News Of The World – A Quick Thought!

News Of The World Closure – When A Brand Breaks Unwritten Rules

This story is moving so quickly now it is almost impossible to keep up.  Just like in the Arab Spring uprisings, social media tools have led to a groundswell of unrest and discontent at the actions of the paper.  I do not want to try and unpick the whole story here – watch the bbc web-site for all the information you need.  But the first thing that occurred to me this morning as I woke up is that News of the World has broken unwritten rules – and brands like people cannot really preserve relationships once they have done that.

Until recently public opinion and probably the opinion of advertisers was that News of the World had come close to, or had broken some rules of journalism.  But if that got to the heart of a good story about someone who chose to live in the media spot-light it was somehow ok.  It was down to the individual to fight it out with the paper using the courts if necessary to put their side of the story across.

That changed the moment people realised phone hacking was not reserved for politicians and high profile celebrities – it was used in a wide ranging number of stories including those of innocent members of the public who have suffered terrible tragedies.   This is not acceptable and it breaks an unwritten rule of journalism.  What you can do to a celebrity or politician is not that same as what you can do to an ordinary member of the public who is unfamiliar with that world.

When a brand breaks an understood and known rule it will be damaged, but if it does the right thing it can recover, and in some cases even become more respected.  Break an unwritten rule and it is almost certainly terminal.

Baby Food and The Art of The Long View

I recently was introduced to the Organix baby food brand.  No, I haven’t become a father but I did get to look into a rather exciting opportunity to work with the company.  Based in Bournemouth the company is full of bright creative people who are all passionate about their brand and what they do.

Just after I finished talking to the Marketing Director there I also started reading The Art of The Long View.  A most interesting book which discusses how one might predict what the future landscape or market conditions might look like for a business.  It is not seeking to deal with innovation or long term business planning, merely suggesting that for innovation or business models to be most useful they must surely fit into a future where they are both necessary and compelling as a proposition.  To understand what the future might look like I would probably start by looking at some relevant long term trends, but the authors argue that this is not particularly helpful.  Instead they argue that one should consider specific, relevant, and clearly possible (however unlikely they may seem now) scenarios and consider how the business would need to respond in that environment.  Scenario responses can then be compared to look for commonalities which suggest areas for business focus and investment because they are good bets, but also tracked backwards asking what would have to happen for those scenarios to occur and what is the likely hood of those circumstances happening in the mid to long term.

Upon finishing the book I decided to look at two scenarios way into the future that might change the way Organix operates as a business and brand.

Scenario 1 – “Imagine a UK where most people have become close to being self sufficient or at least neighbourhood sufficient”. In the previous decade Supermarkets have built total dominance of the retail sector, but then a backlash started. One of the main problems was that for many decades Supermarkets had controlled inflation to a certain degree by keeping food prices low.  But this had become unsustainable.  Strengthening Asian markets, a weakening US market, and a dependence on imports from Europe had all lead to the UK cost of consumer goods becoming very high.  At the same time rising fuel costs and a destabilised Middle East meant most people and all but the largest of businesses had to reduce unnecessary travel expenditure.  Realising that both government and corporate organisations were unable to affect this, UK citizens simply started to “drop out” of the retail economy and produce their own food growing it locally and cooking at home.  At first this seemed like a hippy craze from the 1960’s but something was different.  Firstly families were making considered economic judgements about the cost of their cars, transport, and food before investing significant time and money on moving towards self sufficiency.   Secondly they were not protesting, they were adapting to preserve the family and celebrate their local community.  In this environment everyone grows vegetables in their garden and when they have too much they exchange it with neighbours for something they need.  There is a local farm, a local dairy, a flour mill that makes bread and pasta, and a local market where people can buy or exchange goods.

What would Organix look like in this Scenario?

