent most of my formative management years. And then as the fashion moved to process re-engineering it continued to be useful as long as you understood that the value chain was not a process per se but that processes were embedded within. People who’ve worked with me will know me as one who is ‘process obsessed’ so it should be no surprise that I continue to use value chain.

I use the diagram above. On the left hand side you’ve got the medium/long-term processes. I changed the left hand one from simply ‘design’ to ‘discover or design’ when I started working with start-ups. On the right hand side are the more operational or short-term processes and in the middle is marketing which I’ve tended to refer to as the glue which holds the two sides together. I’ve then exploded the market box as shown in the diagram below.

There may be a couple more boxes which you could add to this and it’s perhaps stretching the process analogy to continue to use the chevrons but there’s a rough relationship between the left and right hand sides of this diagram with those of the main one at the top of this blog post. But the more I reflect on this and look at the diagram the more I’m inclined to say that marketing is not a part of the value chain.

That’s a statement that’ll have the CIM and marketeers world-wide up in arms. But it’s not as though marketing is a resource management function like HR, information and finance which are used by all elements of the values chain. Marketing in fact runs through the value chain, it’s a continuing thread. It’s not an ‘on demand’ function it is the driving and directing function. marketing is not a part of the value chain, it is the value chain!

The 6 elements of marketing in my diagram above are my invention. No doubt others have their own but just to be clear here’s what the 6 elements are.

Inbound marketing: this is that most essential element of good marketing viz being alert to the outside world. It’s not just market research. It’s about being continuously being in touch with the market, understanding what impact the outside world is having and watching the competition carefully. (note that in the US there’s a tendency to use ‘inbound marketing’ to refer to marketing where the customer chooses to receive information. That’s OK. I just use it this way)

Strategic marketing: as the name says this is about strategy and that means choice of direction. Which products, which markets, which brand etc.

Internal marketing: don’t ever forget this. It’s the marketing that ensure everyone within the company, within its network of stakeholders, is informed and able to act in support of the marketing strategy. Sometimes people think that this is HR’s job. It’s not it’s far too important to be left to HR.

Tactical marketing: this is the development and implementation of marketing programs and there’s an element of choice again. Which markets, which customers, which products? Such programs raise awareness, generate leads, support sales and build relationships.

Operational marketing: doing it and especially supporting sales activity.

Relationship marketing: it does what it says on the can. It build relationships, not just with existing customers but also with prospects which may not even know us yet.

I’ve developed my understanding of both marketing and the value chain in product based B2B businesses but increasingly I’m finding both disciplines equally useful for services and for B2C. You have to change some of the words and for services you need to go beyond the 4Ps but the underlying logic remains powerful.

Finally: there are still spaces available on the high growth coaching program, Check out http://www.stjohns.co.uk/coaching/

The event was organised around 6 different challenges with each challenge being addressed by 3 teams. The challenges were very different. Two related to social enterprises, one to off-the-wall technology, one to a product launch in a new geography, one to a totally new business venture and one to a start-up which is due to go through its first metamorphosis. Each mentor (there were 6) was to support the 3 teams addressing one of the challenges.

It was a full day and began with a keynote speech from Peter Hiscocks. Peter unfortunately came without his memory stick (!) but as a result gave perhaps a more intimate and compelling speech. He re-emphasised his ’10 qualities of a successful entrepreneur’ and highlighted the need for a top class team. He identified 3 roles: the person who’s good at selling, the money man and the guy who can be counted on to deliver. I’d concur with this but suggest that you probably have a fourth who is probably the inventor and is now the ‘chief technology officer’.

The teams I worked with addressed the ‘metamorphosis’ challenge and this was posed by Emmanuel Carraud of Magic Solver (www.magicsolver.com). Magic Solver has done very well but sees the need to move on. It is not abandoning its business model but allowing it to develop and it has real marketing challenges to be able to support this. The teams came up with a couple of really bright ideas and I’m sure that they will feature in Magic Solver’s plans going forward.

The mix of participants was incredible. They were obviously very smart but also enthusiastic having given up a Saturday to participate. There were Brits present but I had none in my teams; they were Mexican, Thai, Indian, Polish and HG Chinese!

The day ended with another keynote speech, this time from Alan Barrell (www.alanbarrell.com). Alan is a wonderful guy, an unashamed self publicist but also a guy who infects others with his enthusiasm. At one time he was chief operating officer at Willett International and a few years after he left I joined the same company as Group Marketing Director. Alas Willett is no more having been swallowed up by Danaher although the brand survives in some parts of the world.

Alan did have his memory stick with him and gave a very good end-of-the day speech which was interesting, inspiring and entertaining. He talked about the many people who’ve made a difference despite relatively humble origins, who’ve overcome adversity and who’ve had vision which has gone beyond borders. He also highlighted the sources of inspiration which led to people becoming entrepreneurs and included the famous George Bush quote about the French having no word for entrepreneurs. Alan had a photograph of the Rue des Entrepreneurs in Paris to remind us why Mr Bush will not go down in history as one of the best presidents of the US.

It was a splendid day and you’ve got to have confidence in the future if our universities can turn out such ambitious, intelligent and enthusiastic people.