If Organix had managed the brand through this market change it could not be a retail food brand – but perhaps a brand that champions the best food for new born babies.  To do this, it may still produce and sell a range of baby foods, but this is now just a small part of its business.  Instead it has become an authority of the best nutritional diets and the best food ingredients to raise all kinds of babies.  It produces books on this subject, and has a large web-site which for a price provides mothers and fathers with a “how-to” set of teaching guides to source the right ingredients and cook babies the best food that suites them.  After partnering with Universities and years of research they have also become an authority on a specific food groups that promote the long term health of new born babies, reducing the likelihood of diabetes and cancer.  Finally Organix has produced a completely new business proposition.  The Mother and Baby restaurant.  This is a franchise business model.  A family in a local community buy a franchise and Organix set them up with a small catering unit, relevant equipment, and training.  Mothers can “check in” using a web-site and pre-order the meals that they would like and when they would like them.  The premises have taken years to develop, and were initially based on the designs for their own offices in Bournemouth.  They are comfortable, clever acoustics absorb much of the sounds of babies which reduces discomfort, different colours engage the babies, furniture is practical and attractive, and staff are on-hand to help with feeding and cleaning as soon as is needed.  Layouts allow mothers to spend time together and for babies to play after their meals.  The business model has won Organix many awards – it has brought them into the heart of the community, it has allowed mothers to connect, it has taken stress way from feeding time and replaced it with an enjoyable social experience that is also very convenient.

Scenario 2 – “A dramatic increase in government regulation”.  For many years government and the private retail food industry have battled to find a happy medium between the concerns of governments who wish to ensure that food promotes healthy living, and the commercial concerns of private sector food companies who resist regulation.  Over time government intervention has increased.  Guideline Daily Amount schemes have been replaced with legal requirements for maximum amounts of fat / salt / sugar in products per 100g’s.  Packaging claims have been outlawed unless proven by independent approved laboratory research.  But in the last few years governments have realised even this is not working.  Cancer rates are still too high, obesity continues to rise, and diabetes has become the number 1 killer in the UK.  In response to this, the government has launched its own range of food and drink products that cover ages 0 – 18.  Approved by experts, the government acknowledges that these meals do put nutrition before taste. However, all the ingredients are sourced from the UK, all the products are made in the UK, they are “nutritionally best in class” and the government has created legislation meaning that retailers cannot price another product in the same category to be less than 5% more expensive that the government label equivalent.  In other words, for other food businesses to compete, products must be nutritionally best in class and secondly have a significant taste improvement to mean customers pay the extra price.

What would Organix look like in this Scenario?

When Organix was born the company’s founder had strong beliefs about Organic food and even then they lobbied the government hard to improve standards.  During 2010 – 2020, Organix continued to do this but it went considerably further.  It commissioned research into diabetes and the long term impact of food eaten in the first three years of a life.  It was brave too, every time it improved a products nutritional profile or added a new ingredient based on research it made the knowledge and sourcing available to the entire industry.  On the one hand Organix continued to push the frontiers of diets for babies, yet at the same time it moved to a software open source like business model.  Anyone could see the intellectual property driving the products Organics were making and the contracts they had with suppliers were never exclusive.  One key business benefit of this was that competitor ranges simply couldn’t keep up!  Organix invested so much in being the best and then used transparency to prove it – it was almost too costly for other businesses to try and compete on getting first mover advantage on dietary improvements.

Whilst this “open source” at first appeared to be an industry initiative Organix actually started to reach influential opinion forming customers.  Mothers and fathers realised that the brand literally had no secrets – on-line you could see the food being made live in a factory kitchen, you could see where every ingredient came from, and you could listen to talks from researchers in independent laboratories talking about the latest thinking on diets – all for free.  By becoming a totally transparent business and at the same time refusing to yield its market leadership position to anyone, Organix continued to outsell any Government sponsored product range.

Back to reality!! Having been through the process, albeit very briefly, it is clear to me how powerful the Scenario planning process can be.  It opens the mind to look beyond trends and into realistic yet alternative views of the world.  I think it would be very powerful to run a scenario based set of workshops to really consider how brands might need to adapt to meet future needs and market conditions.  I thoroughly recommend this book.  Oh and the last few pages will probably bring a tear to your eye!

Is There Still Room For More Ice Cream?

I was recently introduced to an absolutely delicious ice cream brand called Gelupo.  Now I know you are thinking is this yet another great food brand Norman gets to work on and enjoy eating in the evenings?  Well, not quite, but I have become most interested in the brand and the business because of the crowded market place in which it is operating and its distinct product offering.  Looking at this made me consider some pertinent questions for start-up businesses.

Firstly Gelupo is not just an ice cream.  It’s much more in several ways.  Gelupo makes Gelati (or ice cream as we call it), Sorbets and Granitas – a semi frozen desert only made well in Italy in my experience!  But secondly Gelupo is not just an ice cream or even a desert brand, it is an authentic ice cream parlour linked to a successful delicatessen.  So this means that both the product offering is highly differentiated to a normal ice cream brand but perhaps of more significance is that the business model and brand proposition also need to be very different from other ice cream businesses in the main stream retail markets.

To me Gelupo stands the best chance of long term success by placing people right at the heart of the brand.  This is both different and remarkable within the market I think particularly if it is underpinned by a rigorous recruitment programme to find highly credible, natural brand ambassadors to work in the parlours and a rollout of parlour stores in strategic locations. The brand does have some health claims that come from using less cream in the product – but in my view this is not different and is poorly marketed/communicated, and does not drive the consumer to want to eat the ice cream anyway.  Ice Cream is ice cream – if you want to lose weight you don’t eat it!

I also think the brand needs to fully commit to its proposition whichever way it wants to go. This is something I see in FMCG fairly often.  It is no longer enough to say your food is the best because you know where it originates from or because you have some great flavour concepts.  Yes these are very important but you have to tell the consumer why they are important – you must commit.  Is Gelupo the world’s best tasting ice cream because of where it comes from, or is it a unique taste that everyone should try at least once because of where it comes from? The flavour names sound exciting, but what is the inspiration behind them? Where do all the ingredients come from? Who makes these recipes and of most importance (and commitment) why should customers know and love this story?

Alongside a roll out of ice cream parlours, either through financing or franchising, the business could also move into traditional retail.  This would be a brave move requiring substantial marketing investment of course, but the question I would ask before that is “what is the right business model to make this brand flourish?” A large retail contract with an outsourced production solution always seems easy and very attractive.  But what if people are the most attractive part of the proposition and the bit that’s remarkable.  Can this be carried through to a differentiated retail offering?  I think it can but it is far from easy and needs a full marketing mix maximising the use of social media and PR to work alongside retail implementation to preserve the brand.

To me Gelupo is a brand to watch and one that can definitely flourish.  I would offer up that a critical aspect of that success will be a commitment to the brand that consumers can see, and the integration of its branded proposition to its business model for growth.  These must work in harmony or as we have all seen with some large high profile brands recently, consumers spot the disconnect and loose belief in the brand.

Keep an eye on http://www.gelupo.com/index.php

Made to Stick

This book is a nice complement to “Making Ideas Happen”.  The book sets out that one of the problems with making ideas happen is that we simply forget them.  Whilst some things seem to stick in our minds other things simply do not.  Unfortunately often the gem of a good idea, or a suggestion to make something that isn’t working work often just doesn’t get remembered and therefore is never actioned.

The book suggests six characteristics of ideas that are sticky:-

-They are simple – if you cannot explain your idea in three sentences or thirty seconds it probably isn’t clear enough in your mind and therefore won’t be able to resonate in someone else’s.

- They are unexpected – that is not to say Gimmicky and a fad or hype, but they have something that triggers enquiry and interest

- They are tangible – not pie in the sky visions that people instinctively understand probably won’t happen

- They are credible – perhaps through demonstration, perhaps through logic or research, or perhaps through other people’s support, but in some way ideas must have a credibility factor to stick

- They are emotional – ideas that do not appeal to people’s emotional intelligence are unlikely to get a positive response, people just think there is a possibility of more work.  You must show your passion and seek it from the audience to make an idea stick

- The idea, the problem, and the solution can all be communicated neatly into one simple story.  People remember stories not academic theory or financial formulas.  If you want your idea to stick tell it as a story.

I think this is quite a useful checklist.  Next time you have an idea and you need other people to help you make it a reality why not try this and see if you can make it sticky!

The New Business Road Test

This is a most useful book for anyone who is contemplating starting their own business.  It is a very good compliment to Business Model Generation.  The book argues that writing a business plan is not an effective way of creating a business because it is a) too formal and rigid, b) produced in isolation and away from the market forces that the business will be exposed to, c) written with a heavy slant towards writing what an investor or lender would want to hear and d) completed with little customer endorsement or consideration of the practicalities involved in building a business.

One interesting argument in the book is also the recommendation to separate the decision of creating a business from that of the product, market or industry to enter.  The book argues that often start-up business fail not because of internal weaknesses, inexperience or capability, but because they have simply entered industries or markets that are not attractive and where the odds are already stacked against them.

The book offers not what I would describe as a business modelling template, but instead a framework for developing a business idea and evaluating the chances of being successful.  This is based on seven factors : macro and micro market forces combining to assess the markets attractiveness, macro and micro industry strengths and weaknesses combining to show how sustainable the industry might be and how attractive it might be to operate in, the internal teams propensity for risk and whether this is in equilibrium with business objectives, the connections and influence that the management team have, and the ability of the total team to execute, or ship as Godin would say!  I think this is a clever balance between conceptual business or marketing appraisal and the more practical but equally relevant considerations.

My key out take was that successful businesses need to be placed in the right place at the right time but most importantly with the right people on the job.  A good enjoyable read!

Seizing The White Space

I really enjoyed reading this book.  It is clear to me that the nature of innovation has changed dramatically over the last decade or two.  As companies look to grow through building new revenue streams they are increasingly faced with new challenges to bring products to market.  Firstly the start-up is able to move quicker than ever, use the internet and other purchasing tools to manage down upfront costs, and communicate with its audience in timely and relevant manor often without cost.

Secondly and perhaps an even bigger challenge is that fact that to fully maximise the potential of innovation, established businesses now often need to adopt radically different business models.  This can often cause at best “growing pains” or at worst mean never actually making it to market.

In this book Johnson explains how businesses must think radically about innovation and step far away from the comfort zone of existing markets.   In doing this Johnson argues that businesses need to completely reconstruct their business model in order to make the innovation viable and over time maximise the opportunity.

I also liked Johnsons summary of what a business model should look like and I think this is a useful tool for anyone considering a start-up

1)      What is the compelling customer proposition.  What is it that you can do, that they need to get done, and how do you do it better than anyone else

2)      What is the formula for profitability

3)      What are the resources and processes that deliver both 1 and 2

The book also defines areas that are rich for innovation and again I think this is useful food for thought for any business

1)      Can you transform an existing market by doing something totally different, eg EasyJet

2)      Can you create a new market all together, eg Apple iStore and applications for mobile smart phones

3)      Can you confront an inevitable industry change, eg Tata Motors

Overall I think this book provides useful material for any CEO or Director who is engaged in trying to develop a start-up business or bring new revenue streams to an existing one.

Business Model Generation

I would describe this book as almost like a mini guide to an MBA, or an exercise book for an entrepreneur.  The style of the book makes it easy to read and the visual look and feel of it is just great and refreshingly different for a business book dealing with something as technically difficult as business model innovation.

As the title suggests this book is all about business model generation, but what makes it unusual is the way it takes you through the process step by step almost as if a business coach was sitting alongside you.

It also provides some great resources.  Marketing and business analysis tools, frameworks for creativity, a really great model to understand how your business and business model could work, further reading references and extracts from other books (most of which are covered within my blog incidentally!) which are all of relevance.

There isn’t too much detail or anything too controversial to write about in a review, but it is still a really useful book to have.  It is also very easy to read and very visual which allows the reader to think more about their business rather than just reading the book.

I would recommend this book to anyone grappling with business modelling, but also to consultants who are facilitating workshops for clients.  The book is full of tools and frameworks, and also points you to further resources should a particular area be of interest to you.

The Importance Of Robust Business Modelling – A Lesson From Retailers

Since the New Year it has been very disappointing to hear of several well known and long established retailers in Norwich going out of business.  Clearly the trading environment both before and after January 1st has been very difficult.  Before January the market was very competitive, highly price sensitive, and demand for good deals was high because customers knew of VAT rate increases to come. Small independent retailers were often faced with trying to compete with nationwide or sometimes global chains with demonstrably greater purchasing power.

After 1^st January things really seems to change as customers felt the full force of higher fuel and energy prices, higher VAT, high food prices on commodity items, and sadly often some job insecurity within the home.  In the background inflation continued to rise at a faster rate than salaries or wages, and many home owners know in the back of their minds that their mortgages will only cost more in the future.

It seems to me that all of this makes it a very difficult trading environment.  I am very sure it is much easier to say than to do this, but it does seem to me to only reinforce the importance of understanding ones business model, sticking to it robustly, and adjusting critical resources accordingly.  Small businesses and independent retailers clearly don’t have the buying power of national chains or internet retailers, but they are very flexible.  They can change the levels of resources they have and the customers they choose to target to meet the climate they trade in.

It is easy to ignore the challenges the environment puts to businesses and to customers, but it at the peril of the business to do so.    In difficult trading times it is more important than ever to rigorously understand the business model, understand the constraints it places on the business, and most importantly translate that into tangible practical action that protects the business.  Not easy, but essential none the less!

The Lowest Cost Viable Product

Project FB – Update.

So recently we have completed what I would describe retrospectively as the nice, exciting, and even easy parts of starting a business.  We have done the brain storming, looked at the opportunities and evaluated them, come up with the ideas and concepts.  Finally having considered all of this, we have said OK – this is our product, our idea, our brand.

It has several advantages.  The product sits in a category that has been highly commoditised, so we can offer a premium alternative and refresh the market. The product does not currently seem to exist in a premium fashion; it isn’t like producing another niche beer, another premium meat pie, or another special cake.  So everything sounds like a good opportunity exists, but this is where the challenges really lie.

How does one go about converting the idea into a tangible product at low cost to gauge consumer feedback?  I have read a lot recently about a concept called “the lowest cost viable product”.  In essence this is saying, what are the bear essential aspects, ingredients, or materials that are needed to produce something that can be used to gauge consumer opinion?  Whilst this may sound like just a sensible approach to buying an initial proto-type it is actually a much deeper thought than that.  This is because it fights in the face of a person’s natural tendency to want the product to be received well and therefore engineer in un-necessary and costly attributes that are not needed or perhaps not relevant to the consumer or customer.  The challenges we have faced include under pricing the product and being too easily moved into reducing the price point, over packaging the product to give a premium feel, providing un-necessary marketing support material, a tendency to rush the flavour development process, and a drive to bring too many flavours to market too early.

My learning from the process is simple but very valuable.  Use other people to sense check what you believe to be essential purchases or aspects of a proto-type.  Don’t assume you know what the consumer expects, start bare and then work up if you need to.  Resist calls to lower price at least until you have let real consumers have their say.  And be comfortable with accepting you may still be working with a proto-type even when others start to think of it as a finished product – keep listening and refining.

The next challenge…. if we have a brand and product that people like….. can we build a business model that is robust?

Unleashing The Idea Virus

I picked up this book having read it a few years ago when it was first published.  The first thing that is of interest is the fact it is written pre the social media explosion.  I think there is some internet thinking in the book, and free email has taken off, but just Seth’s thoughts at the time are interesting and act as a great insight into how the social media landscape has changed marketing opportunities for both new and existing businesses.

The book is a Seth Godin classic, in terms of how it is written, its language and how it challenges the reader.

In this book Seth essentially relates the idea of marketing a concept to a potential market to spreading a virus like a cough or cold.  But whereas you may not want to spread a cough or cold, he asks, if you did how would you do it, what would you look for, and if you can understand this can you translate it into a marketing strategy.

So the essence of the book:-

Well firstly do you have a virus – do you have something good enough to easily spread from person to person, is your product and message good enough and compelling enough?

Can you find a concentration of people who are all particularly susceptible to your virus – do you have a market segment which is tightly defined and easily accessible?

Can you find someone who is really good at sneazing and coughing, because they are the most likely to get your virus to spread – can you find brand ambassadors who are a) respected and b) happy to talk about your brand?

Have you made it easy for the virus to spread – if I like your brand, how easy is it for me to share it with someone else?

Seth argues as he often does in his books that any brand regardless of size or financial resources can adopt these methods to create highly compelling propositions and supporting marketing campaigns that really work.  I think challenges with electronic marketing and social media do exist and it is not always as easy as Seth makes it sounds, but I do think this is a good set of questions to ask before executing a marketing campaign. Strong positions targeting tightly defined market segments, underpinned by good communication undoubted win market share.